Mayor pushes Penguins on Plan B
Ravenstahl clarifies position on arena in letter to team
Sunday, September 17, 2006
By Shelly Anderson, Pittsburgh Post-Gazette
Mayor Luke Ravenstahl, who endorsed the Isle of Capri casino plan for arena funding earlier this year as City Council president, is now also backing the "Plan B" alternative and hopes the Penguins will, too.
"My objective is to retain the Penguins in Pittsburgh, evident from my early support and endorsement of the Isle of Capri proposal," Mr. Ravenstahl wrote in a letter dated Friday and addressed to Penguins Chief Executive Officer Ken Sawyer.
"We must recognize, however, that the Isle of Capri proposal does not guarantee the Penguins will remain in Pittsburgh since it is unknown whether the Pennsylvania Gaming Control Board will award the slots license to Isle of Capri."
The letter then called on the Penguins to commit to Plan B even if Isle of Capri does not get the slots license "just as you have asked for, and received, my commitment to the Isle of Capri proposal."
The proposed Plan B blueprint for building an arena draws on slots and state money as well as contributions from the Penguins.
A Penguins spokesman said yesterday that the team had no comment because it has not yet received the mayor's letter.
Team officials have repeatedly stated their belief that the Isle of Capri plan is by far the best for the hockey franchise and the community, and that their contract with Isle of Capri prohibits them from getting involved with Plan B negotiations.
The Penguins' agreement with Isle of Capri stipulates that the gaming company will donate $290 million toward construction of a new arena if it is awarded the city's slots license later this year or early next year. The team probably would be responsible for construction cost overruns.
The team's lease at Mellon Arena expires in June, and Penguins officials maintain they need a new venue to be viable in Pittsburgh.
Mr. Ravenstahl could not be reached for comment yesterday.
Allegheny County Chief Executive Dan Onorato, who said he spoke with Mr. Ravenstahl, described the letter as an affirmation that the new mayor is "on the same page that [late Mayor] Bob O'Connor and I were on. When Luke and I spoke, obviously, it was one of the top items as a key priority for the region."
Mr. Ravenstahl became mayor after Mr. O'Connor's death Sept. 1.
"No matter who gets the slots license, we have a scenario for a new arena," Mr. Onorato said. "We understand the Penguins' contractual obligation [with Isle of Capri], but if Isle of Capri doesn't win it, there's no reason the Penguins or the new owners can't honor Plan B.
"We're telling them, 'If Isle of Capri wins, we know you're staying. If not, we have a plan. You should be prepared to sign a long-term lease at a new arena under either scenario.' "
Mr. Onorato said he and Mr. Ravenstahl plan to discuss the arena and Penguins issue publicly later this week.
Gov. Ed Rendell proposed the Plan B alternative in case one of the other two finalists for the city's slots license -- Forest City/Harrah's or PITG Gaming -- prevails.
Plan B calls for the Penguins to make an initial payment of $8.5 million, commit to paying $2.9 million a year for 30 years and forgo $1.1 million a year in naming rights. Forest City/Harrah's and PITG Gaming have agreed to contribute $7.5 million a year if they end up running the city's slots parlor. The state would provide $7 million a year from a slots-backed development fund.
The state has also given the city-county Sports & Exhibition Authority $26.5 million for site acquisition and preparation.
Mr. Ravenstahl's letter states that the Penguins' impending sale makes the arena issues "timely and critically important."
The letter makes it clear that Mr. Ravenstahl thinks Plan B can work.
"In my opinion, Plan B is a highly competitive offer," Mr. Ravenstahl's letter said. "The marketplace recognizes its competitiveness, given the level of interest expressed by potential buyers who have committed to staying in Pittsburgh and participating in it. The fact that the Penguins are in receipt of offers that would make the transaction among the most lucrative ever for an NHL franchise is a credit to you, the Isle of Capri proposal and Plan B."
The Penguins announced in January that the team is for sale and have had offers for up to $180 million but have not reached a purchase agreement.
Four current or previous bidders have stated a preference for keeping the team, or attempting to keep the team, in Pittsburgh, but there also has been interest in moving the hockey team to Kansas City, Mo.; Hamilton, Ontario or other cities.
Ontario businessman Jim Balsillie is the front-runner to strike a deal for the Penguins, but it is not known what the sale price would be.
A buyer would be bound to the Isle of Capri deal and therefore obligated to keep the team in this city if that company gets the slots license.
A buyer would not be bound to participate in Plan B.
Mr. Onorato said he has not talked to Mr. Balsillie or any representative of his but has spoken "to the other [bidders] on and off."
Mr. O'Connor also kept in touch with at least a couple of bidders and the Penguins, and Mr. Ravenstahl wants to maintain that communication.
Copies of the mayor's letter were sent to Mr. Rendell, Mr. Onorato, City Council President Doug Shields, sports authority Executive Director Mary Conturo and city Urban Redevelopment Authority Executive Director Jerome Dettore.