Back in the Game
Nineteen eighty-nine was a transition year for me and Karen. After I finished with the Whalers, we moved to L.A. in September and concentrated on the movie production business. By that point, we had made From the Hip, Billy Galvin, Spellbinder and a few others. When we left Hartford, we left with some money — our share of the sale of the Whalers was $2.7 million — and we were living off that money and also investing in films. Karen was finding success with the acting and writing, and we were expanding our film company, as we both liked living in California.
Although I was not active with my own team in the NHL, I’d stayed close to people in the league and had many friends and connections within it.
Jay Snider was running the Flyers at the time and, thoughtfully, had put me on their board, which to this day I still appreciate. As well, Karen and I developed a friendship with Bruce McNall, who owned the L.A. Kings. We had season tickets for the Kings at the Forum, and Karen even sang the national anthem prior to the Kings-Whalers game. There were 16,000 people there and she did a great job. I was so nervous that I was in the bathroom, sick to my stomach.
We were happy in Los Angeles, but I did miss what I had grown used to doing for over 20 years — running a hockey team. I missed the competition and camaraderie of it. For me, hockey was a safe haven; it was all I had done since I started my working life. I had been very fortunate because with the Whalers, from day one, I always had great partners, starting with Bob Schmertz and evolving into the corporate partnership. There was stability for me in hockey, whereas with the film business we didn’t generate any income unless we made a film.
So I was at a place where I was eager to find a way to have a little more stability. And just as I will never forget that small WHA article in the Boston Globe, I will never forget the phone call from NHL president John Ziegler and Calgary Flames partner Norm Green.
It was the summer of 1989, and Karen and I were driving along the Pacific Coast Highway in Malibu when our car phone rang.
“Howard,” John said, “the league would like to expand by at least two more teams, and we want to push westward. You’re on the West Coast, see what you can find out.”
John added that they wanted to establish a new benchmark price of $50 million for a new NHL franchise. Although I was a bit taken aback by the size of that number, I said I would see what I could do.
The call came a little less than a year after Peter Pocklington traded Wayne Gretzky to Los Angeles. I remember having a bet with Ed Snider after that trade. Ed was saying, “Oh my God, with that deal, L.A. will win the Stanley Cup this year.” And I said, “I bet you Edmonton wins another Cup before L.A. does,” because I felt Mark Messier was such a competitor that he was going to prove a point. And the Oilers did win, in 1990.
The Gretzky deal was sad for Canada, but for L.A. and the rest of the U.S. it was great. It triggered the growth of hockey on the West Coast. You take the greatest player in the history of the sport, in terms of persona — you could argue that Bobby Orr, or even Gordie, was a better player, but Wayne was an absolute giant at the time — and put him in a star-studded city like L.A., and it electrified people.
Suddenly people started going to the hockey games in L.A. in record numbers. That trade single-handedly did more to generate interest in the NHL in the United States than anything that had been previously done. Wayne was the one star of the game who transcended it. Mario Lemieux, the other superstar of the time, was very reserved — a reluctant star. Mario was a great, great player, but he did not enjoy being an ambassador for the sport. Wayne was an ambassador for the sport and Bruce was a smart promoter.
Bruce immediately tripled Wayne’s salary to $3 million per year. Bruce knew he had to get the front page, from a marketing point of view, and one of the ways he did this was to encourage celebrities to come to the games by placing them in prominent seats along the ice where the media could capture photos of them and where the TV cameras could pan to them during the game. On any given night you would see such luminaries as Ronald Reagan, Tom Hanks, John Candy, Sly Stallone, Kurt Russell and Goldie Hawn. Bruce made the games a place to go and be seen.
In the Hockey Hall of Fame, they have a Builders section that rewards key executives and owners who have made an extraordinary impact on the sport. Bruce should be in the Hall in that category, as he was a true builder. Granted, he had legal difficulties and he was punished for them, but that doesn’t change the incredibly positive impact he had on the sport itself. When he did that Gretzky deal, it turned the whole hockey world upside down and put all the attention on the West Coast market. It made the NHL a coast-to-coast sport in the U.S. and opened up new markets to hockey. It brought Anaheim into the league in a couple of years, and it was not very long afterward that the league started to move into warmer, non-traditional markets like Miami, Tampa Bay, Dallas, Phoenix and San Jose.
There is no question that Wayne’s trade prompted that call along the Pacific Coast Highway. In a follow-up call shortly after the first one, Norm and John suggested I go to the desert, to Palm Springs, to meet Morris Belzberg, a friend of Norm’s from Canada who was interested in owning a hockey team. Morris had risen from being the first individual licensee of Budget Rent a Car in Canada to being chairman of the board and CEO. Morris and I liked each other from the start and agreed we would join forces to pursue a team. Morris would provide the principal financing for an expansion team on the West Coast, and I would spend the time to explore various markets.
During the late ’80s, right when we were leaving the Whalers, I started working much more closely with Tom Ruta. Tom had always worked with us on our personal financial matters, but in the late ’80s we formed a partnership that remains strong to this day. There is not a thing I am involved with where I don’t reach out to Tom for his input and expertise. Tom and my older brother Michael are two business partners I value greatly. As well, Tom’s brother Nick Ruta has worked with us on all business matters, film and personal. Tom is a brilliant financial mind and our alliance was fortuitous. I love to work with him because he has the ability to take some of my “creative ideas” and ground them in good business practices. It made us an effective team.
Morris, Tom and I began by looking at the San Diego and San Francisco markets, the two most obvious targets. To me, San Francisco was very attractive. I really liked it as a city. It has an East Coast feel to it. The city itself is absolutely beautiful and it had a history of hockey in the old Pacific Coast League, with the San Francisco Shamrocks. However, the politics of the city were such that it was quickly clear to my group that it would take years to get the support needed to build a new arena.
We also looked long and hard at San Diego. They did have a 13,000-seat arena that we could have used temporarily, but we didn’t like the marketing radius of San Diego: it has the Pacific Ocean to the west, Orange County to the north, the desert to the east and Mexico to the immediate south. That location gave us great concern for its long-term viability as a hockey city.
Then I received a call from Jim Hager, a young lawyer in San Jose, who said he had read in the paper that I was spearheading the drive for an NHL team on the West Coast. He asked if I would visit him and the mayor in San Jose.
Jim, a terrific young fellow, met me at the airport, showed me around and took me in to meet the mayor, Tom McEnery. Tom comes from an old-line California political family and to this day is a very good friend of mine.
I knew instantly that San Jose was it. The team would be the only show in town, like in Hartford. It was an exciting up-and-coming city. They had all the financing in place to build a new arena. They were in the Silicon Valley area just as internet technology was exploding. It was a technology center for the world, just as Hartford was the insurance capital.
We engineered a very exciting and powerful deal for the NHL. The team was to be financed based on all the revenue streams we would generate from the arena. Part of the deal with the mayor was that the city turned the arena over to us. So we had the arena and the management rights to the arena to help finance bringing a hockey team there. I then went to Tony Tavares, who was running Spectacor Management Group, an arena management company owned by Ed Snider, and we put together a deal that set the bar for a new NHL team at $50 million, which became the expansion fee for the 1990s. We were able to generate additional financing by bringing Spectacor in as the arena manager — Spectacor advanced dollars to our partnership (Morris, Tom and me) against future arena revenues that it would earn. San Jose was pleased because they would get a top-of-the-line arena management company and an NHL team — a huge boon to the local economy. We were all very proud of this deal.
Karen and I had actually picked out a home and were prepared to move to the area. We were committed to the relocation and to running the team as we had in Hartford. It was close enough to Los Angeles that we could keep an eye on the film business, and if Karen had the right opportunity, we could easily commute for her to take advantage of it.
Then I got another phone call from John Ziegler and Norm Green. Norm invited me to Palm Springs to discuss an “exciting idea.”
You know when you can sense it’s not an exciting idea? So I said to myself, “Whoa-oh.”
If anything, I tend to overly communicate, so I had been keeping John Ziegler and Bill Wirtz, who was chairman of the NHL, closely apprised of the progress I was making. The possibility of the NHL coming into San Jose was now known to the public. Of course, it was also known to the member teams of the NHL.
At the same time that our San Jose deal was coming together, Gordon and George Gund, the owners of the Minnesota North Stars, were making noises about wanting to move their team. When the Gunds became aware of the dynamic opportunity in San Jose, they started to put in a claim on what was essentially my deal. This created some serious debate within the league. On the one hand, there was an existing NHL ownership group which had lost a great deal of money in Minnesota. And on the other hand there was my group (Baldwin/Belzberg/Ruta) which had done exactly as asked by the NHL — create a new, exciting West Coast venue at a premium price to the league.
“We love the idea of San Jose,” John Ziegler told me. “But we have a problem here. The Gunds want to relocate from Minnesota to San Jose and they are a member team.”
The battle lines were drawn. There needed to be a compromise and there was: the Baldwin/Belzberg/Ruta group wound up owning Minnesota and the Gunds got San Jose.
I fought it initially, pointing out that I put the whole deal together, that I had sweat equity in the franchise and that Karen and I were prepared to move up there. Bill Wirtz and some of the other guys on the board were very loyal to me and said, “Howard found this,” but there were other guys who said, “Yeah, but Gordon’s in the league and he’s lost a lot of money.”
It wasn’t going to go our way, so the solution was a swap.
The compromise deal was announced on May 5th, 1990. The Gunds would take their Minnesota team to San Jose as an expansion franchise, and the league would put an “expansion” team in Minnesota for us. We had a draft of the Minnesota players to split them up, and both teams would take part in the expansion draft.
San Jose paid $50 million to the league, and we paid $33 million to the Gunds. So an interesting way to look at it is that the Gunds got San Jose for only 17 million bucks.
That’s the only deal that I was really disappointed not to get done. I thought we had San Jose, and it kind of pissed me off, but that’s the way it went. It was sad for me because we loved the market and we loved the people.
So we created San Jose for the league, we created the $50 million benchmark and we saved their asses in Minnesota.
We paid less money for our franchise but to be candid with you, neither Karen nor I wanted to be in Minnesota. However, it was a good hockey opportunity, so we said we’d adjust our personal plans and go to Minneapolis and try to make it work.
