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Penguins Penguins deny team is on the block

Lemieux's salary doubled; Site purchased for a new arena is now for sale

Thursday, October 02, 2003

By Dejan Kovacevic, Post-Gazette Sports Writer

The Penguins are paying owner and star player Mario Lemieux $10 million this season, nearly double what he made a year ago.

They also have put up for sale a vacant hospital building across the street from Mellon Arena, a site the Penguins had purchased three years ago with the intent of erecting a new home.

But Ken Sawyer, the Penguins' president, yesterday vehemently rejected suggestions that either move should be viewed as a harbinger that the team is up for sale.

"I can tell you we're not preparing to sell or go out of business," Sawyer said. "We're trying to do everything we can to make the Penguins a successful organization in Pittsburgh for the long term."

Still, political and business leaders who were aware of the two moves -- both executed within the past three months -- are concerned they are indicators the city's 37-year-old National Hockey League franchise will soon be sold. It is not uncommon for businesses to cash in assets or sell off parts shortly before going up for sale. The Penguins are not tied to Pittsburgh beyond the expiration of their Mellon Arena lease in 2007.

Lemieux, 37, made $5.25 million as a player in the 2002-03 season and roughly $200,000 for his duties as chairman and chief executive officer of the Penguins.

His deal for the coming season, which begins Oct. 10 for the Penguins, still calls for a salary of $5.25 million as a player, according to the contract filed with the NHL Players Association. But the Penguins' ownership committee decided this summer to boost his pay for off-ice duties to $2.25 million and add $2.5 million in deferred compensation. Lemieux, who is the controlling partner but does not own a majority of the company, does not participate in votes on his pay.

Sawyer said yesterday the board agreed Lemieux was overdue for a raise.

"In the cases of both contracts, it's our judgment that his worth as a player and CEO has always exceeded market value for his contributions on and off the ice," Sawyer said. "It's hard to challenge that, I think. His worth in terms of ticket sales and corporate sponsorships is enormous, and he has never been compensated at full value for that. For everything he's done for the Penguins, we wish we could pay him more."

The NHL's highest-paid players are Peter Forsberg of the Colorado Avalanche and Jaromir Jagr of the Washington Capitals, both of whom earn $11 million. Lemieux, who remains the game's premier gate attraction and still ranks among its elite players, has had the same playing salary for three years.

When Lemieux announced July 31 that he would return for 2003-04, the Penguins said only that he would be receiving his same playing salary. Sawyer said yesterday the raise was never mentioned because of company policy.

"We don't discuss salaries of any executives," he said. "Why now?"

The Penguins also did not reveal publicly that they had put up for sale the former St. Francis Central Hospital on Centre Avenue, across the street from Mellon Arena. It has been listed with CB Richard Ellis for $15 million since late August.

The Penguins purchased the building for $8 million in November 2000, saying that they wanted to secure land for a new arena. That was a point they made frequently after that when describing their potential private contribution to the project, the total cost of which could be as high as $278 million.

But Sawyer said yesterday that the team hoped at the time that the city, county or Sports & Exhibition Authority would take it off their hands within a year. Sawyer estimated that the team was paying more than $1 million annually toward the building for mortgage, property taxes and maintenance.

In May, Sawyer informed Mayor Tom Murphy, Allegheny County Executive Jim Roddey and SEA Executive Director Steve Leeper of the Penguins' intent to sell the building.

"We were expecting a financing deal from the SEA within a year, and it's now costing us more than $1 million a year to carry," Sawyer said. "We're trying to operate as fiscally sound a business as we can. We lost money as an organization last year, and we'll probably have losses this year. That building is not something we feel we should carry."

The SEA's Leeper declined comment.

Several proposals have been floated to finance an arena for the Penguins, who claim they need a new facility to remain competitive. Sawyer said the team expects to know the fate of its new arena within two months and that the hospital building was put up for sale so that it could be sold as quickly as possible if the arena deal falls through.

Roddey called the Penguins' decision to put the building up for sale "a positive move" because he feels a new arena would be cheaper to build on the site of Mellon Arena. Sawyer did not rule out building on the Mellon Arena site, saying that it is the likeliest scenario if the hospital building is purchased before arena financing is in place.

Roddey added that he had no issue with Lemieux's raise.

"For a player of his stature and what he means to the game, Mario is probably still underpaid," he said.

Sawyer reported the Penguins lost between $2 million and $3 million last season. The team has pared roughly $8 million from its payroll since last year, although that figure may change dramatically in the next few days. General manager Craig Patrick is trying to sign goaltender Marc-Andre Fleury, the No. 1 pick in the June NHL Entry Draft, by a Monday deadline. No. 1 draft picks can cost as much as $5 million annually.


Dejan Kovacevic can be reached at dkovacevic@post-gazette.com or 412-263-1938.

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