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Keeping the Penguins in Pittsburgh November 16, 2006 Zack Baginski John Gross Gorana Smailagic Colby Whitman.

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Presentation on theme: "Keeping the Penguins in Pittsburgh November 16, 2006 Zack Baginski John Gross Gorana Smailagic Colby Whitman."— Presentation transcript:

1 Keeping the Penguins in Pittsburgh November 16, 2006 Zack Baginski John Gross Gorana Smailagic Colby Whitman

2 Overview Our recommendation Background information Three different options –Plan B –Stay in Pittsburgh –Relocate

3 Our Recommendation Plan B –Keep the Penguins in Pittsburgh –Construct new arena –Funding from casino, state, and team

4 Background Founded in 1967 Oldest arena in the country Some key players: –Randy Carlyle, Les Binkley, Rick Kehoe, George Sullivan –Mario Lemieux –Paul Coffey, Kevin Stevens, Rob Brown, and John Cullen from the minors –Tom Barrasso from the Buffalo Sabres

5 Background 1990s: Drafted Jaromir Jagr Mark Recchi, Joe Mullen, and Bryan Trottier signed as free agents Larry Murphy, Ron Francis, and Ulf Samuelsson League's best team

6 Background Formidable team throughout the 1990s The stars of the Stanley Cup years were followed by Martin Straka, Petr Nedved, Alexei Kovalev, and Robert Lang, Sergei Zubov, Kevin Hatcher, and Darius Kasparaitis

7 Background Filed for bankruptcy in 1998 Lemieux bought the team

8 Background Not much has changed over the past 8 years The team doesnt want this to happen again, therefore a new arena is a must

9 Plan B Overview Created in case Isle of Capri deal falls throughCreated in case Isle of Capri deal falls through Still allows for construction of arenaStill allows for construction of arena Relies on bid-winning casino, the Penguins, and the stateRelies on bid-winning casino, the Penguins, and the state

10 The Arena Cost: $225m 18,000 seats Lower Hill District

11 The Arena

12 The Site

13 Plan B Finances Over 30 years… –$7.5m/year from casino –$7m/year from state fund –$2.9m/year from Penguins –$1.2m/year from naming rights –$8.5m upfront from Penguins Total of $563.5m

14 Additional Plan B Information Majestic Star has already agreed –Plan B payments –$350m to Hill District No taxpayer dollars Generates needed tax revenues Ed Rendell supports plan

15 Staying in Pgh: Financials Total revenue: $71 million (includes ticket sales, parking) Steelers revenue: $187 million Pirates revenue: $125 million

16 Staying in Pgh: Financials Cheapest Ticket Price: $35 Most expensive Ticket Price: $140 Salary Floor: $21,500,000 $37m Player Expenses Home Games: 41 Avg Attendance: 15,804 (05-06 season) Sell Out Capacity: 17,537 seats –90% attendance

17 Staying in Pgh: Pros Politics –Rendell, County Chief Exec Dan Onorato, Mayor Ravenstahl, and City Council want to keep Penguins in Pittsburgh

18 Pros 650,000 hockey fans per season Young, affluent fans –57% of fans are years old –1 in 4 attendees have a household income of at least $100,000 –1/3 of women 35+ are fans –45% of men 35+ have watched a game

19 Cons Last December, Penguins projected $7 million US loss this season That was assuming the team drew near- capacity crowds and advanced to Round 2 of Stanley Cup playoffs

20 Potential Solutions Penguins and the SEA to negotiate a long- term lease for the Mellon Arena for $1 million per year Penguins can tap into non-hockey events –Advertising and concessions Market the arena for concerts, ice shows and other non-hockey events

21 Potential Solutions Directly appeal to community for money –Winnipeg If the Penguins are truly a valuable asset to Pittsburgh, then there must be corporations and individuals who benefit substantially from the presence of the team