The deal wasn’t as good as the one in San Jose. We thought we had a deal for a new arena, but it didn’t work out. They were building a new arena in Minneapolis for the Timberwolves basketball team, but at the last minute the owners of the NBA team decided they didn’t want to share it with another prime tenant.
To further complicate the situation, Morris decided he didn’t want to finance the team in Minnesota without an additional money partner. So, lo and behold, who does he bring in but his friend Norm Green?
I knew from the moment Norm set foot in Minneapolis that he wanted to run the team, and there was going to be conflict. The only opinion that mattered to Norm was his own. I had no issues working for somebody, but I wasn’t about to start working for somebody who knew little to nothing about the business.
I don’t think Norm behaved the way you’re meant to behave. He thought he knew more than anybody, and he was a bully to people who couldn’t fight him back. I remember he called the office once and couldn’t get right through to me, and he had the receptionist in tears. It was at that point that Karen and I looked at each other and realized that our relocation to Minnesota was going to be a short one.
Another time, Karen and I were in our apartment early on a Sunday morning. Those were the days of the old fax machines that spun paper out like toilet paper, and I hear this thing going “Mmmmzzzz.” I thought it was stuck or something, but when I went in the other room to check, there was a fax from Norm that stretched all the way to the bathroom, telling me, “Do this, do that.” And I thought, “Mmmm, this isn’t going to work.” And of course it didn’t.
Karen and I were in Minneapolis for only two or three months. We hired Bob Gainey as coach and Bob Clarke as general manager, but it was only six weeks later that I sold out to Norm and Karen and I went back to L.A. And Norm actually got lucky that season, as Minnesota made it all the way to the Stanley Cup final before losing to Pittsburgh.
One of my favorite Norm Green stories has to do with my cousin, Taylor Baldwin. Taylor came to work for me in the mid-’80s. His story is a fascinating one. Taylor’s father, my father’s older brother, was Peter Baldwin. After World War II, Uncle Peter settled in Bombay, India, rather than returning to Harvard. He was a physically imposing man, one of the last runners-up to Johnny Weissmuller for the part of Tarzan. Uncle Peter started his own airline in Bombay in the late ’40s and it was a great success, so much so that eventually it was taken over by the Indian government. Uncle Peter was married to his fourth wife, Taylor’s mother, an Indian woman named Myrtle, and he decided to leave India and move to Kabul, Afghanistan. In Kabul he was a highly successful businessman and did a tremendous amount of wonderful work in the country for the local people. Peter and Myrtle had three boys — Taylor was the middle child. Very sadly, Uncle Peter died playing tennis with the man who was then king of Afghanistan. My father flew over there to get Myrtle and the boys and bring them to the United States. Taylor was 11 when he was relocated to this country.
As he grew to manhood, Taylor reached the impressive height of seven feet and was a standout college basketball player at Maryland. When he left Maryland, I immediately hired him as a salesman for the Whalers. I remember with delight the first time Karen saw Taylor — she thought he was standing up behind his desk when in fact he was seated, and then he rose up in all his seven-foot glory! Everyone adored Taylor — he was a gentle giant.
When we left Hartford, Taylor came with us to Los Angeles, and then on to Minnesota with a few other Hartford employees. The one agreement I had with Norm Green when we left the North Stars was that he would give every Hartford employee that we had taken with us at least three to four months to prove themselves. Needless to say, in classic Norm style, the minute the jet wheels were up and we were on our way to L.A., he called Taylor into his office and told him his “services were no longer needed.” Norm was behind his desk. Somehow he hadn’t twigged to the long reach of Taylor Baldwin’s arm.
Taylor stood up as if he was going to reach for Norm behind the desk, pick him up, and give him a good shaking — which, believe me, Taylor could have done — but he was only trying to scare Norm. Norm flipped over backwards in his desk chair in fright, and Taylor proceeded to laugh hysterically as he exited the office and the city and came back out to L.A. to rejoin us in film.
Taylor went on to work for us in Pittsburgh, but tragically he passed away of brain cancer in 2000. It was a devastating personal loss to Karen, to me, to my children and everyone in our family, and to anyone else whose life Taylor touched.
The Penguins, Part II
Karen and I had kept our place in Beverly Hills, so when we returned to L.A. from Minnesota we went straight back to doing film work with our production company.
In the early fall of 1991, I received a call from Tony Liberati, who was then working full time for Ed DeBartolo Sr., the owner of the Pittsburgh Penguins. Tony had been with Equibank a decade earlier, when we tried to do the deal where the Whalers would buy the Penguins and jump leagues.
Tony said that Mr. DeBartolo wanted to sell some of his holdings because the real estate market had gone soft, and because he knew I’d done a couple of NHL deals, he wanted me to handle the sale of the Penguins. Tony flew into L.A. and we made a deal for, I think, 2 per cent of the purchase price, plus my expenses.
Paul Martha, who had played football for the Steelers, was running the Penguins, and he didn’t like my presence in the sale. I knew Paul very well because I’d sat across the table from him at many NHL board meetings, and I said, “Look, Paul, Mr. DeBartolo wants my assistance, and I intend to try to help him.”
To me, Pittsburgh looked to be a pretty good opportunity, in that whoever purchased the team would also get the arena management contract. I thought Peter Karmanos from Detroit or Bill Comrie from Edmonton might have an interest in the Penguins, and I had very good meetings with both gentlemen. (This was before Karmanos ended up buying the Whalers from the Gordon Group.) Both of them were genuine in their interest, but both felt the price should be between $30 million and $35 million, based on the performance of the team at the time. But it was clear to me that the franchise was underperforming and that there was a significant upside for any new buyer. I just had to convince Comrie or Karmanos of that fact. Both had a passion for the sport, and either would have made a fine owner. Peter had a junior hockey team in Michigan, and Bill’s son Mike — whom I first met when he was about 12 years old — went on to become an NHL player and is married to actress Hilary Duff.
I had a great meeting with Bill up in Vancouver, which I invited Paul Martha to attend with me, as I needed him to give Bill the kind of information about the team and franchise that a prospective buyer would want. But instead of helping me out, Paul said to Bill, “Why would you want to buy this team?” and mentioned how the Penguins were always struggling at the gate. Instead of trying to help me sell the team, he’s trying to talk the guy out of it! Paul clearly had his own agenda.
When I returned to L.A., the phone rang and it was Ed DeBartolo Jr., whom I’d never met, but whom I was excited to talk to because he was one of the owners of the San Francisco 49ers. Ed asked how the meeting with Comrie had gone and how Martha had handled himself, because I think they were suspicious of him. I told Ed that Paul “didn’t contribute much,” as I didn’t want to get him in trouble with his bosses. Ed was a very perceptive individual and made it clear to me that I shouldn’t worry about having Paul attend any more meetings. We had an unspoken understanding.
Ultimately, we were unable to conclude the deal with Comrie or Karmanos, as they were fixated on the $30 million price and undervalued the opportunity. Mr. DeBartolo, conversely, was rightfully fixated on a higher price, based on the new expansion model which we had created. That is: $50 million.
It was right after the talks with Comrie and Karmanos broke down at the end of the 1990–91 season, and as the Penguins were about to win the franchise’s first Stanley Cup (taking Norm Green’s North Stars in six games), that I received a call from my friend Ed Snider. He urged me to put together my own deal with Morris Belzberg and Tom Ruta and buy the Penguins ourselves.
I didn’t know it then, but ironically that Stanley Cup final was between a team we’d owned briefly and one we were about to own.
Ed said that his arena management company, Spectacor, would do the same kind of deal we were going to do in San Jose — that is, turn around and acquire the arena management contract back from us, thereby enabling us to get the team for a number that was lower to us but still worked for Mr. DeBartolo. Morris agreed, and I called Mr. DeBartolo and asked if he minded if I was the bidder.
“All I’m worried about is getting the price,” he replied.
It was a very creative deal: we spun off the arena end of the business in return for a large part of the purchase of the team.
But the league was unhappy with the way we structured this deal. They felt the value wasn’t what it should be, based on the $50 million expansion fee that Ottawa and Tampa Bay had just paid, which, again, we had helped create. They wanted to see a higher value on paper.
The league objected to the structure because they felt it was lightly capitalized with very little equity money coming in from ownership. And frankly they were not wrong, but after successfully operating a team in Hartford for 17 years and looking closely at the Penguins’ numbers, I felt that we could make up for the capitalization, because the revenue streams could be dramatically enhanced with reasonable price increases.
The deal we originally created was worth between $37 and $38 million, but we had to go back to the drawing board in order to get it to come in at $50 million to maintain the validity of the newly-established expansion fee. So we created a performance-based scenario relative to how the team did. If the Penguins made the playoffs, then we would pay a bonus. If the team made the second round, we’d pay a second bonus. Increased television revenues resulted in a bonus too. Mr. DeBartolo made every one of the bonuses and I was pleased about that because he had stood by us. He was a good man.
We closed the deal in October of 1991, and I was back in the National Hockey League with a team that was the reigning Stanley Cup champion and had two of the greatest players in the game — Mario Lemieux and Jaromir Jagr — plus my star player from Hartford, Ron Francis.
Bumpy Road Back to the Stanley Cup
We took over a tremendous hockey team which had just won the Stanley Cup, and which had so much talent that winning a few more was certainly not out of the question.
There were stars — and one mega-star — on the ice; Craig Patrick was doing a brilliant job as GM; and the coach, Bob Johnson, had created just the right atmosphere for a team on its way to the Cup. Bob, known as “Badger Bob” for his run of successes at the University of Wisconsin, was famous for the observation, “It’s a great day for hockey!” which has become part of hockey’s everyday language. You won’t find anyone in hockey who didn’t love Badger.
But in August of 1991, as we were still working on the formal deal to purchase the team, Bob suffered a brain aneurysm while he was preparing to coach Team USA in the Canada Cup. While he was in hospital, he was diagnosed with brain cancer and he was immediately flown to Colorado for treatment.
