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Penguins Going Bankrupt?


The battle between co-owners Roger Marino and Howard Baldwin for control of the Pittsburgh Penguins is at an impasse while the team considers filing for bankruptcy, a newspaper reported Saturday.

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  • Penguins, who lost $37.5 million the past two seasons and face two lawsuits, have been sending signals in recent weeks that they may file for Chapter 11 bankruptcy protection.

    If they do, NHL commissioner Gary Bettman will take over the team, the Pittsburgh Post-Gazette reported.

    There has been no decision to seek court protection under Chapter 11 -- yet," Marino said Friday in a statement.

    However, Marino just hired J. Garvin Warden as the team's interim chief executive officer. Warden, a corporate turnaround specialist with no experience in sports administration, was employed in a similar capacity by the Italian Oven restaurant chain in 1996 to oversee its bankruptcy.

    Meanwhile, Baldwin has refused to give up his half of the team without guarantees that the Penguins will not declare bankruptcy.

    "As long as I am co-managing director of this team, that will not happen," he said of bankruptcy. "That is not a solution. I am interested in doing what is best for the long-range success of this franchise."

    Much of the Penguins' financial troubles stem from $33 million owed to retired center Mario Lemieux under a contract negotiated under Baldwin. Lemieux sued Marino and the team two months ago over missed payments.

    "On more than one occasion, the Penguins have expressed to us the very real possibility of filing for bankruptcy protection," Lemieux's agent, Tom Reich, said Friday. "In our preparations for the courtroom, we continue to anticipate that probability."

    The NHL constitution says an owner risks losing a bankrupt franchise. The Penguins declared bankruptcy in 1975 when owned by Tad Potter and Peter Block. The NHL took over the team and sold it to Ohio businessman Al Savill.

    If the NHL were to seize the Penguins, it would sell the franchise to a buyer who would keep the team in Pittsburgh and assist its financial recovery, the Post-Gaztte reported.

    The Penguins also are being sued by Spectacor Management Group, the company that runs the Civic Arena, for failing to pay a $545,000 installment on a $1 million promissory note in June.

    "If they decide to declare bankruptcy, they would still owe us money," Spectacor president Wes Westley said. "And if they decided to leave the Civic Arena, where would they play? Could they try to move the team? I don't know."

    Chapter 11 allows debtors to craft a plan to pay creditors. A bankruptcy judge must approved the plan.

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