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Rigas’ plans included Pirates in ’95 |

Rigas’ plans included Pirates in ’95

Lou Ransom And Michael Yeomans
| Thursday, July 25, 2002 12:00 a.m

John J. Rigas, founder and former chairman and CEO of Adelphia Communications, nearly became a household name in western Pennsylvania with his 1995 near-miss in buying the Pittsburgh Pirates.

He went on to build an extensive local subscriber base for his Coudersport, Potter County-based cable empire.

Rigas, 77, and several other former company executives — including two of his sons — were arrested Wednesday on charges they looted the now-bankrupt cable company of billions of dollars.

The other defendants include Rigas’ sons Timothy, a former company chief financial officer, and Michael, also a former company executives; along with James R. Brown, a former vice president of finance; and Michael C. Mulcahey, former director of internal reporting.

The family is accused of using Adelphia money to fund a number of private ventures, including a $1 billion family partnership that used the money to buy company stock, a $150 million purchase of the Buffalo Sabres National Hockey League team, $12.8 million for office furniture and design from John’s wife, Doris, and another $13 million to build a private golf club.

In May 1995, Rigas shook hands with a consortium of local companies that owned the Pirates on an $85.15 million deal to take over ownership of the foundering team. Rigas had been the choice of a selection committee to make an exclusive bid on the team. At the time, Rigas maintained what he called a “modest” home in Mt. Washington and pledged to be very visible in the city.

But even after a jubilant announcement of a done-deal by Murphy, Rigas and Pirate ownership, Major League Baseball expressed reservations with the debt-to-asset ratio of the Rigas purchase plan. Ultimately, Rigas did not receive league approval, opening the way for current owner Kevin McClatchy to step in.

But Adelphia’s ties to the area did not end with the Pirates’ bid. Adelphia’s primary outside legal counsel in recent years has been Pittsburgh-based Buchanan Ingersoll Professional Corp., the city’s third-largest law firm.

Buchanan spokeswoman Lori Lecker said yesterday that her firm has decided against representing Adelphia in its bankruptcy. “We have decided, despite the request to do so, not to do any work for Adelphia. We are providing limited help to transition them to their bankruptcy counsel,” she said.

Buchanan previously did limited estate planning work for the Rigas family, Lecker said, but terminated all such work earlier this year.

Reed Smith, the city’s second-largest law firm, was invited to represent the Rigases during the early stages of the turmoil surrounding Adelphia, but recently severed its ties with the family, citing an ethical conflict with other clients.

Chuck Greenberg, an attorney with Pepper Hamilton LP, served as John Rigas’ attorney for about eight months in 1994 and ’95 when Rigas attempted to buy the Pirates.

Greenberg, who then worked for the law firm Cohen & Grigsby, said Rigas was a ”warm and likable person.”

“It’s tragic to see all this taking place,” he said.

Greenberg said he had no indication of the possibility that Rigas would use Adelphia funds to pay for the Pirates’ acquisition, as he is accused of doing with the Buffalo Sabres.

“To my knowledge, it was always a personal investment by Mr. Rigas,” he said.

Greenberg said when he learned of the deal for Rigas to buy the Sabres, he felt it made more sense for Rigas because Adelphia has more cable subscribers in the Buffalo area than in the Pittsburgh area, which would produce more synergies for the relationship between the team and Adelphia.

More than 240,000 Adelphia cable subscribers in the area now know Rigas as the founder of the sixth-largest cable company in America.

In Allegheny County, Adelphia serves residents in Bethel Park, Homestead, Mt. Lebanon, Mt. Oliver, Pleasant Hills, Monroeville, Munhall, Upper St. Clair and West Mifflin, and portions of Beaver and Lawrence counties.

In Westmoreland County, Adelphia’s Blairsville service system provides service to about 105,000 subscribers in Bolivar, Delmont, Derry, Murrysville, Latrobe, Ligonier, West Newton, Loyalhanna, Salem, South Huntingdon and Unity. In Indiana County, it serves residents in Black Lick, Blairsville, Clymer, Indiana and West Wheatfield.

The company has stressed that the bankruptcy will not affect customers or service, though it acknowledged initially stopping payment on some franchise fee checks, paid to municipalities where it provides service. Adelphia is now making good on those payments, according to a company spokesperson.

Adelphia Communications issued a statement supporting the government’s charges against the Rigases, though it expressed disappointment that the government would also seek civil monetary penalties against the company.

Key Rigas dates

  • August 1994 — Pirates spurn concession offers by the city and invoke option giving the city six months to find a buyer. More than two dozen inquiries are made.

  • October — The list of prospective buyers is whittled to four: John J. Rigas, the family of Pittsburgh Steelers owner Dan Rooney, Washington, D.C., attorney Larry Lucchino and Florida financier Malcolm Glazer.

  • November — Rigas named the city’s preferred buyer.

  • January 1995 — Rigas and Pirates ownership begin discussions, but exclusivity clause giving Rigas sole right to bargain for the team expires. Pirates hire investment banking firm to being exploring other options.

  • March — Rigas submits $85.1 million offer for the team, but he and current ownership cannot agree on who will be responsible for the Pirates’ anticipated losses this year.

  • April 1995 — Pittsburgh Mayor Tom Murphy and Pirates Board Chairman Vincent Sarni jointly announce the completion of the sale is imminent.

  • May 18 — City and team officials sign term sheet for purchase of the team by Rigas and expect a final agreement signed within a month.

  • June 26, 1995 — Major League Baseball balks at Rigas deal because of debt-to-equity ratio.

  • June 27, 1995 — Mayor Tom Murphy meets with Kevin McClatchy about potentially purchasing the Pirates.

  • March 27, 2002 — Adelphia Communications discloses that it backed billions of dollars in private loans to the Rigas family and misstated earnings and numbers of subscribers.

  • May 23, 2002 — Rigas resigns from board of Adelphia. Family agrees to turn over $1 billion in assets to pay debts.

  • June 26, 2002 — Adelphia files for Chapter 11 bankruptcy protection

  • July 24, 2002 — John J. Rigas, Michael Rigas and Timothy Rigas, and two former company executives are arrested and charged with looting the company of billions of dollars.

    Categories: News
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