Asking price for Penguins franchise said to be at a record $750M
The Penguins are asking for a record $750 million for the franchise but might accept less if a potential buyer is willing to forgo development rights on the old Civic Arena site, sources told Trib Total Media on Wednesday.
Government officials said the ownership group, led by Mario Lemieux and billionaire Ron Burkle, could sell the team and retain the exclusive development rights to the 28-acre site. The team formed a separate but affiliated legal entity — Pittsburgh Arena Real Estate Redevelopment LP — to oversee the development project, records show.
The city's Urban Redevelopment Authority and the city-county Sports & Exhibition Authority would have to sign off on such a deal, said the officials, who requested anonymity out of fear of interfering with the process. The agencies own portions of the former arena site.
If the Penguins get their asking price, it would be the most paid for a U.S.-based NHL franchise, more than doubling the previous high of $320 million that Josh Harris paid for the New Jersey Devils in 2013. It would be significantly more than the $565 million Forbes estimated the Penguins were worth last year.
“If they're asking that, it doesn't mean anybody's going to be willing to pay that much. But it could be the starting point of the negotiation,” said Brad Humphreys, a sports economist at West Virginia University.
Sports investment advisers told the Trib the asking price has become public knowledge in their circles.
The Penguins on Wednesday declined to comment. When it announced the hiring of Morgan Stanley on June 3 to explore a sale, the team said in a statement that it would have no further comment until the process is complete.
Finalizing such a large deal would be another in a series of big-money accomplishments for Don Cornwell, one of the top deal makers in sports.
Cornwell works for PJT Partners, one of the banking firms the Penguins hired to work on the sale.
His resume includes three of the most lucrative sports deals of all time: the $1.32 billion sale of the Toronto Maple Leafs to Canadian telecommunications companies Rogers and Bell in 2012, the $1.4 billion sale of the Buffalo Bills to natural gas mogul Terry Pegula in 2014 and the $2.3 billion sale of sports talent and marketing agency International Management Group to entertainment talent agency William Morris Endeavor in 2013.
Cornwell, 44, is a New York native who earned a degree in government from Harvard and an MBA from Stanford before working in various capacities for the NFL out of college. He was hired by Morgan Stanley in 1998, eventually leading the firm's investment banking sports practice. Last year, he joined PJT, a breakaway company formed by former Morgan Stanley executive Paul Taubman.
Cornwell worked on the restructuring of Steelers ownership in 2008. Steelers president Art Rooney II declined to comment on Cornwell's role in the restructuring.
Cornwell also declined to comment.
There are several ways a sports banking adviser such as Cornwell could influence a potential Penguins sale.
First, he could round up prospective buyers, which is a sports banking adviser's most important job. Given the potential price tag, it's not necessarily an easy task.
“There's not many human beings that can write that kind of check,” Cornwell said at Bloomberg Sports Business Summit last year, speaking generally about the franchise-buying process. “When you run around and try to find buyers, you end up with lots of groups, and as I think we can all attest, it's like herding cats. Trying to get three people worth $800 million to come together to write a check and buy something together is hard to do.”
An investment banking adviser can work on the presentations the team makes when it hosts management meetings. The Penguins entertained potential buyers three weeks ago.
In face-to-face meetings such as those, Cornwell could be a seller's ace in the hole. After all, he twice finished in the money at World Series of Poker events.
“A good investment bank rep for a seller helps to find ways to play up the value points. They're salespeople,” said Jonathan Altman, a lawyer for the Downtown firm of Sherrard, German & Kelly who worked for Pegula on the Bills sale. “They're essentially trying to make whatever it is they're selling more attractive to a buyer.”