The $1.7 billion sale of the Pittsburgh Penguins to the Hoffmann Family of Companies was approved Thursday by the Sports & Exhibition Authority Board — but not before board members called out former owner Fenway Sports Group for its “profiteering.”
Pending NHL approval, the sale would result in an $800 million profit for FSG after four years of ownership — an 89% return on investment, according to Aaron Waller, executive director of the authority.
FSG and the Hoffmann Family announced their agreement for controlling interest in December. FSG will remain a minority shareholder for a period of time and “continue supporting key business areas, including sponsorship sales and regional sports network management, as part of a phased transition.”
In December 2021, the SEA board had approved the transfer of the Pittsburgh Penguins franchise to FSG from its former owners, including Mario Lemieux, for approximately $900 million, he said.
The SEA board is requesting “a small percentage of its enormous return” on investment to PPG Paints Arena’s capital reserve account, Waller said, “to ensure that Penguins fans can continue to have a first class facility in which to enjoy the team.”
The request is being made also to ensure FSG fulfills “its previously promised commitments to the Lower Hill neighborhood and its citizens,” according to Waller.
“To date, FSG has refused to do so, although FSG’s refusal to live up to its promises does not provide the SEA board with the right to deny its approval of this transaction,” he said during Thursday’s meeting. “The board is deeply disappointed in FSG profiteering from this community and its refusal to honor its promises to the people of the Lower Hill.”
FSG issued the following statement in response: “FSG has fully complied with its obligations under the lease throughout its tenure, and we appreciate today’s unanimous vote by the SEA and their engagement as we continue to move the transaction forward.”
After purchasing the Penguins franchise, Waller said FSG promised to invest in Pittsburgh — specifically the Lower Hill neighborhood — by committing to fund community investment projects like the Curtain Call public art projects and the completion of Frankie Mae Pace Park.
“However, (it) has not lived up to its promises to Pittsburgh for the Lower Hill neighborhood,” he said.
The Pittsburgh Urban Redevelopment Authority provided the Penguins franchise holder with the redevelopment rights to the 28 acres of the Lower Hill District, where the former Civic Arena stood, according to Waller.
“To make the 28-acre site attractive for development, the SEA and the URA, along with the commonwealth, the county, the city, invested substantial public dollars to build roads, install utilities and develop other necessary infrastructure,” he said. “To date, public investment in the 28-acre site totals approximately $59,582,000.
“This public investment has significantly benefited FSG, which received fees and other monies from the development that has taken place there in the last four years.”
Waller said FSG’s “tremendous return on investment” wouldn’t be possible without public support offered by the commonwealth, Allegheny County, the City of Pittsburgh and SEA.
During FSG’s tenure as owner, the SEA committed over $16 million toward repairs or enhancements to PPG Paints Arena, he said.
Waller said the SEA board is still calling upon FSG to honor these commitments and “be the partner it promised to be four years ago.”
“Given that FSG is about to reap this tremendous windfall based in part on the substantial public support it has received, we have requested that FSG live up to its promises and contribute a small percentage of its enormous return.”
Michael Quatrini, vice chair of the SEA board, also voiced his disappointment with FSG’s actions — saying representatives of FSG “couldn’t even show up on their way out of town.”
“Although that request has been made, notice that FSG is not here,” he said. “FSG has continually refused to live up to their agreements. And for that … we’re disappointed, and I would remain skeptical in the future that FSG ever returns for anything regarding the SEA or otherwise.”
Waller said the SEA board is excited to have the Hoffmann group as the potential new Penguins owners.
“There is a tremendous opportunity for the Hoffmann group to join us as partners, and we hope that they seize that opportunity.”