We opened the season with our assistant coaches Pierre McGuire, Rick Paterson, Barry Smith and Rick Kehoe as sort of a coaching committee, and Craig asked Scotty Bowman, our director of player personnel, to be the interim coach until, hopefully, Bob recovered. Craig’s famous father, Lynn, had hired Scotty to coach St. Louis when they went to the Cup finals the first three years of expansion, and Scotty had coached Craig with the Montreal juniors in the mid-1960s. Of course, Scotty also had those five Stanley Cup wins in the ’70s coaching the Canadiens, and in November of that year he was being inducted into the Hockey Hall of Fame. So with Scotty at the helm, and solid assistants, we were in good hands.
We got off to a quick start, going 22–13–4 before New Year’s. What made that record even more commendable was that the players, who all loved Bob Johnson, were really worried for him. Bob was communicating with the team and coaches through faxes, and was sent videotapes of all the games, but sadly, on November 26th, Bob lost his battle to cancer. The whole hockey world, and especially our team, was devastated.
The players dedicated the season to Bob and wore commemorative patches on their left shoulders, bearing his nickname, “Badger,” and the numbers 1931 and 1991, the years of his birth and death. Bob’s catchphrase, “It’s a Great Day for Hockey” was painted on the ice at both bluelines and remained there the whole season.
After our hot first half, we cooled off dramatically for a few weeks, managing to get only 14 of our next possible 48 points. On February 19th, when Craig Patrick traded Paul Coffey, who was going to be a free agent anyway, to Los Angeles for Brian Benning and Jeff Chychrun, a lot of fans thought we had given up. But that same day Craig sent Benning and Mark Recchi to the Flyers and we got some much-needed toughness back in Kjell Samuelsson and Rick Tocchet, plus a good goalie in Ken Wregget.
We were only three games over .500 at the time, and fell to an even .500 by the end of the month, with the playoffs in doubt. But we went on a 12–5–1 tear to end the schedule and head toward the post-season with a head of steam. Mario was incredible, leading the league in scoring with 131 points despite missing 16 games, and Kevin Stevens finished second with 123 points. Joey Mullen had 42 goals, and Jaromir Jagr, who turned only 20 in February, had 32 goals and 69 points, essentially a point a game (he played 70 games total). We led the league in scoring, with almost 4.3 goals per game, and were a lot of fun to watch.
Midway through that first season in Pittsburgh, there was a significant turning point in hockey history when the NHL Players’ Association appointed Bob Goodenow as its executive director on New Year’s Day. I happened to know Bob from some time earlier. During my first year with the Whalers, my father called to say that a friend of his from Harvard knew a young man who was writing his thesis on hockey and wondered if I would talk to him about the game. That graduate student was Bob Goodenow, and we spent a whole afternoon talking about hockey in general. I liked him and we stayed in touch, and we still do.
It was a different game with Goodenow in control rather than Alan Eagleson. The collective bargaining agreement had expired at the start of the season, and on April 1st, 1992, with only a few days left in the season, the players association called a strike. It was the first general players’ strike in NHL history, although the Hamilton Tigers did strike over playoff wages in 1925. (The team dissolved rather than pay, and Hamilton has been trying to get back into the league ever since.)
I kept hoping and praying that the strike would not happen. We had just taken the team over six months earlier, and I didn’t want our year to end that way. There was tremendous pressure on us, as new owners and defending Cup champions. I said to the other members of the NHL Board of Governors, “Guys, if you don’t have a Stanley Cup playoff, how are you going to sell tickets all summer? What are you going to tell your season ticket holders? We’ve got to play!”
And that’s where I was out of step. Every strike, every lockout, I was out of step. As a member of the board, I was always looked upon as somebody who was friendlier to the players than other board members were. Remember, we came into the league not through the front door but through the back door, and we had to hammer it down too. With a battering ram. And I’ve always felt that too many board members didn’t have the experience that comes from running their teams on a day-to-day basis like I did.
As the strike went into its second week, everyone was swirling around in unhappiness over it, worried that the playoffs would be cancelled. Bruce McNall was one of the leaders of the settlement group. I was on some of the calls, as were Peter Pocklington, and Bill Wirtz and Stan Jaffe of the Rangers. We were more vocal in that our teams had a shot at the Cup, but others wanted it settled as well.
We were all talking about how best to resolve this when John went ahead and made a deal with Bob Goodenow. John just made up his mind that we couldn’t afford not to have the Stanley Cup, and he went into a room with Bob, put together a deal and then told the board about it. Everyone voted for it. The players would get better playoff bonuses and changes to free agency, and each team’s season would go to 84 games with two games in neutral sites as market tests for future expansion.
Some of the owners were very upset with John because they felt he hadn’t built the consensus to make the deal he made. I was adamant, though, that he did the right thing. If the Stanley Cup playoffs were not held, it would have been devastating for the sport. Sadly, the decision cost John his job.
Thanks to the fact that there was a Stanley Cup playoff, we had a chance to repeat as champions, which is exactly what we did. We were in a tough division, finishing third behind the Rangers and Washington but fourth overall in the east. The Capitals finished 11 points ahead of us and beat us in the first two games of the opening round of the playoffs, and then took a 3–1 lead after game four, but they never could beat us in the playoffs and we swept the next three games, with Tom Barrasso outstanding in a 3-1 win in game seven, right in Washington.
Then the Rangers won two of the first three games against us in the division final, but we took the next three to advance to play Boston for a berth in the Stanley Cup. We swept the Bruins, and then won the Cup final in four straight games against the Blackhawks, clinching the championship on their ice to become the first team since the 1988 Oilers to win back-to-back Stanley Cups. Our 11 straight wins to end the playoffs was also a league record. Mario, who had 34 points in just 15 games, won the Conn Smythe Trophy as playoff MVP for the second straight year. Just as in Hartford, in my first year in Pittsburgh we won the league championship.
Winning the Stanley Cup was an exhilarating experience. However, in my mind it almost came too easily, in that we had not had a long history with the Penguins franchise and we couldn’t help but feel a little bit like passengers. Having said that, I was incredibly proud for my partners, for the players, and for the City of Pittsburgh.
I also knew that winning the Cup would make the job in front of us really difficult, moving forward. We had many expiring contracts and we were negotiating from weakness — it is tough to look a player in the eye when his team has just won two Cups in a row and tell him that we can’t afford to pay him. Also, with Bob Goodenow in charge of the players, we were entering a whole new era.
Still, we were thinking we could defer some of the bigger contracts until our revenues caught up. We couldn’t do it all at once, but we had a truly great product.
I felt we were right on track in our progress the first season.
Embracing Change
In June, after the Stanley Cup final, the NHL had its annual board meeting in Montreal. At that meeting we decided to make the change from John Ziegler to a new NHL president.
There was the usual run of phone calls and meetings leading up to it, all pretty well agreeing that it was time for change because it was clear that we were entering a new era. Bob Goodenow was at the helm of the players’ union and, from the tough way he conducted himself during the strike, there was no question that there would be trouble ahead.
John was asked to stay out of the meeting, so he knew what was going on and I think he was ready for it, but I still felt John was treated very badly. He was never properly honored by the league and the board for his 16 years as president. And I’m partly to blame because I was a member of the board of governors. I’ve always looked back on that firing in regret and shame because it was not well done.
Being NHL president (or commissioner, as it is now) is a demanding job, and during his reign John Ziegler was a very good president. He was a huge believer in collaboration and had all the board members vested in the league by sitting on committee after committee. The question around John was whether he was going to be able to do it from the marketing point of view. And that was definitely a concern at the time.
The agreement at that board meeting was that Bruce McNall of the Los Angeles Kings would be the board chairman, with Gil Stein the acting president, and that they would run the league while we put together a committee to search for a new, permanent president.
That was what I called the NHL’s defining Alexander Haig moment. Gil, whom I’d known since he was Ed Snider’s lawyer with the Flyers, had always been in the background as league vice-president and legal counsel. And some people don’t know enough to stay in the background. When we all left the meeting, everybody supported the plan of temporary leadership while we conducted our search, but within days Gil went out and campaigned to make the job his permanently. Gil clearly was bitten by the bug of wanting the NHL presidency. He was an outstanding legal counsel for the league, but unfortunately nobody envisioned him becoming the permanent president.
I wasn’t on the search committee for the new president, but I did put forward the name of a good friend of mine, Senator Lowell Weicker of Connecticut, for consideration. They interviewed Lowell and they also interviewed two executives from the NBA, Deputy Commissioner Russ Granik and legal counsel and Vice President Gary Bettman.
Gary came in and just blew everyone away. He was extremely confident, and coming out of that NBA school of marketing he had a leg up, because they were very hot at that time. He said, “Look, this is what we did, this is how we did it, and this is what we can do here.” He was very impressive, and he got the job. After 75 years of presidents, the NHL had its first commissioner. The reason for the title change was that the other three leagues were run by commissioners, so it was time for the NHL to make it clear to the sporting world that it too had a very strong leader. “Commissioner” has a stronger connotation. It was a change to be consistent with the other major leagues.
Meanwhile, I had a lot of work to do with the Penguins. We had our second Cup but we also had a lot of star players, including Mario Lemieux, whose contracts were up, and we felt that part of our ownership mandate was to keep this great team together.
Karen and I first met Mario when we and our partners, Morris Belzberg and Tom Ruta hosted a reception for players and staff after the first game of our first season. Mario arrived late with his beautiful French-Canadian girlfriend, Nathalie, whom he later married, and clearly possessed the aura of a star who transcended the sport of hockey. He and I formed an immediate bond that night and agreed we’d get together as soon as possible to discuss his future with the Penguins.
Throughout that first season Mario and I met for dinner from time to time with his agent, the very powerful, passionate and well-respected Tom Reich. Tom had a lot of gray in his hair and beard, but in his feelings he was all black and white. He either liked you for life . . . or didn’t like you at all. He always fought fiercely for his coveted client, and despite that ferocity, he and I are friends to this day. Tom would often say that Lemieux was a “God” to him and that he would fight to the death for him. That might seem a little extreme . . . but so is Tom.
As soon as we arrived in town the media began speculating that we would quickly sell Mario or other stars to help defray the cost of purchasing the team. That began my frustration with the Pittsburgh media. It was during my tenure in Pittsburgh that I, a newspaper reader all my life, decided to stop reading newspapers. Why? Because in Pittsburgh, I learned the hard way that I wasn’t going to let any members of the media influence my moods or decision making. I decided, better just not to read anything and to do what I thought was right than to read something and overreact.
