Lemieux and Pens' co-owner offer to buy Pirates

[ZapRowsdower8]

http://www.post-gazette.com/pg/10030/1032299-100.stm

Mario Lemieux and Ron Burkle, co-owners of the Penguins, recently made an unsolicited offer to buy the Pirates in a face-to-face meeting with that team's owner, Bob Nutting, but the offer did not receive a response.

Sources on the Penguins' side last night described the offer made by Mr. Lemieux and Mr. Burkle as "very serious," without divulging a dollar figure, and said they remain interested in following up.

The Pirates characterized the matter far differently.

Mr. Nutting, the only person in the meeting to comment on it, was adamant that no serious discussion about a sale had taken place. And he firmly reiterated that the Pirates are not for sale.

"Honestly, I'm not sure there's a situation to describe," Mr. Nutting said last night when asked about the meeting. "I like Ron. He's an extremely competent businessman and deal-maker, and we've talked about a wide range of topics. But I think the simplest way to say this is that there never has been a substantive or formal offer for the team. The team is not for sale."

Mr. Nutting was asked if the Pirates ever have been for sale, since he took control of ownership in January 2007.

"The team has not been for sale and is not for sale," he replied. "I'm excited about where we are. We've made some tough decisions, made a lot of progress and, frankly, we're just getting started with where we're headed. A sale is simply not an option that's on our table."

Mr. Lemieux and Mr. Burkle could not be reached.

The Penguins, through a spokesman, declined comment.

"We don't discuss private business matters," vice president of communications Tom McMillan said.

Because the teams' stances on the meeting vary -- greatly in some aspects -- this is a story with two distinct sides.

According to sources on the Penguins side, the meeting happened four months ago at the Penguins' front-office headquarters in Chatham Center, Uptown. Mr. Lemieux, Mr. Burkle and Mr. Nutting were present, and the intent of the meeting was for the Penguins owners to offer to buy the Pirates. Mr. Burkle made a financial offer.

According to the Pirates, the purpose of the meeting was about another matter, and no serious discussion about an offer or sale took place.

The reasons Mr. Lemieux and Mr. Burkle would want to buy the Pirates will not be clear until they speak to that, though that is not expected soon, if at all.

One possibility, according to a source, is that a joint ownership of the Penguins and Pirates could create a business "synergy" that would allow one to pick up the other in tough times, and vice versa. It would help, the source added, that the NHL and MLB seasons have little overlap and that the teams currently have the same local television rights-holder in FSN Pittsburgh.

Major professional sports leagues once frowned on having their franchise owners venture into other leagues, but it has become more common in the past two decades. In this case, between the National Hockey League and Major League Baseball, there would be no issue other than that all potential new owners must be approved in a vote by fellow owners.

The city's hockey and baseball teams have been at polar opposites in recent years.

The Penguins are fresh off a Stanley Cup championship, have two of their sport's brightest stars in Sidney Crosby and Evgeni Malkin, have sold out Mellon Arena for 144 consecutive games and are about to move into the new Consol Energy Center.

The Pirates are fresh off a 17th consecutive losing season, had an average attendance last year of a little more than half the capacity of PNC Park, and will enter 2010 with a promising core of young players but a $35.6 million payroll that could be the lowest in the majors.

Forbes magazine estimated the Pirates' value last year at $288 million, with only the Florida Marlins below them. The Pirates have acknowledged being profitable the past six years, and have one of the most lauded stadiums in sports in 9-year-old PNC Park.

Mr. Lemieux, among the most accomplished and beloved athletes in the city's history, has had one previous venture into baseball: That came as minority owner of the Pirates' Class AA affiliate in Altoona when Pittsburgh attorney and friend Chuck Greenberg was the owner there earlier in the decade.

Mr. Burkle, the California grocery magnate whose net worth was estimated by Forbes magazine at $3.5 billion in 2008, broke into sports by joining Mr. Lemieux as co-owner of the Penguins with a $20 million investment in 1999. He also had expressed interest in baseball's Washington Nationals and Chicago Cubs when those franchises were for sale in recent years.

Mr. Greenberg and a group of investors last week reached agreement to buy baseball's Texas Rangers at a price of more than $500 million.

Mr. Greenberg previously had expressed a strong desire to buy the Pirates, his favorite team beginning with childhood, but his interest -- which was not believed to have reached the offer phase -- was rejected because, as he was told, the Pirates were not for sale. Mr. Greenberg was not involved in the offer made by Mr. Lemieux and Mr. Burkle.

Mr. Nutting has bought out several minority owners in recent years and now has a dominant stake, in the range of three-quarters.

My comments: MAKE THIS HAPPEN!!!

[JayJaxon]

Perhaps the Pirates need to be sold. It would make sense based off the reasoning given in the article.

[rvrdgsfn]

As much as I am no a Penguins fan, I think this is what the pirates need. Coming from a guy who's team has been in a losing season since 98, its time for a new direction.

[maz]

Yes Please

[BBTV]

While anything would be better than the current Pirates situation, and anything with Lemieux' name on it would certainly get the fans pumped up, it's not like the payroll is instantly going to shoot up to 80 - 100 million or anything like that. No matter who is running the club, there's still a revenue ceiling in a lot of markets - Pittsburgh being one of them. Now if this Burkle guy has extremely deep pockets from his other interests and just doesn't care about losing money, then that's a different story. What they could do is at least re-invest their profits back into the team - that would be an improvement. I'm just not sure that this would be as great as people are thinking, once the "new car" smell wears off. I hope it happens, because as long as they're not in the NL East, I kinda like the Pirates, but I just can't see any ownership group being able to turn this ship around.

I thought Lemieux was basically the owner based on the team not being able to pay him money that they owed him. Isn't he only invested <10% or something? He made a ton of money, but not "ownership" kind of money. I'm assuming Burkle is the guy with the cash, right?

