Progress in arena talks

PHILADELPHIA -- The Penguins aren't packing for Kansas City just yet.
After more than four hours of talks last night, the team and state and local leaders reported "significant progress" in negotiations on a new arena, providing hope for fans just when it seemed as if the franchise might skate off to another city.

Joseph Kaczmarek , Associated Press Chuck Ardo, spokesman for Gov. Ed Rendell, takes a phone call from Gov. Rendell last in Philadelphia's City Hall, just prior to reading a joint statement from elected officials and the Penguins that negotiations will resume next Wednesday.

In a joint statement, the two sides called last night's session, the first face-to-face gathering since Jan. 18, "very constructive" and said they would meet again Wednesday, at a location to be determined.

Chuck Ardo, a spokesman for Gov. Ed Rendell who read the statement, said there would be no other comment. None of the principals were available for interviews.

The statement was issued more than four hours after Penguins co-owners Mario Lemieux and Ron Burkle and Gov. Ed Rendell, Mayor Luke Ravenstahl, and Allegheny County Chief Executive Dan Onorato convened about 7 p.m. in an undisclosed hotel in Philadelphia hoping to hammer out a deal that has escaped completion for more than two months.

Aiding the effort was National Hockey League Commissioner Gary Bettman, who traveled from New York to be part of the session, the first face-to-face meeting that involved both Mr. Lemieux and Mr. Burkle since Jan. 4. Reporters awaited the outcome at City Hall.

"We had a very constructive meeting where significant progress was made. The parties have agreed to meet again next Wednesday," Mr. Ardo said.

The positive news came four days after the two owners declared an impasse in the talks and vowed to aggressively explore a move. Since then, Kansas City, which opens the $276 million Sprint Center this year, has sweetened an offer for the team that already includes free rent and a split of the building revenues.

The offer was so good that Houston, one of the cities interested in the Penguins, dropped out of the bidding.

Despite the Penguins' vow to pursue other cities, Mr. Ardo said before yesterday's meeting the governor was "guardedly optimistic" that a deal still could be reached. He, Mr. Onorato and Mr. Ravenstahl have said they thought the parties were close to an agreement.

At the same time, Mr. Rendell and Mr. Ravenstahl would not rule out an appeal to the NHL to block a move by the Penguins, given the team's passionate fan base in Pittsburgh, which has led to sellout after sellout, and the arena deal on the table.

Mr. Ardo described the start of last night's meeting as "serious and business like."

The Penguins have offered to put up $4 million a year toward the arena - the same amount Mr. Rendell requested from them a year ago. The team contribution included $3.6 million a year in rent and $400,000 annually for capital improvements.

It also agreed to pay $500,000 a year for a parking garage as part of the arena complex.
Despite that, the parties have been unable to reach a deal. The rest of the arena funding would come from $7.5 million a year from Pittsburgh casino winner Don Barden and $7.5 million from a gambling-financed state economic development fund, up $500,000 from an earlier offer.

In their letter declaring the impasse, Mr. Lemieux and Mr. Burkle said they were concerned about the appeals of the casino award to Mr. Barden, saying the litigation creates more uncertainty about arena financing.

The Penguins had partnered with Isle of Capri Casinos Inc. in its unsuccessful bid for the license. Isle of Capri, which pledged $290 million for an arena as part of its proposal, is one of those appealing the award.

Sources close to the team also have complained about the treatment the Penguins have received from public officials, which included a table-pounding outburst by Mr. Rendell Jan. 18. Last week, the state refused to share interest rate information with the team, creating even more friction.

The letter declaring an impasse came even though Mr. Rendell, Mr. Onorato, and Mr. Ravenstahl thought the parties were close to a deal.

Among the remaining hang-ups were how to pay for an extra $20 million added as a contingency to a proposed arena bond issue. The extra $20 million increased the bond issue from $270 million to $290 million.

The parties also were in dispute over who would pay if the guaranteed maximum price for the arena came in above the available funding. The Penguins have agreed to pay for cost overruns, but only above the guaranteed maximum price.

Mr. Rendell said the parties had all but settled differences over development rights to the site of Mellon Arena, which would be demolished, and parking revenues.