Torontonian may move Penguins

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Torontonian may move Penguins

Postby SAMPICK on Mon May 08, 2006 8:51 am

get it from the trib board

Torontonian may move Penguins
Fingold might take club to Kansas City
Team's `great investment,' says magnate
May 8, 2006. 06:15 AM
RICK WESTHEAD
SPORTS BUSINESS COLUMNIST


A Toronto commercial real estate magnate who once tried to bring an NBA team to the city has surfaced as a potential bidder for the NHL's Pittsburgh Penguins, and plans to move the franchise to Kansas City if an agreement for a new hockey rink in Pittsburgh isn't completed.

David Fingold and his son Sam have already reviewed the Penguins' financial books and are poised to make a bid to buy the struggling team, the Star has learned.

The elder Fingold, who has spearheaded a tony real estate development called The Chedington on Bayview Ave., was part of a group alongside basketball hall of famer Wilt Chamberlain that mounted a failed attempt in 1988 to bring an expansion basketball team to Toronto.

As the NHL moves into the playoff mode, after the first season following the league's season-long lockout, investment bankers who specialize in the pro sports business say that, strong attendance figures and TV ratings aside, at least a half-dozen franchises are up for sale.

While the owners of teams such as the Atlanta Thrashers, Nashville Predators and Phoenix Coyotes would certainly entertain buyout offers, the Penguins may present the most compelling package for interested parties.

The Penguins joined the NHL as an expansion franchise in 1967 and, thanks to the emergence of Mario Lemieux as a star player in the mid-1980s, won back-to-back Stanley Cup championships in 1990-91 and 1991-92. Even though the team struggled in subsequent seasons — in October, 1998, the Penguins franchise declared bankruptcy for the second time — the club has a promising future thanks to Sidney Crosby and other coveted young prospects.

"What we would get with the Penguins would be an affordable franchise and a portable one," Sam Fingold said in an interview. "We think this could be a great investment."

Neither Fingold would say whether their family has other financial partners.

"We'd be doing this mostly with family money," Sam Fingold said.

One sports investment banker said that prospective bidders like the Fingolds are vexed about what to offer for the Penguins, who are now owned by Lemieux. The former star player acquired the team because he was one of its biggest creditors when it filed for bankruptcy protection.

"If you're buying the team to keep it in Pittsburgh, you're probably looking at paying $120-$130 million (all figures U.S.)," the banker said. "But if you're buying them to move them to a different city, where you're definitely going to be in a better building with a better lease, maybe you're looking at closer to $150 million."

The Penguins' future in Pittsburgh hinges on which company is awarded a slot-gaming licence by the state government.

The Penguins have partnered with Isle of Capri Casinos Inc., one of the world's biggest operators of riverboat and dockside casinos that's one of the companies pursuing a licence. The Biloxi, Miss., gaming company wants to build a $250 million casino replete with 3,000 slot machines and has also pledged to pay $290 million toward a new arena for the Penguins, who currently play in the NHL's oldest rink, 45-year-old Mellon Arena.

The Penguins can leave Pittsburgh in June, 2007, when their current lease expires.

Isle of Capri has already secured financing for the arena and casino from Toronto's CIBC World Markets, the Pittsburgh Post-Gazette has reported. But several other groups are also pursuing the slots licence and don't have pacts with the Penguins. The state Gaming Control Board is expected to issue the licence later this year or in early 2007.

If one of the Isle of Capri's competitors wins the license, that may free up the team to move to a more attractive market such as Kansas City, Sam Fingold said.

Fingold confirmed that he and his father would consider moving the club to Kansas City.

Kansas City hasn't had an NHL team since the Scouts, an expansion franchise, moved to Denver in 1976 to become the Colorado Rockies.