[DustDevil61]

Well, current payroll limits aside, I think that this is a good thing--all in all--for the Pirates. For them, there's nowhere for them to go but up at this point.

[Lee.]

I would laugh heartily if Lemieux and Burkle bought the team, then reports started that the team would be ready to move to Winnipeg or Hamilton if a new stadium for the Pirates wasn't built.

[STL FANATIC]

Mark Cuban made a similar unsolicited offer a couple years ago, I believe. He was debunked.

Despite the fact that they aren't particularly good owners, they don't seem to want to move (ownership of) the franchise.

[Luigi74]

As long as the Nuttings can sit back and collect a fat check from the luxury tax they wont sell the team.

[rangerfan94]

Being a Buc fan since 1970,ANYTHING that can turn this team into at least a 500 record to begin, and then a playoff contender would be satisfing.

[maz]

I thought Lemieux was basically the owner based on the team not being able to pay him money that they owed him. Isn't he only invested <10% or something? He made a ton of money, but not "ownership" kind of money. I'm assuming Burkle is the guy with the cash, right?

I'm not sure on percentage of ownership or who has what, but I do know Mario is the chairman which, i'd assume, means he calls most of the shots.

[BBTV]

It's tough to find good info on the "partnership", but it looks like Lemieux was owed $30M, which was turned into equity. There's no way the team was worth 300M, so he's in less than 10%. I can't really find much about Burkle's part, but he's worth more than 3.5 billion, so while Lemieux might be the chairman (basically the face of the organization) and call a lot of the shots, it looks like the cash is really with Burkle, and in theory, he could probably take over. Not that any of this really matters at all to anything in this thread - I was just curious.

[mania]

Might I add how happy I am that the Pirates never sold to Greenberg?

[ElwoodCuse]

I would laugh heartily if Lemieux and Burkle bought the team, then reports started that the team would be ready to move to Winnipeg or Hamilton if a new stadium for the Pirates wasn't built.

yes Mario would demand a replacement for the best stadium in baseball

because it was so unreasonable that he wanted a replacement for Mellon Arena, which is the absolute worst arena in the NHL from both an amenities and financial standpoint with the possible exception of only the Nassau Coliseum

[Lee.]

I would laugh heartily if Lemieux and Burkle bought the team, then reports started that the team would be ready to move to Winnipeg or Hamilton if a new stadium for the Pirates wasn't built.

yes Mario would demand a replacement for the best stadium in baseball

because it was so unreasonable that he wanted a replacement for Mellon Arena, which is the absolute worst arena in the NHL from both an amenities and financial standpoint with the possible exception of only the Nassau Coliseum

You don't really understand me, do you?

[Gothamite]

While anything would be better than the current Pirates situation, and anything with Lemieux' name on it would certainly get the fans pumped up, it's not like the payroll is instantly going to shoot up to 80 - 100 million or anything like that. No matter who is running the club, there's still a revenue ceiling in a lot of markets - Pittsburgh being one of them.

I'm not sure that's correct. Every team receives somewhere between $35-50M from revenue sharing alone. Then there's the additional money teams get from the Yankees and Red Sox. I've heard (MLB keeps these figures close to the chest) that some small-market clubs get a check for somewhere around $75M. That's all before the first person walks up to the PNC park ticket window.

Now, the Pirates may be putting all that money into the farm system. Could be. But a new owner, if he wanted to, would have the potential to almost double the major league roster's payroll before even opening his own wallet.

[BBTV]

but by doubling the payroll, wouldn't they instantly lose some of that welfare? How many of the small market clubs have payrolls in the 70M and up range? (really - I don't know.) If none, are you saying that every single small market club is run by a cheapskate that pockets his revenue sharing? That just can't be the case.

[The_Admiral]

Well, we know for a fact that Glass and Loria did. Wolff and Nutting/the McClatcheys have been accused of it but I don't know if anyone's proven it.

[Gothamite]

but by doubling the payroll, wouldn't they instantly lose some of that welfare? How many of the small market clubs have payrolls in the 70M and up range? (really - I don't know.) If none, are you saying that every single small market club is run by a cheapskate that pockets his revenue sharing? That just can't be the case.

I don't know about all small market clubs, but I know with the Twins, Carl Pohlad pocketed the revenue sharing money for years. He was the example Steinbrenner always pointed to when he complained about having to subsidize smaller markets.

In part because of Pohlad's skimming, MLB changed its regs. The new rule is that revenue sharing must be put back into the team. Unfortunately, the specific rule is somewhat vague, just requiring that money must be used for "baseball operations" or some such. Some teams use it for major league payroll, some use it for signing bonuses for prospects, some use it for minor league and training facilities.

This is the best breakdown I've seen:

Money flow

In addition to things such as ticket and concession sales, each team receives significant revenue from two outside sources:

MLB's central fund

This is comprised of cash from national television, radio and cable deals, as well as merchandising and licensing contracts. The money is allocated based on relative revenue, so the so-called "small-market" teams get a bigger cut.

Revenue sharing

Each team puts 31 percent of its local revenue into a pool which is then evenly split among the clubs.

So yes, if the Pirates doubled their payroll, they'd lose some of the money they get. So instead of getting $75M, they'd maybe get $50M. But surely the increased attendance that a competitive club in Pittsburgh could bring to the ballpark would help soothe that pain.

[maz]

So, from what I understand is, they'd just make a smaller profit?

I'm not some greedy corporate owner, but Id sure as hell take being competitive and not being one of the biggest jokes and has-beens in the sport over making a few million more dollars. And judging from what they've done for the pens, I think Mario and Co. would take that also, especially when they're already going to be making a killing off the pens in their new barn for a while starting next year.