We were working with Craig Patrick to re-sign a team that had won two Cups, and the public in Pittsburgh had already pre-judged me. Since I was from out of town, they figured I wasn’t committed to Pittsburgh and would sell off this player or that player for whatever I could get. However, it wasn’t my intention to sell anybody.
There were players on our team who would have been superstars on other teams, guys like Kevin Stevens, who had just scored a hat trick in the first period of a playoff game against the Bruins; Joey Mullen, one of the top American players ever; Tom Barrasso, the All-Star goalie; Larry Murphy, who would be going into to the Hall of Fame; and Ron Francis, my favorite Whaler, who through the short-sightedness of the new Hartford owners became a Penguin in time to win the two Cups.
We knew we couldn’t keep them all, so it was a challenge. We knew that among all those stars, we had two mega-stars in Mario and Jaromir Jagr. The dilemma was, how could we let either one go? If we let Mario go, we would have been horribly crucified. And if we let Jagr go and threw all our eggs in Mario’s basket, we weren’t even sure whether he’d be playing or not. His back was bothering him a lot and he was already missing games.
We had to find a way to keep them both. Jagr was only 20 years old and his contract was still low, so the first challenge was to sign Mario. Although I had a close relationship with both Tom and Mario, negotiations were tough. But Mario was cooperative and was open to structuring his contract in a way that we could afford to pay him what he was worth.
Mario’s contract was up and he was eligible for free agency. Salaries were exploding, and the Flyers had just signed Eric Lindros to a deal that gave him a $2.5 million signing bonus, two years at $2 million and another four at $2.5 million. How could I have Lemieux — who had achieved all that he had, and who had just won two Cups — not make more than Lindros, who had never played a game in the National Hockey League? Mario was the greatest player in the game at the time, and one of the very few who could put fans in the seats and drive TV ratings.
So Tom knew he had the leverage in the negotiations, and we knew it too, but in October of 1992 we were able to get Mario’s contract done: $42 million over seven years.
I felt Mario’s contract was reasonable because it was structured in such a way as to give us time to build up our revenues, which were way below the league average. The contract averaged $6 million per year over seven years, but it was weighted to the back end, so that the largest annual salaries came in the final three years. There were some deferrals of salary payments that would come due after the actual playing life of the contract.
We needed time to build revenues because when we acquired the Penguins, their revenues ranked 19th out of the 22 teams in the league, despite the fact that they had just won the Cup. What was gratifying was that, in slightly more than a year, we had increased revenues enough that we were among the top nine teams in the NHL.
Going back to my early lessons in Philadelphia and Hartford, we immediately re-scaled the house, enabling us to generate gross gates that would allow us to keep the team together on the ice. If a team can’t do that after winning two Cups, it can never do it. We did get some pushback from fans, which was to be expected, but the answer was obvious: if you want to keep a championship team, you have to pay more.
We increased sponsorship. We were more aggressive on merchandising. We changed the logo. We were also among the first to put games on local pay-per-view. Our revenue stream immediately increased.
We certainly did try to keep our team together as much as we could. We could take no credit for the first Stanley Cup, but we certainly were an active participant in the second one.
It was frustrating in that the media assumed we were going to get rid of players and they criticized us in advance for it. We didn’t do it, but then when we signed the players, the media were critical and said we paid the players too much. We were damned if we did, damned if we didn’t.
I can defend every Penguins contract we signed during that period. We signed Ron Francis to triple what he had been making and everyone said we overspent on him, but Ron was a treasury bond. He finished in the top five or six scorers every year. By 1998, my last year with the Penguins, Ron’s contract was about $1.9 million. The next year he went to Carolina for about $6 million. This proves the argument that players’ values are based on the contracts they are able to generate. A player is worth what a team will pay him. It didn’t make us wrong for not paying Ron that much, nor did it make Carolina wrong for signing him for that number. That’s what they thought he was worth and it was their right to determine that.
Another contract we were really criticized for was the Kevin Stevens deal. In May of our second year in Pittsburgh, we were about three-quarters of the way to signing a new contract with Kevin. We were playing the Islanders in game seven of the second round of the playoffs when Kevin went into the corner, collided with Rich Pilon and was immediately knocked out. He couldn’t break his fall to the ice and broke an amazing number of bones in his face. He required delicate surgery involving metal plates to help reassemble his face. It was one of the worst injuries I’ve ever seen. How could we have said to Kevin Stevens — who gave his face for the team — that we weren’t going to pay him? A lot of people questioned whether Kevin could come back and play after that injury, but the very next season he came back and scored 41 goals and 87 points.
Mario’s Battle
The team that went for the third Cup was the best Penguins team of them all. I’ve always said that, and so has Scotty Bowman.
That year we had five players (Lemieux, Jagr, Tocchet, Stevens and Mullen) with 30 goals and four (Lemieux, Stevens, Tocchet and Francis) with 100 points. We finished first overall with 119 points to win the Presidents’ Trophy for the first time in franchise history. Mario started the year with at least one goal in each of the first 12 games and by January was threatening to break both Wayne Gretzky’s goals and assists records for a single season.
Then, on the morning of January 12, 1993, I got a call from Mario while he was on the way home from the doctor.
“They found a lump and I have Hodgkin’s disease,” he said.
I was just stunned. I wanted to be there for him and immediately flew from L.A. to Pittsburgh.
Here’s what most people don’t know. Mario couldn’t start his lymphoma treatment right away because he had an infection in his lungs and the doctors couldn’t be sure that the infection wasn’t more cancer. So for two weeks we were all very nervously praying for the lungs to clear. Fortunately they did, and Mario began a series of 22 radiation treatments.
It was a difficult, frightening time for Mario and his family, and also for everybody in the franchise, but the players managed to play a game above .500 and hang onto first place in the division for the six weeks that Mario took treatment.
Mario got his last treatment on a Monday, and two days later he was on the ice in Philadelphia. The Spectrum is not known for its friendly fans, but before the game they gave Mario a huge standing ovation. Unbelievably, after 52 days off the ice and weakened by radiation, Mario scored a goal and an assist. Unfortunately, we still lost that game.
We lost again three nights later in New York but then didn’t lose another game for the rest of the regular season. We set the NHL record, which still stands, with 17 straight wins before ending the schedule with a tie. Mario was out of this world. When he came back he was 12 points behind Pat LaFontaine in the scoring race, and he ended up winning by just that, 12 points. Pro-rating his points-per-game and goals-per-game percentages, if he’d played the entire schedule he would have broken both of Gretzky’s records.
We beat New Jersey in five games in the first round, but never got a chance to go for the third Cup because the Islanders took us out in game seven of the division final when David Volek scored in the sixth minute of overtime.
I don’t think anyone in professional sport has ever come close to doing what Mario did in 1992–93. Being diagnosed with a disease that could have ended his career, and maybe his life, then coming back to play the way he did after 22 radiation treatments. It was superhuman.
However, he may have come back too soon, because when we started the next season, we could see that things weren’t right with him. He had had his second back surgery in the summer, and missed the first 10 games of the season, recovering. After he came back, Howard Jr. came out to a game in Anaheim with me, and by this point it was always tenuous whether or not Mario was going to play. We were sitting up in a box when the players come out for the second period . . . and no Mario.
I asked Howard Jr. to go down to see what was going on, and Mario was sitting in the back of the team bus, pretty emotionally distraught. Tom Reich soon came to me and said Mario was going to have to take a break, and I supported that idea. As a friend, I wanted to be very sensitive to Mario, as the past year had been an immensely trying one for him, both physically and emotionally. Mario never properly fully rested after the cancer treatments. Mario played only 22 games that year, 1993–94, but as a testament to his ability, he had 37 points in those games. He came back in February, and from that point on, I felt, he was always a reluctant participant in the sport. That was something that always ticked off Roger Marino when he became my partner a few years later.
Mario got seven points in the first playoff round, but Washington, the team that could never beat us in the playoffs, eliminated us in six games. That was the spring that the Rangers finally won the Stanley Cup after 54 years, with Mark Messier publicly guaranteeing that the Rangers would win game six of the Eastern final, then scoring a hat trick to make sure it happened. That’s what superstars like Messier, and Gretzky, and Mario could do.
The First NHL Lockout
Most people in the sport will tell you that once their team gets eliminated in the playoffs, they are reluctant to watch any more hockey that season.
However, I watched the 1994 Cup final between the Rangers and Vancouver because it was so electrifying for the league. Messier made that incredible prediction the previous round, then single-handedly carried the Rangers to the Cup.
We had played the entire 1993–94 season without a new collective bargaining agreement between the league and the players’ association. The CBA we signed to end the short players’ strike in April of 1992 was a two-year deal, but it dated back to the start of that season. That led to a lot of media speculation that the NHL would lock the players out before the 1993–94 season, but we played that season without any interruption and went into the summer hoping we could hammer out a new agreement.
I was on the league’s negotiating committee and we had a lot of meetings over the summer, trying to work out a new deal. It was a difficult process involving a lot of discussions because there were a number of complicated issues involved. We actually agreed on one of the most fundamental points, though: that it was important to find a way to keep the smaller-market teams alive in an era of changing economics. The two sides came at it from vastly different points of view, of course.
Essentially, in the negotiations, the NHL was proposing a payroll tax and a salary cap, along with some changes to free agency and salary arbitration. The players, meanwhile, were suggesting revenue sharing among the teams as an answer to economic issues.
We were having meetings every other week to discuss the potential work stoppage, and I really did not enjoy them. The owners who were pro-lockout felt the only way to do it was to shut the game down and force the players’ hands.
As I’ve said, I’ve been out of step on every strike and every lockout, and to this day I feel that this was the most ill-advised lockout this league has ever had. There are a number of reasons for this. With the Rangers having just won the Cup after five decades without it, there was a renewed public interest in hockey. We had just signed a new TV deal with the emerging Fox network, which appealed directly to the NHL demographics. As well, Major League Baseball players went on strike in August, which eventually cancelled the World Series, thereby putting us in a position of not having to compete with baseball for media attention. It moved us up to right after the NFL on the nightly sports news, so even our exhibition games were getting on ESPN and in the sports pages.
