Penguins, Isle of Capri Reach 11th Hour

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The New York Sun

The Pennsylvania Gaming Control Board will vote tomorrow on who will receive Pittsburgh’s lone slots license. Among the candidates are the Isle of Capri and the Majestic Star casino companies. Professional sports owners have always had an uneasy relationship with gambling. Owners have gone out of their way to make sure games are played on the level. If someone is caught betting on or throwing a game, in most cases, they will face permanent suspension. But sports owners appear to have no qualms about promoting legalized gambling, if accepting casino and lottery money for advertising is any indication. Nor are they turning away cash for new facilities generated from legal gambling.

About a year ago, the Pittsburgh Penguins ownership, led by Mario Lemieux, entered into an agreement with the Mississippi-based Isle of Capri Casinos and Nationwide Realty Investors to build a new arena. Under the terms of the deal, Pennsylvania would grant the casino company a license to operate a slot parlor in Pittsburgh, and Isle of Capri would in turn pay about $290 million toward the cost of constructing the arena. The Penguins’ ownership also would hold no equity in the newly built casino. Soon after the agreement was drafted, Lemieux’s group sold the franchise to Ontario businessman Jim Balsillie, who agreed to the Isle of Capri plan, maintaining that it was “imperative that the Penguins have a new arena.” But on Friday, Balsillie suddenly withdrew his bid to buy the Penguins franchise, after negotiations with the league to finalize the purchase agreement broke down.

Still, the Isle of Capri arena plan is the only one the NHL Commissioner, Gary Bettman, wants to discuss, so he and the league are playing the waiting game for now. Tomorrow the PGCB will decide among the three applicants.

The Isle of Capri, Majestic Star Casino (operated by PITG Gaming, LLC), and Bruce Ratner’s — yes the same Bruce Ratner who is attempting to build an arena and mixed-use development in Brooklyn — Forest City Enterprises–Harrah’s Entertainment partnership all are in the running for the coveted gaming license. Both Majestic Star and Forest City Enterprises–Harrah’s are prepared to set aside a portion of their casino earnings to help fund a new Pittsburgh arena, but Bettman is keen on the original Isle of Capri deal.

So is the influential Pittsburgh Gaming Task Force.

As far back as the final stages of the rebuilding of Baltimore’s Inner Harbor seaport city, which included the Orioles’ Camden Yards stadium, opened in 1992 — sports has been accepting gambling money for facilities. Spending the proceeds from casino operations to build a hockey facility also is nothing new for the NHL or for pro sports.

Baltimore’s Camden Yards ballpark and football stadium were built with funding generated by the Maryland state lottery. The National Basketball Association granted a casino — the Mohegan Sun — ownership of a franchise in the Women’s National Basketball Association and has allowed the owners to name their team the Connecticut Sun, after the casino. The casino operators became the first non-NBA owners of a WNBA franchise. The National Hockey League cut a deal with Alberta, Canada that allows the Canadian province to use NHL team names in a hockey lottery; a portion of the proceeds from the lottery are passed on to the league’s Calgary Flames and Edmonton Oilers franchises.

What will happen to the Penguins if the Pennsylvania Gaming Control Board decides to award the slot license to Majestic Star or Forest City Enterprises and Harrah’s? Will current owner Lemieux and the NHL — now that Balsillie has withdrawn his offer to buy the franchise — talk to the business developers or will the league allow the franchise to be sold to owners who may move it elsewhere?

Lemieux’s contract with the city to rent the Penguins’ Mellon Arena expires at the end of the season, when Lemieux would be free to relocate. But is there an alternative at this point, other than trying again to work out a different Pittsburgh arena deal?

The answer is no.

The only viable option would seem to be Kansas City and its new arena, but city officials are already planning to open the building next summer without an NBA or NHL team. If Lemieux wanted to move his team to Portland or Houston, he would be a tenant and the lucrative arena revenue sources would be going to Portland or in Houston, to Rockets owner Leslie Alexander, who controls the downtown Houston arena lease. And Alexander has been pursuing an NHL franchise for the past decade, so neither Portland nor Houston would work economically for Lemieux’s group.

There have been some rumblings from Hartford, Conn.,that the city wants to build a new arena for an NHL team, but Hartford is done as an NHL city. Seattle SuperSonics owner Clayton Bennett wants an NHL team in his proposed new building somewhere in the Seattle area but that building is years away from ground breaking, if it gets that far. Additionally, Bennett doesn’t want to own an NHL team, but rather wants to lease the building, which may not be an appealing arrangement for Lemieux’s group.

Mayor Goodman of Las Vegas has been searching for a Major League Baseball team for years, but has repeatedly struck out in getting MLB spring training complexes built or attracting an MLB, NHL, or NBA team. But Goodman has landed the 2007 NBA All-Star Game and could talk to Lemieux about bringing his Penguins to “Sin City.”

Gambling has not been the root of Goodman’s and Las Vegas’ problem, it’s that the city lacks an economy that could support big league sports.

It’s doubtful that Lemieux and the NHL are open to considering Canadian cities such as Hamilton, Ontario, or — two former NHL cities — Winnipeg and Quebec. Those three cities pose major shortcomings: Winnipeg has an NHL-caliber arena, but not the corporate base or television market required to succeed; Quebec needs an arena; and Hamilton has an arena but is too close to Toronto and Buffalo. It would cost a fortune to pay off the Maple Leafs’ and Sabres’ ownership for infringing upon those franchises’ territorial rights.

Another option seems even less likely. Relocating the Penguins to the Kitchener–Waterloo, Ontario, area, which lies beyond Maple Leafs territory, seems viable on the surface. But the considerable drive and distance from Toronto’s big money residents renders it an unlikely choice. The NHL, like all sports, is always after well-heeled customers, not less well off, die-hard fans to fill an arena.

Toronto could easily support a second NHL team, but it seems unlikely the Maple Leafs’ owners would allow that to happen.

Which means there could be a Plan B in Pittsburgh, just like there was after voters in the city vetoed a plan to build a new baseball park and a new football facility. Right now Bettman is concentrating solely on the Isle of Capri bid, sending a clear message to Pittsburgh, Allegheny County, and Harrisburg elected officials that he wants the members of the PGCB to hand their approval to the Isle of Capri proposal.

Governor Rendell of Pennsylvania claims there is a Plan B on the table, but no one seems very interested in that right now. Tomorrow, the PGCB will make its decision, and the future of NHL hockey will rest in part on the pull of a one-armed bandit in the guise of a politically appointed group in Harrisburg — the Pennsylvania Gaming Control Board.


The New York Sun

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