But Kansas City has recently completed construction on the new 18,500-seat Sprint Center, a $276 million arena that needs a tenant like an NHL team to pay down its debt.
http://www.thestar.com/NASApp/cs/Conten ... 4442957278
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Postby newarenanow on Mon May 08, 2006 10:21 am

This is one of the scenarios we know can happen if the IOC doesn't win the license. Everyone who thought the Pens were a lock or had a greater than 50/50 chance of staying a few weeks ago when it was all good news were counting their chickens before they hatched.

I'm in no way saying this article is a definite the Pens are going to move. I'm just saying the reality is still out there, even with all of the "I declare victory" talk from Onorato. I hope this wakes these politicans up and realize the Pens aren't saved yet.

The politicans talk about an arena definitely being built, but if the Pens leave, that is $4M a year plus $8M up front that is missing from plan B. W/O the Pens, the city is either going to get a cheap arena or no arena.
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Postby Jim on Mon May 08, 2006 10:41 am

The fact that they would be willing to pay $30M more for the team so they can move it should be a kick to the city's balls!
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Postby KCHockey on Mon May 08, 2006 11:54 am

This is the first public story that mentions an owner seriously considering moving an NHL team to KC.

Prior to this story, all we heard in KC was that we are going to have a new building and potential NHL owners are interested, but no concrete names.

However, if a Torontonian is going to buy a hockey team, why wouldn't they make an attempt at putting them in, oh I don't know, TORONTO?

LA -- 2 teams, NY -- 3 teams, yet only one team in the most hockey-crazed city in the world.
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Postby Stoosh on Mon May 08, 2006 12:44 pm

Someone needs to forward this article to the offices of O'Connor and Onorato and ask them if they still feel like declaring victory on this issue. Apparently, it's news to this investor in Toronto that the Pens are the lock to stick around that Danny and Bobert would have us believe.
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Postby Reilly on Mon May 08, 2006 2:10 pm

KCHockey wrote:However, if a Torontonian is going to buy a hockey team, why wouldn't they make an attempt at putting them in, oh I don't know, TORONTO?

LA -- 2 teams, NY -- 3 teams, yet only one team in the most hockey-crazed city in the world.


Toronto is a Maple Leafs town, not a hockey town.
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Postby newarenanow on Mon May 08, 2006 2:44 pm

Reilly wrote:
KCHockey wrote:However, if a Torontonian is going to buy a hockey team, why wouldn't they make an attempt at putting them in, oh I don't know, TORONTO?

LA -- 2 teams, NY -- 3 teams, yet only one team in the most hockey-crazed city in the world.


Toronto is a Maple Leafs town, not a hockey town.


I couldn't agree more. Just like this town I'm sure wouldn't support another football team other than the Steelers. This is a Steeler town.
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Postby Draftnik on Mon May 08, 2006 8:55 pm

There is always the possibility the pens could move but the article is severely flawed. The Pens are worth more in Pittsburgh in a new arena where they get 100% of the arena revenues than they are in a market like KC where they will not get 100% of the arena revenues because of AEG.

The writer is comparing the Igloo lease to a lease in KC which is a totally disingenuous comparison because there isn't a single person in the world that claims the Pens will remain in Pittsburgh to play in the Igloo. The Pens are worth more in Pittsburgh in a new arena with 100% of the revenue streams than they are in KC feeding on AEG's scraps.

Furthermore there is no explanation of the RSN contract and how Pittsburgh's good hockey ratings enable the Pens to get $10M per year from FSN. Nobody watches NHL hockey in KC and there is no way they would get that kind of $$$ for regional rights. That also would effect the final sale price because those are calculated based on revenue streams.

The best thing that can happen to Pens fans that want the Pens to remain in Pittsburgh is for a credible buyer with real $$$ to emerge and want to relocate the team. The only leverage the Pens and their fans have to get a new arena is the threat of moving. The more real that threat is the more pressure there is to get the arena deal done in Pittsburgh.

Maybe this guy is a real threat, but the fact that he has to find partners suggests he isn't a deep pocketed guy that can buy the team on his own.
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Postby KCHockey on Tue May 09, 2006 9:36 am

What do you think the Pens are worth? Checkets paid $150 mil for the Blues. I think $150 mil for the Pens is about right, especially since they will have to play in Mellon for at least three more seasons.

