Plan B in the works

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Postby ExPatriatePen on Wed Feb 22, 2006 1:57 pm

Draftnik wrote:Pittsburgh is the only city, IoC, Plan B, etc that will give the Pens the ability to run an arena so they can make $$$ off 200 dates, most of them non-hockey events. The Pens will lease the arena for a flat fee and control every single revenue stream.


It's not a given that the operation of a new Arena would make money. In fact, a FC / Ratner spokesman came out a few weeks ago saying their figures show the City would still be funding $119 Million for Arena operations.
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Postby ExPatriatePen on Wed Feb 22, 2006 2:06 pm

Zscout wrote:The team is for sale. The value of the the team has a lot to do with the arena situation.


So what? Are you proposing that Pens management run the team for a loss? Are you suggesting that FC / Barden aren't also looking for a profit from their respective license applications?

Zscout wrote:The team will bring in a modest return with a public arena deal, in fact, it may still not be profitable. It would also be tough to find an owner that would buy the team under these conditions.


Yes, there are no garuantees in business. Whats the news with that statement?

You're wrong in suggesting that a sale of the franchise would be difficult.

The NHL is done expanding for quite sometime. The only way to get in the game now is to buy an existing franchise. Recently a report was released stating that the average franchise value has already doubled from last summer. It's a basic example of supply and demand.

Besides Zscout, if Mario was solely interested in maximizing his payout from selling the franchise he wouldn't have attached a self-imposed caveat that could cost him and his group millions. He has stated numerous times for the public record that this group will not be responsible for moving the Pens. In other words, if they leave town, it would be under new ownership. That alone closes doors and limits his options.
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Postby Draftnik on Wed Feb 22, 2006 3:58 pm

ExPatriatePen wrote:
Draftnik wrote:Pittsburgh is the only city, IoC, Plan B, etc that will give the Pens the ability to run an arena so they can make $$$ off 200 dates, most of them non-hockey events. The Pens will lease the arena for a flat fee and control every single revenue stream.


It's not a given that the operation of a new Arena would make money. In fact, a FC / Ratner spokesman came out a few weeks ago saying their figures show the City would still be funding $119 Million for Arena operations.


It would make $$$ for the Pens. The deal is they would lease the arena from the SEA for a fee, say $3M per year. They would control all sponsorships such as naming rights, parking, concessions, suite leases, premium seating, etc for all 200 events. Right now the Pens control very little of that at Mellon Arena.

FC/Ratner are coming up with figures for infrastructure, land (city/county offered that for free already to someone willing to build), and who knows what else that the City/County/SEA are already prepared to chip in.
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Postby ExPatriatePen on Wed Feb 22, 2006 4:32 pm

Draftnik wrote:It would make $$$ for the Pens. The deal is they would lease the arena from the SEA for a fee, say $3M per year. They would control all sponsorships such as naming rights, parking, concessions, suite leases, premium seating, etc for all 200 events. Right now the Pens control very little of that at Mellon Arena.

FC/Ratner are coming up with figures for infrastructure, land (city/county offered that for free already to someone willing to build), and who knows what else that the City/County/SEA are already prepared to chip in.


Well, first of all, under the IoC plan, the Pens are responsible for all overages above $290 Million. Secondly, the final verbage has yet to be released so no one knows yet how the deal would be structured (Concessions, parking, naming rights, etc...).

Even given all that, you have no basis for saying the Pens would pay $3million a year. No one knows that number. Also, no one knows how many other events would be hosted or what the lease numbers would be for those events.

Finally, FC / Ratner has never qualified their numbers other than to use the $119 Million figure. They never mention if that was just for infrastructure or was for other expenses. If it was simply for infrastructure, they must be including a Maglev between the Arena and Sta. Square. Because that number is extrodinary.

Draftnik, you make statements like these facts are a given. They're not, it's pure conjecture at this time.
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Postby Draftnik on Wed Feb 22, 2006 4:42 pm

ExPatriatePen wrote:
Draftnik wrote:It would make $$$ for the Pens. The deal is they would lease the arena from the SEA for a fee, say $3M per year. They would control all sponsorships such as naming rights, parking, concessions, suite leases, premium seating, etc for all 200 events. Right now the Pens control very little of that at Mellon Arena.

FC/Ratner are coming up with figures for infrastructure, land (city/county offered that for free already to someone willing to build), and who knows what else that the City/County/SEA are already prepared to chip in.


Well, first of all, under the IoC plan, the Pens are responsible for all overages above $290 Million. Secondly, the final verbage has yet to be released so no one knows yet how the deal would be structured (Concessions, parking, naming rights, etc...).

Even given all that, you have no basis for saying the Pens would pay $3million a year. No one knows that number. Also, no one knows how many other events would be hosted or what the lease numbers would be for those events.

Finally, FC / Ratner has never qualified their numbers other than to use the $119 Million figure. They never mention if that was just for infrastructure or was for other expenses. If it was simply for infrastructure, they must be including a Maglev between the Arena and Sta. Square. Because that number is extrodinary.

Draftnik, you make statements like these facts are a given. They're not, it's pure conjecture at this time.


The Pens are paying the SEA $3M to run Mellon this year. It was in the bankruptcy settlement. They have leased those rights out to SMG or Aramark.

IoC will build the arena and give it to the SEA to lease back to the Pens. Since the SEA won't be building the arena under this scenario it isn't unreasonable to think the lease payment may decrease. The Steelers and Pirates get full naming rights/concession rights at both their stadiums. The Pens will want the same deal. Some of the parking lots around Mellon are city/private owned and probably would stay that way. Parking would be the only thing in question out of what I posted depending on how much of the St. Francis property is used for the new arena and surrounding development.

Why would anybody build a Maglev to SS when the T already runs the same route? I'm sure the FC/Harrah's numbers are loaded with fictitious worst case scenarios to make IoC look bad. Anything released by either party short of audited financial statements must be considered propaganda.
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Postby Ben Klingston on Wed Feb 22, 2006 7:59 pm

Zscout wrote:We will see if Lemieux LTD is more nterested in keeping the team in the city, or reaping huge profits out of the franchise. My guess is the second.




Your original quote.

I'm not disputing that an arena with ties to a casino, or an arena in another city, represents the larger profit for the Pens, most likely.

The original question, as I understood it, was whether the real interest is to reap a huge profit (i.e. by having casino ties or moving to a high-bidding city) or really keeping the Pens in Pittsburgh. Correct me if I'm wrong.

My opinion is that it's not necessarily about reaping a huge profit, it's about not taking a huge loss over the next few years if a Plan B comes into place. My opinion is that if a Plan B could be executed in time to have an arena in place in the same amount of time the 'casino' plan would have had it in place, the Pens stay, regardless of whether they could reap a bigger profit in the near and long term in another city. BUT, if a Plan B isn' t finalized, or if the plan is finalized but an arena won't be in move-in condition for say another 4-5 years, then asking the Pens to wait that long is unreasonable, regardless of how much more money another city would mean to them.

Bottomline: I don't think it's about the largest profit available. Its about not taking a loss for 4-5 more years.
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