Originally created 05/29/99

Judge puts one buyout proposal on hold; fans rally for team

PITTSBURGH -- A proposal to buy the Pittsburgh Penguins was put on hold Friday while attorneys argue over whether the team's arena lease should be dissolved.

A bankruptcy judge Friday refused to grant preliminary approval to a buyout plan by Civic Arena landlord SMG Inc. and broadcaster Fox Sports Net Pittsburgh until the lease question is resolved.

"It was a good day. Today the Titanic hit an iceberg," said attorney Doug Campbell, referring to SMG.

Campbell's client, retired Penguins center Mario Lemieux, has presented a competing plan to keep the team in Pittsburgh.

Also Friday, U.S. Bankruptcy Judge Bernard Markovitz indicated he would allow the Penguins to set up an escrow account to protect season-ticket buyers if the team leaves town. He also said the National Hockey League does not have to reveal the name of a mystery buyer willing to pay $85 million to move the team.

Markovitz suggested SMG stands a chance of losing the lease, which was scheduled to continue through 2012. He added that the SMG-Fox buyout won't be approved until the lease issue is decided. He scheduled another hearing for next Friday.

If the SMG-Fox proposal fails, only Lemieux's buyout plan would remain to keep the team in Pittsburgh. An NHL plan would dissolve the team.

Lemieux, the team's former star center, said he would continue negotiating to try to find a plan to make everybody happy.

"Every day is very important from now on," he said outside court. "I want to make deals with people to get this thing going within the next couple of weeks."

He pointed to a noontime downtown rally Friday to "Save the Pens" in which fans presented an Internet petition bearing 63,000 names asking city officials to keep the team in town.

"I think everybody gets the feeling they're running out of time," Lemieux said.

Lemieux said he was happy that the judge gave credence to the team's request to end the SMG lease.

Penguins' lawyers contended the lease is actually a loan that is mostly paid off.

When Howard Baldwin bought the team in 1991, SMG provided $24 million toward the purchase price. As a result, the team pays an estimated $6 million to $7 million per year to SMG, payments Penguins officials say helped drive the team into bankruptcy and are preventing a financial recovery.

SMG President Wes Westley has said player salaries and cash withdrawals by team owners were more significant causes of the Penguins' financial woes.

Penguins attorney Robert Sable calculated that the unpaid lease balance is under $3 million, assuming a 9 percent interest rate on the loan.

The Penguins' request to throw out the lease "appears to have enough substance for further review," Markovitz said.


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