Some owners thought that my objection was because we weren’t financed properly in Pittsburgh and couldn’t afford a work stoppage. They were partly right, but 60 per cent of the other teams were in the same situation.
My point of view was, “Look, we’ve got momentum, and that’s the hardest thing in the world to get. We’ve captured the eye of the general sports public, not just hockey fans. We are on Fox, and to make it even better, there is no baseball.” And history has proven me right, because it took years for the game to regain the momentum we had before we locked the players out.
Right after training camp we took a vote at the Waldorf in New York, and my vote was one of only four against initiating the lockout.
I remember walking out of the Waldorf ballroom after the vote with Bruins owner and chairman of the Board of Governors, Jeremy Jacobs, and John McMullen of the New Jersey Devils, both of whom I had tremendous respect for and still do. John put his arm around me and said, “Howard, don’t worry about a thing. These players will miss a paycheck and they’ll be back right away.” I answered that we were all forgetting why we overpaid players: they’re competitive, and do not want to lose. They were going to want to beat us.
At the meeting, one of the lawyers had passed around Marvin Miller’s book A Whole Different Ball Game, which describes what happens during collective bargaining. I didn’t read it until the entire process was all over, and then I wished I’d read it when they gave it to me, because it warns you not to think that a deal will get done until it is the 11th hour. Each side knows that their best deal isn’t going to be extended until the last possible minute, and that is exactly what happened.
The longer the lockout went on, the more people started to object to it. This was the first lockout in the history of the NHL, so nobody knew what to expect and nobody was prepared for it. While some teams laid off staff, we continued to pay all our employees and didn’t lay off one person. My feeling was that it wasn’t their fault that there was a lockout.
There were a lot of hawks amongst the governors: Jacobs, McMullen, Richard Gordon in Hartford, Abe Pollin in Washington. I couldn’t get mad at Abe Pollin — he was a wonderful man and was always good to me. I remember during one vote he was sitting next to me and he said, “Howard, I know you think I’m an asshole, but I’ve got to vote no.” I said, “Abe don’t worry about it. I don’t think you’re an asshole, I just think you’re wrong.”
The lockout was crippling us and kept going right through Christmas. I was really apprehensive that it might not end and we could lose the whole season. It went right to January 11th, and I remember walking around the Civic Arena concourse while the vote to end the lockout was being conducted by telephone, and saying a prayer to myself, because if we had lost the whole season we would have been in trouble financially, along with a number of other teams.
The vote to end the lockout just squeaked by, and we executed our plan to launch a 48-game season. You couldn’t really do it with any fewer games than 48.
We did manage to get a rookie salary cap in the settlement, and rookies had to sign two-way contracts, but there was no overall salary cap — and there wouldn’t be one for another decade. There are those who say we didn’t accomplish enough, and who are critical of teams like ours who couldn’t afford to lose the season financially and so voted to end the lockout. As far as I am concerned, history has proven that I was right with regards to my position on the first lockout. Momentum is really hard to generate in pro sports, and we had it going for us, only to see it dissipate. All you have to do is look at the franchise problems that occurred after this particular lockout, and you will understand why the lockout was so ill-advised. There was a significant number of changes in ownership after the 1994–95 lockout.
When we finally got back on the ice in January of 1995, it was without Mario, who had decided to take the year off to rest emotionally and physically. But Jaromir Jagr helped compensate for Mario’s absence with his first of an eventual five NHL scoring titles. We won 12 of our first 13 games and tied the other one, before cooling off for the rest of the schedule and finishing second to Quebec in the Northeast Division. In the opening round of the playoffs, Washington went up on us three games to one, but for the second time in four years we rallied to beat them out in seven games. Then we lost in five games to the Devils, who went on to win their first Cup.
The 1994–95 lockout was the first lengthy work stoppage for the NHL. It was a learning experience for everyone, including the players. The next work stoppage would be in 2004–05, when the NHL lost the entire season, including the Stanley Cup playoffs. Then there was the 2012–13 lockout, which also resulted in a 48-game schedule.
Each work stoppage made for a far better working environment for ownership and, as far as I am concerned, for the players as well. Without the type of structure that came out of the stoppages, we would have had a league of 12 to 16 teams. The players on those teams may have been richer, but there would have been a lot fewer of them. The NHL is only as strong as its weakest link. Of course Toronto, New York, Montreal and other traditionally robust franchises do well, but the Nashvilles, Carolinas and St. Louises of the league need the opportunity to succeed in markets that are considerably smaller. Under Gary Bettman’s leadership, a CBA has evolved that allows both players and owners alike to grow as the sport grows.
Sudden Death
During the 1994–95 lockout we were also filming a movie called Sudden Death. The lockout made the shooting more difficult, as we were counting on actual sold-out games to film crowd scenes, and there weren’t any.
Karen wrote the treatment for the film, and Gene Quintano wrote the screenplay, which was about a terrorist group that planned to blow up the Civic Arena just as the seventh game of the Stanley Cup final between the Penguins and the Chicago Blackhawks ended. Jean-Claude Van Damme was the star and the director was Peter Hyams, who had done The Star Chamber, 2010 and Timecop.
In the script, the opposing team was Chicago, so we were planning on filming the game from every possible angle when they came to town. Of course, that plan went out the window after the games were cancelled.
Fortunately, I had a pretty good relationship with Bob Goodenow, the head of the players’ association, and I asked him to let me have the Cleveland Lumberjacks, our farm team, play an exhibition game in Pittsburgh dressed as the Blackhawks, as our guys on the Penguins had agreed to help us out and play. Bob agreed to this, too, and we wound up with close to a sellout crowd.
What we hoped to do with Sudden Death was create a movie that was very commercial and would draw people to hockey. And we wanted to tie our Penguins merchandise to the movie, to drive sales.
The movie itself is essentially Die Hard in an arena. It opens with Karen as the director in the ESPN truck, and from there all the action of the movie is tied to the ticking clock in the arena. We cut from scenes around the arena, to things going on outside, to action on the ice, with the scoreboard joining everything together as it dramatically winds down to 0:00, when the arena will blow up.
Bill Wirtz loved the movies, so when he heard we were making Sudden Death he asked what it was about. I showed him the script, and then told him that he was in it! He said he would love to play himself. Bill then realized that it would be a three-week commitment for him on the set, and that ended that. We had to use a real actor.
Sudden Death was a modest success. It made about $75 million worldwide. It was, in its way, a testament to the old Civic Arena: the inspiration for the film was the fact that the roof of the arena could actually be opened up, although the hydraulics never were consistently reliable. When it was built in 1961, six years before NHL expansion, the Civic Arena was the first sports facility in the world with a retractable roof and was considered a major architectural feat at the time.
The Russian Penguins
By now, people in hockey recognized that I like doing things a little differently and am naturally attracted to situations a little off the beaten path. I think that’s what inspired Mike Barnett to present me with the most unique investment opportunity I’d ever seen in hockey.
Much later, Barnett would become the general manager of the Phoenix Coyotes, but in the early 1990s he was running the hockey branch of the International Management Group, the largest sports management agency in the world. And he was the agent for Wayne Gretzky, among many other players. He had a lot of clout in the sport and was also a good friend.
As we were coming to the end of our first year in Pittsburgh, Barnett came to me and asked, “Would you ever think about getting involved with the Red Army team?”
The Iron Curtain had lifted less than four years earlier, and everything was changing dramatically in Russia. It was the Wild West, and some of the biggest institutions of the communist era were having trouble adjusting to life in the new world. One of those was the CSKA — the Central Sports Club of the Army, better known as the “Red Army.” The Red Army had always dominated Russian hockey, wearing the iconic red jersey with the letters CCCP, and had supplied most of the players for the USSR’s powerhouse international team.
Mike was working with a fellow named Paul Theofanous who was fluent in Russian and really knew his way around the Iron Curtain countries. Theo was bright as hell and had an excellent knowledge of the inner workings of the Russian world. Mike and Paul were representing the Red Army, which had fallen on hard times in the Russian Elite Hockey League. You have to understand that Russia was just coming off communism, and while I wouldn’t say it was becoming a democracy, there was certainly a cultural revolution and the Red Army didn’t have the ability to do the things it used to do. For decades, if you were a great player in Russia and the Red Army wanted you, even if Spartak or any of the other teams wanted you too, the Red Army got you because they just enlisted you in the army with a one-time draft. So the Red Army got all the players they wanted. They had the crème de la crème of Soviet Hockey.
Once that changed, it became a competitive environment, and they, of all teams, didn’t know how to compete. They had to buy players and didn’t have the money or know-how to compete for them because they had never had to — it was counterintuitive to communism. So they were looking for ways in which to create a business, and they came to us.
We did the deal with Viktor Tikhonov, who was the Red Army coach, and Valery Gushchin, who was the general manager. Gushchin was a genuine character, and perhaps it’s a cliché, but he sure looked like he enjoyed his vodka. Tikhonov was stoic, didn’t smile much and was very serious about the game and how it had been traditionally played and presented. He had zero interest whatsoever in anything other than what was happening on the ice, and winning the game. He didn’t have a marketing bone in his body. He had been, by far, the most famous coach in the old USSR and had driven the Soviet national team to eight world championships and three Olympic gold medals. During the communist years, he had the rank of Red Army general and he controlled his team like a dictator, keeping his players isolated in training camp 10 or 11 months out of every year. He had to try to adapt to the new situation when players began to have freedom of movement, but it was a very difficult adjustment for him. He also had an extremely difficult time dealing with the multitude of promotions and marketing techniques that we brought to the situation.
Tikhonov and Gushchin flew over to the U.S., and after meeting with them we got excited and decided to do the deal. We announced it in Pittsburgh, and it generated a lot of interest and speculation. Everyone was immediately suspicious of what we were up to.
On our side the partners were Karen and me, our hockey partners Tom Ruta and Morris Belzberg from the Penguins’ ownership, our film partner Richard Cohen, the Canadian actor Michael J. Fox and Mario. It was a 50-50 deal between us and the Red Army, and I think we originally put 350 grand into the program. We had a legitimate Russian lawyer paper the deal, and their minister of defence signed the document.
We were repeatedly asked why we were entering into such an agreement. We had four reasons.
