Talks go on, but still no deal for Penguins arena
Ravenstahl, Onorato still optimistic club owners will keep team in the city
Saturday, February 10, 2007
By Mark Belko, Pittsburgh Post-Gazette
Despite some talking and a flurry of paperwork this week, the Penguins and state and local leaders still don't have a deal on a new arena, and development rights and the team's share of the construction cost still appear to be stumbling blocks.
Team co-owners Mario Lemieux and Ron Burkle talked with Gov. Ed Rendell, Mayor Luke Ravenstahl and Allegheny County Chief Executive Dan Onorato earlier this week by conference call, but the conversation ended without an agreement.
"Right now there is no deal. We're still trying to get to one," said Mr. Onorato, who continued to express optimism about the eventual outcome of the talks.
In an interview, Mr. Ravenstahl said the Penguins' share of the $300 million construction cost and the eventual development rights to the Mellon Arena site are among the issues still unresolved. Once a new facility is built, Mellon Arena is expected to be demolished to clear the land for redevelopment.
"There are a variety of issues that we're discussing and certainly the financial contribution is one of those and development rights are another," the mayor said.
Under the Plan B arena funding formula, the Penguins' share started out at $2.9 million a year for 30 years, plus $1.16 million annually from naming rights and $8.5 million upfront.
However, Mr. Rendell has said that the team's contribution was reduced under a revised Plan B and was "significantly below" the $2.9 million a year the Pirates contributed toward PNC Park. It's not known how naming rights factor into the equation.
"The deal we're talking about now certainly is different than Plan B and the pot has been sweetened, so to speak, from the original B but I don't want to get into specifics on what that is at this point," Mr. Ravenstahl said.
The city-Allegheny County Sports & Exhibition Authority, which owns the Mellon Arena site, has proposed that the Penguins and Pittsburgh casino winner Don Barden share development rights to that property once the Igloo, the oldest facility in the National Hockey League, is demolished.
Team officials have balked at that idea, and the two sides apparently have been unable to reach common ground. The SEA offered the rights to both the Penguins and Mr. Barden because both would contribute to the arena construction. Under Plan B, Mr. Barden is putting in $7.5 million a year for 30 years.
The Penguins have declined comment on all aspects of the talks. Without offering specifics, Mr. Onorato said there's still "legitimate detail" that has to be worked out before an accord can be reached.
Despite the snags, both he and Mr. Ravenstahl said they were still optimistic they would be able to wrap up a deal that would keep the Penguins in Pittsburgh under a new 30-year lease.
"I feel good about where the negotiations are. I'm still optimistic that this will get done," Mr. Onorato said. "I think the negotiations are moving in the right direction."
In addition to the conference call earlier this week, the two sides have been exchanging information and are in "constant negotiation," Mr. Onorato said. Mr. Rendell is expected to be back in Pittsburgh Thursday, but so far no face-to-face talks are scheduled. The last such session was Jan. 18.
One source close to the Penguins had indicated last week that team officials could step up their talks with Kansas City this week if there was not substantial progress toward a deal here. However, it doesn't appear that there has been any major movement in that direction so far.
Officials in Kansas City are offering the team free use of the new $276 million Sprint Center, to open this fall, no construction costs or upfront payments, and half the building revenues. Other cities in the hunt for the team could be Houston, Tulsa, and Oklahoma City.
Neither Mr. Onorato nor Mr. Ravenstahl would put a time period on completing a deal here.
Asked what was holding up the talks, the mayor replied, "I think it's just the natural process of negotiation. Any time you're dealing with this type of significant development and hundreds of millions of dollars, it takes time."
Besides issues like share of construction costs and development rights, the two sides must work out lease details, who pays for any cost overruns, arena management issues and an interim lease arrangement until the new building is ready for occupancy, expected in 2009.