NHL owners voted to approve Fenway Sports Group’s $900 million purchase of the Pittsburgh Penguins at their annual Board of Governors meeting in West Palm Beach, Fla., Thursday, according to a source with knowledge of the deal.
The approval was the last major hurdle for the transaction, with only a few legal loose ends left before the deal closes and the Boston-based sports conglomerate becomes the majority stakeholder.
“I think the executive committee who interviewed the representatives of Fenway Sports Group were very excited about the expertise that they have in professional sports over a long period of time, how well they run their franchises, and the fact that they were excited, Fenway Sports Group, about joining the NHL,” said league commissioner Gary Bettman. “They see a great future for us, and that’s why they’re making the investment.”
The sale will mark the first completed step in FSG’s growth strategy to add to a portfolio that includes the Red Sox, Liverpool Football Club, part-owner of RFK Racing (NASCAR), NESN, Fenway Sports Management, and Fenway Real Estate.
Last March, RedBird Capital Partners infused FSG with a capital investment of $750 million that allowed it to explore opportunities.
FSG is also interested in owning NBA, NFL, MLS, NWSL, and WNBA teams, and adding another European soccer team.
FSG purchased the Penguins from franchise legend Mario Lemieux, who along with Ron Burkle have owned the team since 1999.
Lemieux and Burkle, along with the remainder of the management team, will stay in their positions, with Lemieux and Burkle retaining some ownership shares.
“We like the Pittsburgh Penguins a lot,” said FSG chairman Tom Werner at a Sports Business Journal panel last week. “I think they’ve got a terrific management group, I think there’s a lot of growth in the NHL, they just signed a new media deal with ESPN, they’ve got a very strong collective bargaining agreement with the players, so we see a lot of opportunity there.”
The Bruins, whose owner Jeremy Jacobs is chairman of the NHL Board of Governors, were kept apprised of FSG’s interest in the Penguins. The Bruins own 20 percent of NESN, with FSG owning the remainder.
In Forbes’s NHL franchise valuations released this week, the Penguins were in 12th place at $900 million, slightly above the $865 million average of the league’s 32 clubs.
The NHL is in the first year of a seven-year broadcast deal with ESPN and Turner worth $635 million a season. The league also will begin a jersey-patch sponsorship deal next season. Sponsorship dollars climbed to $676 million last season, Forbes reported, up from $560 million four years ago.
The league, Forbes reported, expects $4.8 billion in revenues this season, $5.4 billion next season, with the total growing to $6 billion by 2025-26.
“The Penguins are an iconic team, they continually get the highest ratings locally for their [regional sports network],” said Werner. “When we went down there, we saw some opportunities to grow the revenues regarding the real estate, which they have an option to grow. There’s a very large parcel next to the PPG [Paints] Arena.
“And we saw some opportunities to raise revenues by creating some more hospitality spaces. We think that there are some more events that can be held in the arena. We love the management, but we also think that with our executive talent we can grow it.”
PPG Paints Arena is located in downtown Pittsburgh, adjacent to Duquesne University and across the Allegheny River from Heinz Field and PNC Park, where the Steelers and Pirates play, respectively. Construction of the arena was completed in 2010.
The Penguins were founded in 1967, and have played in six Stanley Cup Finals, winning five.
The Lemieux-Burkle ownership group bought the team in 1999. Lemieux had been owed back pay by the previous owners. After they filed for bankruptcy, Lemieux was able to convert the owed money into a controlling equity stake.