Nobody watches NHL hockey in KC and there is no way they would get that kind of $$$ for regional rights.


The weekend NHL playoff games draw about a 1.5 rating on NBC in KC. What do they get in Pittsburgh?
http://www.kansascity.com/mld/kansascity/sports/columnists/jeffrey_flanagan/14485270.htm
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Postby newarenanow on Tue May 09, 2006 9:55 am

[quote="Draftnik"]There is always the possibility the pens could move but the article is severely flawed. The Pens are worth more in Pittsburgh in a new arena where they get 100% of the arena revenues than they are in a market like KC where they will not get 100% of the arena revenues because of AEG.

quote]

Doesn't matter if the Pens are worth more in Pgh. The new owners will do what they want. It is not up to the current owners who want the team in the burgh. If the money is right, they will sell and let the new owner's do as they please.
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Postby Stoosh on Tue May 09, 2006 11:26 am

The new owners will do what they want.


Draftnik is right. The new owners will do what they want to a point. It's written into the proposal that if the IoC gets the license, the new ownership agrees to keep the team here because the arena will in fact be a reality at that point.

If IoC doesn't get the license, all bets are off. HOWEVER, at that point, Plan B should kick in and it's up to O'Connor and Onorato to stay true to their word about guaranteed victory. As part of getting this arena built under Plan B, they'll need to generate a lease agreement with the new ownership that will trump any lease agreement that any other potential destination city's arena could offer. Actually, the basic provisions of the lease agreement under Plan B can be drawn up before the slots license is awarded so the new ownership (which Sawyer predicts could be in place before the license is awarded) knows what it would be getting here.

All things being equal, if new ownership has an offer for a lease here that promises a greater share of revenues than the lease agreement in KC does, they'll keep the team here.
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Postby newarenanow on Tue May 09, 2006 11:34 am

Stoosh wrote:
The new owners will do what they want.


Draftnik is right. The new owners will do what they want to a point. It's written into the proposal that if the IoC gets the license, the new ownership agrees to keep the team here because the arena will in fact be a reality at that point.

If IoC doesn't get the license, all bets are off. HOWEVER, at that point, Plan B should kick in and it's up to O'Connor and Onorato to stay true to their word about guaranteed victory. As part of getting this arena built under Plan B, they'll need to generate a lease agreement with the new ownership that will trump any lease agreement that any other potential destination city's arena could offer. Actually, the basic provisions of the lease agreement under Plan B can be drawn up before the slots license is awarded so the new ownership (which Sawyer predicts could be in place before the license is awarded) knows what it would be getting here.

All things being equal, if new ownership has an offer for a lease here that promises a greater share of revenues than the lease agreement in KC does, they'll keep the team here.


It better be a sweet deal because no other city will the Pens be paying $4M a year under a Plan 'B'. And the guy from Toronto in this article seems set on moving the team, or any team for that matter to KC if he buys them. So if he offers the best price to the ownership group, and gets the team, I don't think a Plan 'B', no matter how nice the lease agreement, will keep the team here. And I'm sure there will be other groups like that.

Onorato is writing up the lease agreements now and want to 'talk' to the Pens about it as they are not allowed to negotiate. I also hope they have their update 'Plan B' meetings, since they have been postponed twice already.

This is going to be a very long process with a lot of ups and downs.
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Postby pfim on Tue May 09, 2006 11:55 am

So if he offers the best price to the ownership group, and gets the team, I don't think a Plan 'B', no matter how nice the lease agreement, will keep the team here. And I'm sure there will be other groups like that.


If the lease agreement trumps AEG's offer, he'd be stupid to move. And people with a lot of money usually aren't that stupid, or if they are greed takes over and they go for more money...