22 Other Teams Relocation St. Louis Blues and Los Angeles Kings in 1999 reported substantial losses in the last few seasons NHL season, the Ottawa Senators (Corel Centre built in 1996) and Buffalo Sabres (HSBC Arena, 1996) declared bankruptcy Four more teams, none with an arena more than 10 years old, are for sale

23 Kansas City make chart of related teams and avg ticket prices. Hobbies/what people spend $ on Sprint Center –Opens Fall 2007 Seating capacity 18,000+ –72 Luxury Boxes »Average Price of $110,000 Downtown Construction –$3 billion worth underway –More activity and investment than any other U.S. city

24 Kansas City (contd.) Metropolitan area population of 1,947,694 Median income (household) of $37,198 Median income (family) of $46, % of population below poverty line

25 Houston No new arena currently under construction –Would use Toyota Center Seating capacity of 17, Luxury Suites 2,500 space parking garage connected to arena Metropolitan area population of 5,300,000 Median Income (household) of $36,616 Median Income (family) of $40,443 19% of population below poverty line

26 Portland No new arena currently under construction –Team would use Rose Garden Arena Opened in 1995 Also used by Portland Trail Blazers Seating capacity of 17, Luxury Suites Metropolitan area population of 2,000,000 Median income (household) of $40,146 Median income (family) of $50, % of population below poverty line

27 Las Vegas No new arena currently under construction –Must use Orleans Arena Seating capacity of 9,500 Las Vegas worries NHL because of sports betting Metropolitan area population of 1,700,000 Median income (household) of $44,069 Median income (family) of $50, % of population below poverty line

28 Largest city in Canadian province of Manitoba Population 619,544/ Metro 706,900 Pop. Growth.05%/year 2004: 4th highest crime rate among Canadian cities AHL Team: Manitoba Moose (minor league) 1996: Winnipeg Jets moved to become the Phoenix Coyotes (NHL) Current Arena: MTS Centre (133.5 million, 2004, 15,003 seats, 48 luxury suites) Median Family Income: $46,698 27% of Familys Incomes < $30,000 Winnipeg, Manitoba (talk about it)

29 Population 121,578 / Metro 1,188,241 Median Household Income: $24,820 Median Family Income: $27,051 Population living in Poverty: 30% (no discretionary income) Current Arena: Hartford Civic Center (15,635 seats, 46 luxury suites, 1975, $75 million) 1997: Hartford Whalers moved to Raleigh, NC to become Carolina Hurricanes Why they left? The primary factors in the Whalers departure from Hartford were market size and lack of modern playing facility. In close proximity (2hr. Radius) with 4 other NHL teams Hartford, Connecticut

30 Check and see if crosby is from here City in province of Ontario, Canada Population 490,268 / Metro 714,900 Median Household Income: $47,855 Median Family Income: $58,396 Current Arena: Victor K. Copps Coliseum (17,500 seats, 0 luxury suites, 1983, $35.8 million) NHL Lack of Approval: Buffalo Sabres and Toronto Mapleleafs are located too close; those teams would lose revenue if Hamilton had a NHL franchise. Hamilton, Ontario

31 Columbus, Ohio Population 711,470 / Metro 1,708,625 Median Household Income: $37,897 Median Family Income: $47,391 Current Arena: Nationwide Arena (18,136 seats, 78 luxury suites, 2000, $165 million) Columbus is considered a "typical" American city; often used as test market for products

32 Columbus Arena Financing Nationwide Insurance build a privately funded arena for the new team. While arena is being built by the insurance company, the county's convention authority invested $11.7 million in buying land for the arena. It will get $150,000 a year back during the arena's first 10 years, $165,000 a year back from year 11 to year 25, then $165,000 plus an inflation adjustment through the arena's 50th year. The payments will be made from the $3 million a year the NHL Blue Jackets will pay annually in lease payments. After 10 years, the team's lease grows to $3.3 million and any agreed-upon increases. At the end of 50 years, the convention authority owns the arena unless Nationwide exercises an option to buy it.

33 conclusion several more hockey nights in pittsburgh its a great day for hockey (intro?)


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