This Day in Hockey History – September 1, 1999 – Super Mario Levels Up

Sep 1, 2019

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Some people only go up, never taking it easy. Mario Lemieux skated for 12 seasons with the Pittsburgh Penguins, retired in 1997, and was immediately inducted into the Hockey Hall of Fame. Other retirees might look for a nice hobby. Lemieux took the sour lemons of still being owed millions in deferred salary and turned that into the lemonade of saving the team from bankruptcy by becoming its owner. On September 1, 1999, the NHL Board of Governors approved Lemieux’s ownership application.

As Lemieux was heading into retirement, the Penguins were heading into financial disaster. They finally had to declare bankruptcy in November 1998. Everyone wondered whether they would relocate or even fold completely. They still owed their recently retired superstar over $32 million in deferred salary, which made him their largest creditor. Lemieux made an offer they could not refuse. He would turn $25 million into an equity stake to give him controlling interest in the franchise. As majority owner, he would insist on keeping the team in Pittsburgh.

Lemieux had not really considered owning a team when he retired as a player. “I think this was an unusual situation because of the team defaulting in my wages and the team going into bankruptcy. That gave me an opportunity to buy the Penguins. It’s pure circumstances. In a way, there’s a sad side of it, because I didn’t get paid for my services. But I certainly welcome the opportunity to come back to the game and be a big part of it.” As his reason for choosing to become an owner, Lemieux explained, “I think there’s a lot of upside to the game. I see the future as very bright for the NHL. At the same time, it was important to me to keep the Penguins in Pittsburgh. They’ve been a big part of my life for 15 years.”

In order to own the team and dig it out of bankruptcy, Lemieux (with his group of investors and attorneys) had to jump through a lot of hoops. First, back on June 24, they received preliminary approval from the U.S. Bankruptcy Court to go forward with the plan. The attorneys then had to work with the insurance companies, who were owed a total of $22 million.

On August 31, negotiations with the Civic Arena landlord, Spectacor Management Group (SMG), lasted from 7:30 am to 1 am. Lemieux’s attorney Doug Campbell commented, “This came down to the wire. It’s like, don’t try this trick at home.” With these last-minute talks, Lemieux agreed to pay SMG $1.5 million (at closing) so that SMG would not seek damages. In addition, SMG would have a seat on the nine-member board of directors but would not have a partnership interest in the Penguins. Around the same time, Lemieux and Fox Sports Pittsburgh worked out a deal for Penguins’ coverage.

The NHL Board of Governors met at St. Regis Hotel in Manhattan at 1 pm on Wednesday, September 1st. Before Lemieux could even say anything about his application for ownership, he knew things would go the way he hoped. “I walked in and they all stood up and applauded.” Commissioner Gary Bettman explained, “Mario as a player has generated a great deal of respect. And I think people were delighted that the effort has been made, as only Mario could have done, to save the Penguins in Pittsburgh.” Penguins GM Craig Patrick praised, “Mario’s got more character than anybody I’ve ever met. … He’s got so much drive and determination that it’s going to be a thrill to work for someone like him.” The NHL Board not only approved his application, they voted for it unanimously at 30-0.

By that point, Lemieux’s group of investors had added to his $25 million for a total of $52 million to put towards the purchase. They hoped to find more investors to raise another $10-$15 million more. Lemieux said, “We’ve been talking to a lot of people lately, and I think most of those people wanted us to close first and see the final documents. I think we have a good opportunity to go out and raise more money and make this a solid franchise.”

The final step to pulling the franchise out of bankruptcy was a hearing scheduled for September 3. U.S. Bankruptcy Judge Bernard Markovitz also had to approve the sale. The court liked Lemieux’s plan to ensure all creditors (including Societe Generale bank, Bank of America, co-owner Roger Marino, unsecured creditors, and the NHL) received payments. With the court’s approval, Lemieux officially owned the Pittsburgh Penguins, making him the first former player to become owner of a major professional sports team.

Naturally, Lemieux was glad it had all come together. “It’s a great feeling and a big relief. Bankruptcy is a very difficult process. I had no idea it was this difficult to put a deal together. There were a lot of different parties … SMG, Fox, all the banks, the senior lenders … there were a lot of moving targets. That’s what made this so difficult, especially down the stretch. That’s why I’m just glad we were able to put everything together. Even in the last couple days, there were things that needed to be resolved, and they were.” As for himself, he remarked, “I’m certainly excited to come back to the game after a couple years. It’s really a dream come true. After these last 10 months of working hard on this deal, trying to keep the Penguins in Pittsburgh, I’m very excited about the opportunity.”

With his new role, Lemieux would serve as president, chairman, and CEO. He planned to focus on the business side and let GM Craig Patrick handle the hockey side. “That’s where I’m going to spend most of my time and surround myself with some smart people, people who have been successful.” He felt that his perspective as a former player would benefit him both with the NHL Board of Governors and as team owner. “I think I have some pretty good ideas to make the game better for the players and the fans and for television. Hopefully, I’ll have some input in the future, but I’m still a rookie in this game.” He felt that more athletes may look to invest in teams, but he advised, “They’ve got to have their hearts set on it, which I did from the start. And that was natural for me because I spent my whole career in Pittsburgh.”

By and large, Lemieux’s plan worked. In the first season, the team actually managed to scrape their way into the black with a small profit. Within the first six years, the Penguins were able to repay all their debts.

Most would assume there is no place to go but downhill from there. Not for Lemieux. In 2000, he decided to return to the Penguins as a player, becoming the first player-owner in modern major professional sports. He even became captain again in 2001. Though plagued by injuries, Lemieux remained a player until retiring again on January 24, 2006. As a player and owner, he had to juggle some points of conflict. For example, he paid dues but was not a member of the NHL Players Association, and he had a VP vote in owners’ meetings. When a sale for the team fell through in 2006, Lemieux not only has remained owner but also ensured (thanks to an arena agreement) that the Penguins would stay in Pittsburgh for at least the next 30 years. Since then, Lemieux’s team has won him three Stanley Cup championships.