In the other thread, his quote was that the "priority is to keep the Penguins in Pittsburgh." Not that it means anything, but it doesn't seem like he's going to move the team to KC just to move it.
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Postby Draftnik on Tue May 09, 2006 9:06 pm

newarenanow wrote:
Stoosh wrote:
The new owners will do what they want.


Draftnik is right. The new owners will do what they want to a point. It's written into the proposal that if the IoC gets the license, the new ownership agrees to keep the team here because the arena will in fact be a reality at that point.

If IoC doesn't get the license, all bets are off. HOWEVER, at that point, Plan B should kick in and it's up to O'Connor and Onorato to stay true to their word about guaranteed victory. As part of getting this arena built under Plan B, they'll need to generate a lease agreement with the new ownership that will trump any lease agreement that any other potential destination city's arena could offer. Actually, the basic provisions of the lease agreement under Plan B can be drawn up before the slots license is awarded so the new ownership (which Sawyer predicts could be in place before the license is awarded) knows what it would be getting here.

All things being equal, if new ownership has an offer for a lease here that promises a greater share of revenues than the lease agreement in KC does, they'll keep the team here.


It better be a sweet deal because no other city will the Pens be paying $4M a year under a Plan 'B'. And the guy from Toronto in this article seems set on moving the team, or any team for that matter to KC if he buys them. So if he offers the best price to the ownership group, and gets the team, I don't think a Plan 'B', no matter how nice the lease agreement, will keep the team here. And I'm sure there will be other groups like that.

Onorato is writing up the lease agreements now and want to 'talk' to the Pens about it as they are not allowed to negotiate. I also hope they have their update 'Plan B' meetings, since they have been postponed twice already.

This is going to be a very long process with a lot of ups and downs.


The Pens are paying $3M per year under the IoC plan. Do you think Rendell pulled the $4M figure out of his ..... $4M gives him wiggle room to negotiate and get to the IoC figure without giving the Pens everything they want on his first offer.

It is amazing how you criticize Plan B when Rendell said he was giving the Pens the same basic agreement as the Pirates/Steelers (100% operating rights) yet you have no objective evidence to show how AEG can give the Pens a better deal in KC.

I don't think any logical person would expect Mario and his group to take less $$$ from a buyer willing to keep the Pens in Pittsburgh. On the other hand there is no logical reason to expect the Pens sale price to be higher in another city if that city can't offer the Pens 100% of arena revenue streams. If the Pens get a new arena from IoC or the same lease from Plan B they will remain here because the sale price would be highest here.
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Postby Draftnik on Tue May 09, 2006 9:28 pm

KCHockey wrote:What do you think the Pens are worth? Checkets paid $150 mil for the Blues. I think $150 mil for the Pens is about right, especially since they will have to play in Mellon for at least three more seasons.

Nobody watches NHL hockey in KC and there is no way they would get that kind of $$$ for regional rights.


The weekend NHL playoff games draw about a 1.5 rating on NBC in KC. What do they get in Pittsburgh?
http://www.kansascity.com/mld/kansascity/sports/columnists/jeffrey_flanagan/14485270.htm


The $150M for the Blues is not black and white. There is significant arena debt on Savvis Center that may/may not be inherited or retired with some/much of those proceeds. The fee definitely includes operating rights to reap 100% of all revenues/events at Savvis Center as well. It is hard to know the actual value of the team because of all the other variables in the deal.

The Blues deal is interesting because Checketts used an investment banking firm that is a turnaround specialist to finance the deal. Usually these types of firms try to get their $$$ out in 5-10 years with a high ROI. St. Louis is an excellent hockey market so it should be interesting to see what a couple of sharp guys like Checketts and Davidson do to make this the cash cow the investment banking firm thinks they are buying.

The Pens may still have debt from bankruptcy that could lower their sale price. Their alleged $7M loss this year could be from accelerated debt retirement or any other number of accounting machinations. It is impossible from the outside to objectively understand the true valuations of sports teams in most of these deals because of all the variables and related contracts for leases, TV deals, etc.

I did not see any local TV ratings for this past weekend.
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