We hired Mark Kelley, Jack’s son, as our on-site GM. He was there to be our hockey eyes and ears and to find players for the Penguins. This was a time when NHL draft choices were worth something to the teams they were chosen from. If you were drafted number one, your team got 250 grand and there was a declining order of payments after that. So we said to ourselves, “Hey, this is a) a way to make money and b) a way to get a little edge in the NHL.” This was the old Branch Rickey theory of operating a minor league team: find the best players, put them on your team with good coaching, and when they get selected by the NHL you end up with a high fee for your efforts. Then the NHL changed the rules.
Any money changing hands between the league and an international federation would now have to go to the federation. Prior to this, if the Red Army had a player drafted in the first round, they were the direct recipients of $250K. For a second-round choice that number decreased but was still paid directly to the team. Under the new deal, the NHL just paid one flat fee to the IIHF (International Ice Hockey Federation), which was then shared equally amongst all the international federation teams. Therefore we lost the most valuable profit center for the Russian Penguins. That was the stupidest deal the federations ever made and they realized that . . . after the fact. It took away all the incentive for people to do a good job. Originally, club owners had been incentivized to develop as many number one draft choices as they could because that was their money, right there. Then that got taken away.
We happened to introduce this Russian idea to Michael Eisner, the CEO of the Walt Disney Company, who had just acquired an NHL expansion team and called them the Mighty Ducks of Anaheim. The Disney folks wanted to get involved as a partner in the Russian deal too — Michael was really excited about it. They actually designed an amazing uniform for us and sent a young executive named Kevin Gilmore to join us on our Russian journey (Kevin is currently the chief operating officer of the Montreal Canadiens). The uniform created by Disney was fantastic but never used because we never could finalize the deal with them.
Karen eventually designed a new logo and uniform in red, black and white. The red was the basic CSKA color, and the black and white came from the Pittsburgh uniform. The logo was a menacing-looking Penguin with a military cap and skates. When Tikhonov and Gushchin first saw the logo, they were hysterical with laughter. When we pressed them on what was so funny they admitted it looked like the general who had just been put in charge of all Red Army sport.
We put in a young marketing whiz named Steve Warshaw to run things for us. If you were going to cast a movie, he’d be the Ben Stiller type. A shorter Ben Stiller. The idea was for Steve to show the Russians the culture of filling your building and doing all the cool things around an arena that we do over here — hockey, North American style.
Candidly — and Steve would probably laugh at this — he had worn out his welcome at various other sports franchises. He lacked a bit of tact and he kept coming up with crazy ideas, but crazy ideas and someone who would not be deterred were just what the doctor ordered for this unusual situation. So we sent him to Moscow, where we thought he would be tolerated . . . or at least we wouldn’t have to hear about it. We figured the language barrier might work in our favor. It was a plus to not fully comprehend what Steve was saying. He was the proverbial “gum on a shoe” director of marketing. Sometimes he went too far. For instance, after a dinner in New York City with Michael Eisner and his wife, Jane, at the 21 Club that somehow Warshaw invited himself to, he sent Michael a follow-up e-mail which began “Dear Comrade Eisner.” I called Warshaw and said, “Stevie, Michael Eisner is head of one of the most important entertainment businesses in the world. He’s not your comrade, he’s ‘Mr. Eisner.’”
It was a time of unrest over there. They wanted American money but they didn’t necessarily want Americans in their faces messing around with their way of doing things. Keep in mind that until our arrival on the scene, Tikhonov could have cared less what size of crowd they drew. Actually, they never had a crowd. They might have gotten 500 people on the best nights.
It was hysterical to watch Steve and Tikhonov interact. With Tikhonov, it was all about the game on the ice, and winning. Period. With Steve it was all about cutting-edge promotions, and he could care less about the actual games themselves.
For the first few games, nobody showed up except people who wanted to get out of the cold. Then, as Steve started doing more interesting and creative promotions, people started to take notice and they began buying tickets. Sponsors were sponsoring events once they saw the crowds starting to increase. It was starting to work. We had a Toilet Paper Night, a Razor Blade Night, a Toothpaste Night. People needed the basics and they came to the game for them. We drew a sellout crowd for a Free Beer Night promotion with Iron City Beer out of Pittsburgh, with cans featuring the Russian Penguins logo. Unfortunately we made one mistake: we gave out the free beer before the puck was dropped. Needless to say, as soon as the first goal was scored and there was a stoppage in play, 6,000 empty beer cans were thrown onto the ice. Watching Tikhonov’s reaction from the bench? Priceless.
Then you had the cheerleaders. There had been no cheerleaders at Russian games before we arrived — in fact, there were no cheerleaders at U.S. games either. But Steve wanted to try something new. Near the arena complex in Moscow was a strip bar, and Stevie figured maybe the girls would want to make a little extra cash on the side, so he proposed that they come and cheer at the games. Remember, he spoke no Russian. So he hired some of them to entertain our crowds, and on the first night, the cheerleaders were going to perform their dance on the ice between the first and second periods. The crowd was excited and Steve was sitting in the stands feeling smug about his new “event.” The music began and the next thing you know our cheerleaders started shaking, and then began shedding their cheerleading outfits. Even over the sound of the music and the fans hooting and hollering, you could hear a primal scream from Warshaw in the stands as he shot out of his seat and raced onto the ice to pull the plug on the “inevitable” outcome. He was absolutely aghast and felt there needed to be a premium charged for that much entertainment! As a postscript, the next game was a sellout. The cheerleaders were retired, but they’d had the desired effect. Thank goodness Tikhonov was in the locker room at the time, or we would have had to resuscitate him.
We chartered a private plane for our own personal visit around February of 1994. It was highly recommended that we bring security with us, as it could get dicey over there. Our security was provided by a friend of Theo’s named Billy McClain. All we had to do was look at Billy to know we were safe. Also on the trip were Tom Ruta, Ken Sawyer (the former NHL CFO who consulted with us), and Kevin Gilmore of the Mighty Ducks.
It was dicey all right. There were people getting shot. Rich Americans were being kidnapped for ransom. We stayed in a beautiful hotel, but there were cement barriers all around it with guys carrying machine guns on patrol. When we went to Red Square, where all the markets were, there were all these American knock-offs, and Kevin Gilmore was taking pictures of it all. I asked him, “What the hell are you doing?” “Well, I gotta send these back to Disney, they’re illegal.” I said, “Kevin, you and what army are coming over here to tell the Russians they can’t sell merchandise featuring Mickey Mouski?”
We had landed a major sponsor, American Motors. They wanted to promote the Jeep Wrangler in Moscow and were raffling one off through a lottery system that Warshaw ran all season. The game that we attended that February was the game when the winner of the Jeep was to be determined. The building was packed, and to Tikhonov’s utter dismay, the people were way more interested in who was going to win the Jeep than who was going to win the game. Remember, maybe one-tenth of the Russian population at the time even knew what a Jeep Wrangler looked like, and owning one was completely out of the question for almost all of them.
The plan was that between the first and second periods there would be a selection process to go from 10 semi-finalists down to 2. It was just electric in the building, especially when they drove the Jeep out between the first and second periods. The place was going crazy. Everybody was cheering and yelling as we got down to the two finalists: an older couple, and a young man about 19 or 20 years old. Each was given a key, one of which would start the Jeep, one of which was bogus.
The young man had never driven a car, but with the help of the ice crew, he got the key into the ignition and cranked it. It started, the engine revved and there was pandemonium in the stands. In all the excitement, the young man shifted it into gear, the car started to spin around the ice and went right through the dasher boards. They patched up the boards with something or other, and Tikhonov was incensed, of course, absolutely beside himself with rage. But the kid got his Jeep. And Warshaw had outdone himself again.
That night, Vadislav Tretiak, one of the world’s all-time great goalkeepers, hosted us for a delightfully memorable authentic Russian dinner, and we all had a good laugh over the Jeep.
The next day we went to the rink, and Tikhonov and Gushchin told Tom and me that the general who had just been made sports minister of the Red Army, and who had just come back from the Afghan front, wanted to meet us. Apparently he wanted to express his appreciation for our investment in the Red Army team, and also wanted to see if we would come in on soccer and basketball and other sports under the Red Army umbrella. We said we would be delighted to meet and consider any rational proposal.
Tikhonov and Gushchin said to me, “Now, Howard, do us a favour. If you are going to come in on soccer and basketball, it would make us look really good if you say that you want us involved.” I figured that would be fine. Theo was meant to be my interpreter, but he had evaporated for the afternoon, so we got an executive from the office instead. Our group — Tom, myself, Gushchin, Tikhonov, Steve Warshaw, and Billy McClain for security — were escorted over to the general’s offices and into a secure room with a massive conference table. There were a number of well-armed military personnel around. The head of the table was clearly reserved for the general, and I couldn’t help noticing Gushchin and Tikhonov at the farthest end of the table, looking very uncomfortable. I wondered, “What’s up here?”
The general entered the room, shook my hand, then Tom’s, and barely acknowledged anyone else. He welcomed us in Russian, the executive doing the translation. He then proceeded to say exactly what Tikhonov and Gushchin had prepared us for. “We love what you’re doing, and we really would love to have you invest in other sports teams. We hope you’ll stay with this.” So then I did what I said I would do, expressing great appreciation for the privilege of being allowed to be part of such an historical and exciting venture. I then said that we would welcome the opportunity to pursue soccer and basketball involvement and that we would like Mr. Gushchin and Mr. Tikhonov to be involved as well.
There was complete silence in the room. The general looked at me expressionlessly, then glared at Gushchin and Tikhonov, who were now practically shaking with fear. All of a sudden the general stood up and raised his fist — and I was thinking, “Is he going to hit me?” — then slammed it down on the table and yelled, “Wrong answer!” in perfectly good English. He looked at Gushchin, who was practically ready to die, and said, in English, “Gushchin, you drink too much and you’ve never been in the army. If you aren’t careful, I’m going to see to it that you’re drafted tomorrow.” He was more respectful of Tikhonov, but he admonished him too. “Your team isn’t doing well at all, and if that team doesn’t get going, you’ll be back in the Army.” He went on like this for a while. Tom and I looked at each other thinking, “What the hell have we gotten into?” and “Thank God we have a charter plane to take us home.”
