Lemieux, Burkle explore sale of Penguins
The Pittsburgh Penguins are on the market.
The team confirmed Wednesday that co-owners Mario Lemieux and Ron Burkle have retained investment firm Morgan Stanley to facilitate a potential sale of part or most of the franchise.
“We conduct periodic reviews of our business, and because we have received several inquiries about the franchise in recent years, we decided to engage Morgan Stanley for their insight and counsel,” Lemieux and Burkle said in a statement released Wednesday night. “After buying the team out of bankruptcy, ensuring its long-term future in Pittsburgh and creating a strong foundation for continued success, we believe it is time to explore our options.”
Lemieux and Burkle bought the Penguins in 1999, Lemieux with equity converted from credit through the team, Burkle with an undisclosed infusion of cash. They were introduced through a mutual friend and have overseen the Penguins' winning the Stanley Cup in 2009 and opening Consol Energy Center in 2010.
Their asking price is unknown, but a team source said he believes Forbes' valuation of the franchise at $565 million — which ranks 10th highest in the National Hockey League — is low.
Neither Lemieux nor Burkle plans to relinquish ownership completely, as both want to retain a stake, Lemieux said.
“Our goal all along was to solidify the franchise both on and off the ice,” he said. “Our star players are signed to long-term contracts, they've got a deep and passionate base to support them, and I believe the Penguins are well-positioned for the future.
“Regardless of what happens, I plan on staying involved with the team in some capacity, and Ron and I plan to retain an ownership stake.”
Morgan Stanley helped facilitate the February 2011 sale of the Buffalo Sabres to billionaire Terry Pegula, a Penn State graduate who made his fortune in the oil and natural gas industries.
Lemieux told close friends last summer he wanted to sell all but a small portion of his share, holding a stake that would allow him to keep a title and use of a luxury box at Consol Energy Center, sources said.
A separate source said this process gained considerable steam, spearheaded by an appraisal of the franchise, during the past two weeks.
Regardless of whether Lemieux and Burkle stay on as minority owners, any move would have to be approved by the NHL's Board of Governors.
The NHL, including Commissioner Gary Bettman in comments to reporters before Game 1 of the Stanley Cup Final on Wednesday night, declined to comment. League sources said NHL brass are aware of Lemieux's and Burkle's interest to sell.
Penguins employees were told of the situation Wednesday, sources said.
The franchise reduced spending last season, including on travel for team employees, because ownership did not want to incur more losses due to interest in a possible sale, sources said.
The team last season was on the hook for about $5.5 million owed to former general manager Ray Shero and former head coach Dan Bylsma. The New Jersey Devils last month hired Shero as general manager, and Bylsma last week accepted the job as Sabres coach, freeing the Penguins of financial obligation to them.
Penguins CEO and President David Morehouse told Trib Total Media before this year's playoffs that there are no concerns about the franchise's financial health.
According to multiple sources, the Penguins budget for six home playoff games every year, games that net about $2.75 million per contest. The team played just two such games this year. That marked the Penguins' fewest since the 2007 playoffs.
The team has sold out 377 consecutive games dating to February 2007 and has led the NHL's U.S.-based teams in local TV ratings six years in a row.
It controls redevelopment rights at the old Civic Arena site. A $440 million Lower Hill District project broke ground in late March, the intent to bolster office, residential and retail development on the site. A vote by the Pittsburgh Planning Commission approved construction of the future U.S. Steel headquarters on the 28-acre site.
Lemieux and Burkle said the Penguins will have no further comment until the process with Morgan Stanley is completed.