Lemieux, Burkle no longer looking to sell Penguins
The Penguins’ asking price simply might have been too steep. Or the market conditions just not right.
No matter the reason, the team no longer is for sale, president and CEO David Morehouse announced Thursday, hours before the team began its 50th anniversary season.
“We did look at a bunch of different things. One of them included the outright sale of the franchise. We’re not looking at that right now,” Morehouse told 1020 KDKA-AM. “We couldn’t be luckier to have owners like this in Pittsburgh.”
Morehouse did not rule out the idea that co-owners Mario Lemieux and Ron Burkle still might be looking to add minority investors.
Through a team spokesman, Morehouse declined to comment further.
The Penguins announced June 3, 2015, that team brass hired Morgan Stanley to help explore a potential sale.
Morehouse’s comments were in line with those made by key figures toward the end of last season.
On May 30, NHL Commissioner Gary Bettman said the prospective sale was no longer a front-burner issue. “They listened — and looked — at options, but there’s nothing pressing,” Bettman said. “And there’s no process in place to sell the club.”
The night the Penguins won the Stanley Cup on June 12 in San Jose, Calif., Lemieux didn’t sound like an owner aggressively peddling his club. “Ron and I still own the team, and we’re happy where we are,” he said.
While it’s possible winning a championship diminished Lemieux’s and Burkle’s appetite to sell, economics likely played a more important role, a leading sports business analyst said.
John Vrooman, an economics professor at Vanderbilt University, said the monopolistic nature of professional sports generally inflates sale prices about 25 percent over the figure at which the team is valued.
“If the Pens are worth an estimated $600 million, then normally the selling price could go as high as ($750 million) for the defending Stanley Cup champions,” Vrooman said. “If no potential NHL buyers were taking the Pens’ bait at $750 million, then the Penguins are obviously overvalued by the owners and undervalued by potential investors.”
Vrooman said NHL expansion also could have made market conditions more difficult for a potential sale. The addition of a new team in Las Vegas not only added another franchise to the supply side of the equation, but the $500 million expansion fee also might have artificially changed the value of an NHL team.
“There were no bidders from the NHL-superior Seattle market at an inflated $500 million because the NHL expansion fee should have probably been in the $300 million range,” Vrooman said.
Another economics professor, Andrew Zimbalist of Smith College in Massachusetts, said NHL owners looking to sell could run into serious problems.
“It’s the weakest of the four major sports in the United States, and looking down the road, there is a good likelihood it will be replaced by soccer and become the fifth most popular sport,” Zimbalist said.
“Looking further down the road, the technological revolution we’ve been experiencing over the last 20 years has created a lot of niche sports and surrogate sports viewership, through video games and watching highlights and other video entertainment. The overall audience for sports has been fragmented and diminished.
“It’s going to inevitably impact all of the sports leagues, but it makes sense it would impact hockey before the others.”