Then the general very calmly sat down, his whole demeanor softened, and he said, “Now, please, Mr. Baldwin, how is Mario Lemieux feeling after his bout with Hodgkin’s disease? You must tell him that all Russian prayers are with him.” Which was actually incredible, because all during the Soviet era that had just ended, officially there was no religion in Russia.
We proceeded to have a delightful meeting.
When we left, Gushchin and Tikhonov practically sprinted back to our office. Most offices have a desk and filing cabinet, but this one had a locker, and it was full of vodka. That vodka came out and they were just . . . well, it was a typical Russians-drinking-vodka scene. The fact of the matter was that the army could still do whatever it wanted, even after the fall of the communist era. Tikhonov and Gushchin were relieved to get away with nothing more than a severe admonishment, but I think the general just got there in a bad mood. The guy had just come back from the Afghan front and that was not a good time for the Russians. And I think he also felt that Gushchin and Tikhonov were out of line — which they were.
On the ice, the team was still pretty average, but it was better than it had been when we got there. In 1992–93 CSKA finished second-last overall, with a 7–28–7 record. After we took over, the 1993–94 team climbed just over .500, to 21–20–5, and 14th overall in the 24-team league.
It was a young roster, with about 17 or 18 teenagers playing at least one game that year. Nikolai Khabibulin was probably our most recognizable player; he had already been taken by Winnipeg in the 1992 draft. Sergei Brylin went to the Devils in the second round that June, and Yan Golubovsky went to Detroit in the first round even though he had only played eight games for us after coming from Dynamo’s second team. Golubovsky didn’t have much of an NHL career, but at least he played a few dozen games in the league. We, like most other teams, had a lot of players drafted who never played in the NHL and some who never even came to North America. But now that they could finally get players out of Russia, NHL teams were drafting them like crazy.
Over our two years there, we drafted a handful of players from CSKA for Pittsburgh, like Valentin Morozov, Oleg Belov and Alexei Krivchenkov, but they turned out to be AHL types who never made the Penguins. But by being there we knew all about Alexei Morozov, who played for Krylja Sovetov, and we took him in the first round of the 1995 draft. He had a 20-goal season for us seven years later.
That first year, the 1993–94 season, we toured the Red Army team, billed as the Russian Penguins, through the U.S. We played 13 games against International Hockey League teams, with the games counting in the IHL standings. We won two games, tied two and lost the other nine.
In the 1994–95 season, our second year, we got up to 25–20–7 and finished 6th out of 14 teams in the new West division, but the main thing was that by the middle of that season we were really starting to make money. Warshaw and his crew were doing a terrific job. The team was playing to full capacity on a regular basis, and we were doing over a million bucks in sponsorships, mostly from American companies. The whole idea was that American companies were itching to get into Russia and were looking for vehicles to get their products there. So we introduced North American culture to the Russians . . . through hockey. It made a profit for CSKA, and for us — which, ironically, is what led to our departure.
We got more publicity from the Russian Penguins than from anything else we did. The Today Show, the Wall Street Journal, Good Morning America, a feature in Penthouse magazine — everything. We were mentioned in a speech by Al Gore about how more Americans should go over to Russia; he used us as an example of how Americans could blend into their culture. But all the attention was a double-edged sword. It woke up the wrong Russian elements to our venture, even in our own office. Periodically, Gushchin would send a message asking for an additional $5K or $10K here and there for “hockey” expenses. The final request was a Mercedes for Gushchin, to “make the team better,” to which we said, “Nyet!”
At the end of that year we had our usual “owners’” meeting in New York, and we requested that Gushchin and Tikhonov bring an accounting of how the money had been spent. It was Tom Ruta, Karen and me, and we did what we always did: we went to Morton’s for dinner and the meeting. Gushchin and Tikhonov met us there, but this time they brought with them two guys, both young and pockmarked, with slicked-back hair, gold Rolexes and black shiny suits. Instead of financial documents, Gushchin produced Polaroid photos — in color! — of his new office and Tikhonov’s new office, complete with a high-tech sauna between them. This was their version of accounting for where our money went.
And then they put the arm on us. It was very simple. It was really obvious that their companions were thugs, but Gushchin and Tikhonov introduced them like this: “These gentlemen are our bankers, and they’re our partners now, and in order for this to continue the way we hope, we hope you’ll invest money with them to be able to continue to maintain the program we have together.” This was right in the restaurant. It was a complete shakedown and we’d have to have been pretty naive not to get that. That kind of intimidation was a rampant phenomenon in the “new” Russia. We politely declined to make any payoff, but we also got the message. We would be saying “Do svidaniya” (goodbye) to Russia.
We finished dinner, picked up the tab, said our goodbyes, and the minute we left the restaurant Tom and I looked at each other and said, “We have to get our people out of there, now!” It was getting dangerous, and we didn’t want to jeopardize the safety of our people.
We brought Stevie Warshaw and his crew home from Moscow as soon as we could. To underscore the danger, the concession company at the arena would not acquiesce to any payoff either, and sadly, right after we got Stevie out of there, their concession manager was gunned down right in front of the building.
So you see, we hit it at sort of the perfect moment, and while it is more stable there now, we got out at the right time.
I loved the experience, and I was very proud of it because we were the first. If the rules hadn’t changed, we might still be there today. Tikhonov and Gushchin were great, fun characters, and Tikhonov, to this day, is one of the great hockey coaches of all time, and not just in Russia. The general who everybody thought was going to shoot us? I’m not sure what happened to him but would love to find out.
It was one of the more interesting chapters of my life. I’d like to think we made a difference in a transitional period for Russian hockey. If you go to a game there now, they are doing all of the same kinds of promotions, plus more.
To this day we still have the rights to own half CSKA if we wanted to. Once a year or so, we get an e-mail: “Come back.” But now that they’ve got the KHL, they don’t need us. On a number of occasions quite recently, Gushchin has reached out to Stevie Warshaw to see if we might consider returning.
I guess they need a new Jacuzzi.
Reluctant Bankruptcy
and Leaving the Penguins
My final two years with the Pittsburgh Penguins were sometimes dramatic and almost always difficult.
On the ice, Mario decided to retire after the 1996–97 season, despite winning his sixth Art Ross Trophy as NHL scoring champion, blaming his back problems. In his final season, the Flyers easily eliminated us from the first round of the playoffs in five games. GM Craig Patrick was behind the bench after relieving Eddie Johnston of his coaching duties late in the season. Kevin Constantine took over the next year and, without Mario (who was fast-tracked into the Hockey Hall of Fame that November), instituted more of a defensive style, and we finished a very strong second in the East with 98 points. Ron Francis had taken over as captain, and Jaromir won the NHL scoring title with 102 points, 11 more than anyone else. But the Canadiens, who had finished seventh, upset us in six games in the first round of the playoffs.
Off the ice, I got a new partner, Roger Marino, and that eventually led to the Pittsburgh Penguins declaring bankruptcy in October of 1998.
I took a lot of criticism in the Pittsburgh media for that, and still do. I get a little sensitive about the bankruptcy. It did not occur because we had to go bankrupt. It occurred, I would argue, because of three commitments — Spectacor Management Group’s stranglehold on the arena income, our Fox TV deal and Mario’s contract.
After the lockout in 1994, Morris Belzberg, at this point a reluctant partner, asked me to get him out of his share of Penguins ownership. He was retired and said he didn’t need the pressure of having to make payrolls any longer. So I contacted my close friend and lawyer from the Whaler days, Bob Caporale, who had founded Game Plan LLC with the former NFL star Randy Vataha. A large part of Game Plan’s business was putting buyers and sellers of sports teams together. They introduced me to Marino, a Boston businessman who made his fortune as one of the founders of EMC, a major computer technology business. He also owned the Worcester IceCats of the American League.
Roger bought out Morris, and Tom Ruta as well. I had honored my commitment to Morris because as a result of this transaction he was no longer liable for putting more money into the team, and he got all of his investment back. Roger’s cost came to $15 million, plus a line of credit for team operations.
Roger and I then began a partnership that would eventually turn into a match made in hell. We became like Michael Douglas and Kathleen Turner in The War of the Roses. Roger wasn’t what he appeared to be. He could be a charming fellow, but in many ways he could be a contradiction. You’d have a great meeting with him and think you’d made some sense, and the next day he’d do whatever the hell he wanted. I believe he cost himself the franchise, he cost me the franchise and he cost a ton of money and aggravation to everybody else.
The new partnership deal closed in May of 1997, just a few weeks after we had been eliminated from the playoffs. Under our partnership agreement we had joint control — I could block him on decisions and he could block me. But make no mistake, he was the money. I had as much power as the money because I had a veto, but I would lose that power whenever we needed extra money because I couldn’t put it in, and that was clear to Roger when he made the deal with us.
Before Roger arrived on the scene, we had structured Mario’s 1996–97 season so that it didn’t come across as a permanent retirement when it ended. We didn’t want the bottom to fall out of ticket sales, and we were all still holding out hope that once Mario had a chance to rest a bit and recover, he would want to come back and play. Everyone felt his desire to retire was a temporary reaction to the trauma of cancer and treatment. But Mario retired because of his back problems.
My own feeling was that he could have and should have played — that it wasn’t his back, it was his mind. But I had no way of knowing, so I was at his mercy. We had to accept Mario’s word on his back because there was no other method to gauge how healthy it really was. There was no way to visually decipher his pain. His doctor, Bob Watkins, from Los Angeles, was one of the most renowned back doctors in the world. He worked on a large number of pro athletes and he did some work on my back too. Bob told me, “If Mario decides he can’t play because of his back, there is no way you can judge that he can’t.”
We had no insurance if he didn’t play because of his back. And therefore we were screwed on his contract. It was serious money, and the deferred portion of it was accumulating too.
That helped cost us the franchise, because from a marketing standpoint, we couldn’t build around Mario, yet at the same time we still had to pay him.
In January of 1998, Roger, Penguins president Don Patton and I met, and we realized that attendance was not holding up. We were doing 11,000 or 12,000 a night, and that would be disastrous on the bottom line.
It was clear we had a problem, and it was about then that Roger became fixated on claiming bankruptcy, and our relationship, which had actually been pretty good, became rocky and started to erode. He felt that the only way to avoid bankruptcy was to redo three deals: our arena management deal, our local TV deal and Mario’s deal.
