Thursday, August 31, 2006

Penguins to pay half -- KC Star erroneously reports

The Star hurriedly chimed in on the Fingold/30-day negotiation period story.

Thirty-day period over, but Fingold, who talked of bringing Penguins to KC, can still buy team

One of those issues likely centers on the arena situation. The main hope for funding a new arena in downtown Pittsburgh would be if the Isle of Capri is granted the city’s license for slot machines. The Isle of Capri said it would commit $290 million toward the new arena if it wins the license. But if one of two other companies receives the license, a secondary Plan B would provide only half the necessary funding of the arena, and the new owner likely would be responsible for the remaining costs.


Wow. That is very, very incorrect.
Penguins officials react cautiously to Rendell's backup arena plan

The governor's proposal would require annual debt payments of $18.56 million for 30 years. That money would include a voluntary $7.5 million annual contribution from whichever group receives the slots license; $7 million a year from the state new Gaming Economic Development and Tourism fund derived from slots revenue; $2.9 million a year from the Penguins'; and $1.1 million a year from naming rights and food and beverage sales at the arena.


From that where does anyone get "new owner likely would be responsible for the remaining costs [half]"

Let's get this straight
$7.5M per year from whomever is awarded slots license
$7M per year from Gaming fund
$2.9M per year from Pens (plus $8.5M up front)
$1.1M per year from naming rights


I went to the William Allen White School of Journalism at KU, twice, so I'm no math wizard, but I come up with the Pens paying 17% for the arena, not the misleading "remainder after half" that the Star quotes.

“It’s apparent to me that the Isle of Capri has to pass in Pittsburgh,” McGannon said. “If it doesn’t, the current Plan B would mean the current or future Pittsburgh ownership group would have to fund half the building. Well, the Kansas City deal is a better deal.”


What?
Is McGannon equally uninformed? Where do these guys get "half"?

Speechless. I'm simply speechless. The Star continues to take what AEG and NHL21 says at face value without questioning what they say or researching it to see if it is accurate.

Dear KC Star,
Here's a hint. When Fingold signed the LOI I put a note on my Yahoo! Calendar 30 days after the LOI. Then, I planned to post a story that day. Perhaps you could do the same thing in the future and be a little more timely.

Sincerely,
Your friend at www.kchockeybuzz.com

7 Comments:

At 8:48 AM, Anonymous Anonymous said...

I e-mailed Randy Covitz regarding the figures & here was his response...


Thanks for the figures. I had never seen it broken down that way. Still, $131 million _ or 37 percent of the costs _ is still a huge chunk for an owner when he could move into a brand new arena without any building costs. I'll certainly use these figures next time I write about the situation.
While the NHL _ and every league _ has by-laws regarding franchise shifts, the Raiders' Al Davis proved in a court of law that any franchise can relocate with or without the league's permission. That precedent will supercede any league's by-laws. Do you think the NFL approved the Colts' move from Baltimore to Indianapolis? Or the Browns' move to Cleveland?
Thanks for writing.
Randy Covitz
Kansas City Star

-----Original Message- ----
From:
Sent: Thursday, August 31, 2006 1:59 PM
To: rcovitz@kcstar.com
Subject: Your article....


Randy,
Reading through your article, I believe you are misleading your readers on a few points regarding the sale of the Pens.

1) Plan B calls for the other two bidders to provide $7.5million/year for 30 years or $225 million total. The team would be required to provide $4.1 million/year for 30 years plus $8.5 million (naming rights) for a grand total of $131.5 million. This represents approximately 37% of the total cost versus the half you reported.

Source: Pittsburgh Post-Gazette http://www.post-gazette.com/pg/06195/705791-61.stm

2) Section 36 of the NHL by-laws on franchise relocation list about 24 different areas of consideration that the league uses to determine whether or not to approve said relocation. Obviously, the major sticking point here is the new arena, but a viable plan such as Plan B (& of course, the IoC plan) should be enough to block a move. This is further bolstered that the state of PA has advanced $26.5 million to local officials to begin property acquisition & site preparation.

Sources: Pittsburgh Post-Gazette: http://www.post-gazette.com/pg/06200/706788-61.stm
Pittsburgh Post Gazette: http://www.post-gazette.com/pg/06199/706586-61.stm

While these sales are complex, it is not clear whether Sam Fingold will be able to finalize the purchase of the team, and it could go back up on the bidding block. It is also unlikely that the league will allow a move if a viable plan exists. Coupled with the fact that the Pens played before 93% capacity last season & had the highest jump in attendance post lockout (33%), the NHL would not be too keen on losing a proven market. While I understand that you are writing for a Kansas City audience, the Penguins leaving Pittsburgh is not a done deal.

 
At 9:05 AM, Blogger KCHockeyBuzz said...

$131M is incredibly deceiving. It should be stated in per year payments.

A team payment of 2.9M per year for 30 years plus the loss of naming rights revenue, which, I suppose, brings it to $4M to $4.2M.

However, the $4.2M payment is fixed.

Thirty years from now $4.2M will be the equivalent to, what, $1.7M 30 years from now (3% inflation).

 
At 11:29 AM, Blogger Max said...

Wow. Great work. How embarassing for the Star. I hope they run a correction.

 
At 9:40 PM, Anonymous Anonymous said...

I read your blog and enjoy it. Remember these figures are moving targets and political rhetoric as all these politicans are up for re-election in Nov of this yr. $131 million is 1/2 of a $262 million new arena...thanks for your passion, we will get a NHL team. Paul McGannon NHL21

 
At 11:48 PM, Blogger KCHockeyBuzz said...

Paul,
(if this really is Mr. McGannon)

Thanks for writing.

The arena isn't $262M. That is the initial cost of the building.

Plan B is asking for payments from all parties each year for 30 years, which is why the payment from the Gaming fund would be $7M per year for 30 years.

If the payment from the Gaming Fund is
$7M for 30 years
The Harrah's or Don Barden payment is $7.5M for 30 years
Pens payment is $2.9M for 30 years plus $8.5M up front
And, naming rights is $1.1M for 30 years

Then, how in the world do you figure the Pens are on the hook for half?

"Remember these figures are moving targets and political rhetoric as all these politicans are up for re-election in Nov"

How ironic. Like the political rhetoric thrown around before the Arena Vote?

 
At 9:49 AM, Anonymous Anonymous said...

True enough...but remember the Sprint Center is reality...these are all "plans" in Pittsburgh...a gaming board not the public will decide the fate of the Penguins, at least at the current time. The Sprint Center passed here because of people like you and I who believe in the NHL in KC. Paul McGannon NHL21

 
At 8:36 PM, Anonymous Anonymous said...

However,
Plans are all Pittsburgh needs to keep the Pens. Property is being bought up & a site will be prepared after Jan. The league wants the team in Pittsburgh & here it will stay....

See you at the new Pittsburgh Arena Oct 2009 for the start of the new Pens season...

 

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