Roger hated our contract with Spectacor Management Group, and he was absolutely right about that. But when I originally made that deal with SMG, it enabled us to acquire the Penguins in the first place. At the time, Ed Snider was the primary owner of SMG, but it was now under new ownership and they were inflexible about trying to help us through our problems.
As well, we weren’t making enough from our regional TV deal with Fox. So Roger flew to L.A. and we met with the Fox people, with whom I had a close relationship. I’ll never forget it, because it was right out of a comedy movie. Fox was great about it, and we rewrote the contract and Roger was like a kid. We walked out of the office and he jumped in the air and clicked his heels like Charlie Chaplin. I was kind of amazed that he performed the move so well.
I thought everything was all settled, but it wasn’t long before Roger said, “You know what? I don’t like the Fox deal.” And he’d already clicked his heels over it. So we went back to Fox and got an even better arrangement.
Next Roger said, “Now we’ve got to attack the Lemieux contract. And the way to do that is go to battle.”
I said, “We’re going to lose that battle. Don’t pick on the biggest star in the world, particularly in Pittsburgh.”
I had already talked to Mario and Tom Reich about making some adjustments to his contract, and I told Roger that, but he didn’t listen.
It was at this point that the bankruptcy discussions increased in intensity. I was just as intense as he was in my refusal to sign off on a bankruptcy. Bankruptcy wasn’t the way to solve our problems. We had solved Fox and we could have solved Mario too, without reverting to that.
We were at an impasse, and Gary Bettman called and said, “Look, we have to end this thing, Howard, because he has the money and you don’t.”
So Gary brokered a meeting at Boston’s Logan Airport in the first week of July. We all met with Roger, and I sold out to him. I was to receive $500,000 a year for 10 years, which was a lot of money to me, plus the practice facility. And I got the dormant American Hockey League franchise that we had bought from Colorado.
We shook hands on the deal, I thanked Gary Bettman and Bill Daly, and off I went back to my home in Massachusetts, figuring I was done in Pittsburgh. But later that month Gary called and asked if I’d received any paperwork on the deal yet, which I hadn’t. Nobody could reach Roger, and the next thing we knew, we were reading in the paper, “Roger Marino, owner of the Pittsburgh Penguins, flies to Houston, and then to Kansas City.”
He was looking to move the team out of Pittsburgh. And to me it seemed clear that he wasn’t going to honor the deal we had made.
Quickly, I got calls from Tom Reich and from Gary, saying that I was the only guy who could block Marino and would have to fight him on the bankruptcy. The deal with Roger wasn’t done, so I still had co-control of the team.
Mario did not want the team to move, and he had a lot of deferred money that he was owed on his contract, so I had a number of meetings with Mario and said that I would fight for him. I could have walked away. I had a pretty good deal, on a handshake, from Roger, and I could have just said, “Screw you guys” and stayed away. But I gave up that deal and came back to the Penguins — and Tom Reich will back me up on this — to fight for Mario in any way I could.
And that was when it really became The War of the Roses.
With Mario not playing, one of our primary goals had been to sign Jaromir Jagr, our other mega-star, to a long-term contract, and I was working closely with his agent, Mike Barnett. In the fall of 1997, we were close to signing Jaromir to a five-year deal at $5 million or $6 million per year. But then the Flyers extended Eric Lindros’s contract for two years, with his salary going up to $8.5 million per year in 1998–99. And right away I knew I was in trouble.
Then, in December, after Paul Kariya had held out for 32 games, Anaheim signed him to a short (two-year) deal too, that would pay him $8.5 million in 1998–99. It was clear that agents felt that the value of free agents would keep going up, so they wanted shorter terms. I talked to Jaromir about the value of a longer guaranteed deal over a shorter one, and he was good about it, but with those two deals out there, I knew we weren’t going to be able to sign him.
Late in the 1997–98 season, Roger and I made up our minds that the only way that we could survive and get our debt paid off was to do a sell-trade with Jagr, the way Quebec did with Lindros and Edmonton did with Gretzky. In a sell-trade you get cash, you get draft choices and you get whatever else you can.
So Craig Patrick and I divided up the teams we thought could afford Jagr. One of the teams I took was the Rangers. On my very first call, Rangers president Dave Checketts said, “Okay, $12 million, a couple of number one draft choices, and a couple of young players.”
It took only one call. But Gary got wind of it and said that wasn’t going to happen under his watch.
I said, “Gary where do you think Jagr is better off playing? In New York City, where he’d be a marquee star? Or in Pittsburgh, where we’re dying? We can’t afford to keep these kinds of payrolls here.”
But Gary put a cap of $4.5 million on the cash we could get back for Jagr, so we were screwed. In order to hang on to the franchise, we had to have more money than that. The only issue I ever really had with Gary was that we were unable to do what Marcel Aubut did in Quebec with Lindros, and what Peter Pocklington did in Edmonton with Gretzky, which was to take an asset that they owned and turn it into a bigger asset — cash and players.
Then we had a number of meetings in Gary’s offices about bankruptcy. I’ll never forget the one meeting when Mario, his lawyer Chuck Greenberg, Tom, my lawyer Steve Lynch and I were in one of the offices and Roger came into the room. When he saw us he took a Coke can and just threw it. It was childish.
Roger and I fought each other right up to the first payroll of the 1998–99 season, when Gary called and said that the only way the payroll could be met was if we filed for bankruptcy. Then, under debtor-in-possession rules, fresh money could be borrowed, because it would be in the first position.
Gary said, “Howard, Roger is the money. You’re going to have to give in to him — as bad as it is, you’re going to have let him file.” I know that Gary didn’t like it any more than I did.
In early October, 1998, Roger filed to put the Pittsburgh Penguins into bankruptcy.
Once he did that, I knew I was done in Pittsburgh. I knew I would get crucified by the Pittsburgh media for the bankruptcy, and I just wanted to be finished with the whole situation. I knew there was nothing that I could say to the media that they would accept and that wouldn’t sound defensive.
The bankruptcy settlement took until the end of that season, and it was after that that I got mad, because the media all forgot that I’d fought for Mario. Part of the commitment I was looking for was for someone to say the right things — that I was an ally of Mario, and that I was an ally of the franchise, because I had tried to do the right thing by both. And when we were going through it all, the Lemieux people, led by Tom Reich, had been very appreciative.
I said to Mario, “Mario, I don’t expect you ever to give me a dime. But when people criticize me, don’t lump me in with Roger Marino, because that isn’t fair.”
At the time I was really pissed, but history will judge whether what I did was good, bad or indifferent.
Tom Reich was a hero of that bankruptcy. He’s the one who brought Ron Burkle in with new money for the team, and he’s the one who fought every second for Mario.
In Mario I was dealing with a man that I truly had genuine affection for. And who could not admire the skill level of this extraordinarily gifted athlete? I only hope that Mario and a few others realize how hard we did try on his behalf and on behalf of the franchise. People were quick to forget that at the time we acquired the franchise there was considerable speculation that it would be purchased and relocated.
The bankruptcy was conditionally settled in June, with Mario, the largest creditor, proposing to turn $20 million of his $28 million in deferred payments into equity, which would give him controlling interest. And in September, the NHL approved his application for ownership. In the end, as part of the bankruptcy settlement, I was able to keep the dormant AHL franchise (which eventually became the Manchester Monarchs) and a small residual interest in the team.
Postscript to Pittsburgh
On reflection, the 1990s was a very rough decade for me and for hockey.
Personally, I had the thrill and excitement of being part of a team that had Hall of Famers and some of the greatest players in the world at the time: Mario Lemieux, Ron Francis, Paul Coffey, Tom Barrasso, Joey Mullen, Kevin Stevens and, of course, Jaromir Jagr, who is still playing today and who will be an instant first-ballot Hall of Famer. We won the Stanley Cup, a Presidents’ Trophy, and many other wonderful awards.
Financially, however, it was an incredibly difficult period to operate an NHL franchise. We were forced to suffer the indignities of a bankruptcy that I never wanted. That was heartbreaking for me.
There was new leadership in the NHL with Gary Bettman, who I think was the perfect man for those difficult times. Bob Goodenow was head of the players’ union and he represented the players well. There was no longer the “overly chummy” relationship that the league had enjoyed for so long between the players’ rep, Alan Eagleson, and the old-line owners. The players were very cognizant of the agreements the other three major leagues had between their unions and management. No longer were the hockey players going to just roll over.
On a personal level, I felt that I did some really good things. We held the Penguins together as a team. If they are put into their proper perspective, some of the contracts that I have been criticized for don’t deserve the criticism. I took a lot of heat for the Lemieux contract from other owners and GMs. Yet those very same critical owners and GMs were guilty of contracts that were just as onerous as any contract I ever agreed to — if not more so. All one has to do is look at history to see that is a fact. And lastly on this issue, how could we not have paid the greatest player in the game at the time, and one of the very few drawing cards that the league then had, especially after we won back-to-back Stanley Cups?
The problem with some of the critics was, and still is, not understanding that there’s more to it than just selling tickets. As we got into the 21st century, it was television and the worldwide appeal of the sport that would make the revenues grow dramatically. And that world is driven by stars.
I do feel, however, that I could have done a better job of managing other expenses and of building up the cash reserves of our company in the beginning, when we were doing well financially. We would have been better prepared for the “rainy day.”
I also felt that we made too many changes at the top of the Penguins organization. That falls on me. There is no other way to say it — I was just unwilling to relocate to Pittsburgh full time. I feel strongly enough about my own abilities to operate a business to think that if I had been there day to day we would never have had to file for bankruptcy. Subsequently, when the ownership profile changed and Morris left and Roger came in, I was dealing with somebody who had his own point of view and was totally unwilling to listen to anyone else’s — mine included.
I think another problem we had as owners was that we were always perceived as outsiders — which we were. However, the people in Pittsburgh were incredibly supportive of us as well as the team, and were so nice to us. Pittsburgh is a great city, and having Mario Lemieux as a local owner as well as the financial savvy Ron Burkle brings to the table as the lead money partner is huge for the franchise. Mario gives the franchise a great face not only locally but in the sports world at large. Ron Burkle gives the franchise immense financial credibility. It makes us very happy to see how well the team is doing now.