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The Mario Lemieux Penguins Ownership Era: The Final Pieces Of The Puzzle

In the final part of our four part series, we'll take a look at the quick transformation of the Penguins into a contending, profitable team. Here are parts one, two and three.

In order to finish off this series, we'll review the theorized five-point plan for Mario Lemieux and the Pittsburgh Penguins:

1) Excite the fanbase.

2) Cut costs.

3) Create a level playing field.

4) Invest in the future

5) Win

So, where are we?

1) The fanbase had been reinvigorated as much as possible prior to the 2004-2005 NHL lockout. Even while the Pens were on the decline, the mere idea of Lemieux returning kept the fans coming. While many who lived in the early 1960s can remember with startling specificity where they were when John F. Kennedy was shot, most lifelong Penguin fans can remember where they were when Lemieux announced his return from retirement.

2) However, once cost-cutting began, there could only be so much excitement. Alas, cost-cutting was necessary and every player, save Lemieux, making a reasonable salary was eventually shown the door. The team fell apart, but the Penguins had gotten their finances in order and could start over. From this, as we saw earlier, the team actually managed to turn a profit in semi-successful seasons while budding superstars were still in the moderately-priced years of their NHL careers, just before the wheels fell off.

3) Now that the team had been stripped bare, the only way to make the squad competitive was to give it a chance to compete financially with the rest of the NHL. Leading the charge into the lockout, Lemieux and the Penguins helped usher in a new era of competitive balance for the NHL and the Penguins have been, by far, the biggest beneficiary of the NHL's salary cap.

4) Even with the salary cap in place, the Penguins could only afford to operate at a level below the maximum of the cap and stay financially successful. The only way to get more money into hockey operations, and (arguably more importantly) into investors' portfolios, was to obtain a new arena. A new arena would be an upgrade on the old Mellon Arena and allow the creation of more revenue, most of which would stay with the team. A new lease could be negotiated and the Penguins, not the Mellon Arena's managers SMG, could eat most of its fruits.

Lemieux's ownership group wanted an arena first and foremost, whether that arena would be in Pittsburgh or elsewhere. Once plans for the Consol Energy Center were solidified, so was the future of the franchise ... and that future would be in Pittsburgh.

The only thing left was putting a winner on the ice.

The 2005-2006 season proved that this would not be an easy since, with an army of aging stars, the Penguins were once again one of the worst teams in the NHL. Sergei Gonchar had incredible difficulty adapting to the NHL's new policies, in which rules against clutching and grabbing were enforced much more strictly. Injuries forced early retirements for Ziggy Palffy and, more depressingly, Mario Lemieux. In the end, this turned out to be a good thing, because the direction of the Penguins became incredibly clear.

Sidney Crosby blew up in his rookie campaign that same season, putting up 102 points in 81 games at the ripe old age of 18 and, most unbelievably, registering only a -1 as the primary forward on a team that gave up 72 more goals than it scored. The arrival of Evgeni Malkin the following season, the christening of Marc-Andre Fleury as the team's starting goaltender, and Gonchar's eventual adaption to the league's new rules once again gave reason for optimism.

Other developments, less obvious initially, such as the emergence of Rob Scuderi and Brooks Orpik as able defenders, the transformation of Ryan Malone into a power forward, a healthy Mark Eaton's steady contributions on defense, and, much more obviously, the 29-goal performance of Jordan Staal in his rookie season skyrocketed the Penguins from the cellar of the NHL to the playoffs in 2006-2007.

Attendance, unsurprisingly, capped off at near-capacity numbers with the winning team. Gradually, the organization added to the roster through key trades and free agent acquisitions, slowly inching towards, and eventually leveling near, the maximum of the salary cap.

But the main reason the team became what it is today was thanks to Sidney Crosby and Evgeni Malkin, two dominant players with contrasting styles, creating matchup problems for opponents on a nightly basis. Just as when Lemieux and Jagr dominated the ice at the Igloo, the Penguins boasted two of the premier talents in the NHL.

The young stars, however, do not come cheap, with their salaries both sitting at $8.7 million per season. Conceivably, could the Penguins have afforded this in the pre-cap NHL?

Let's take a look at the gradual improvement of the Penguins' revenue with some numbers shared by James Mirtle in 2008 over at SBN's From The Rink (in millions):

Rk          Team       03-04  05-06 06-07  07-08 Change      Avg.

23.     Pittsburgh     $52      $63    $67     $87     67.31%     $67

The list shows the ranking of each franchise from 2003-2004 through 2007-2008 in overall revenue, including revenue sharing (from which the Penguins benefited). 

Unsurprisingly, though the Penguins were still ranked 23rd in the league in overall revenue, the franchise also showed the largest increase in revenue of any team, percentage-wise, over that time, all while still in the Mellon Arena. Couple this with the salary cap keeping costs in line, and the Penguins were finally in an enviable situation.

Accordingly, via Forbes, the franchise's value increased from $132 million in 2000 to $222 million in 2009, making it the NHL's 11th-most-profitable franchise. Imagine what the return on investment for Lemieux's $5 million has been since the purchase of the team. Significant, to say the least.

And why is the franchise so wealthy now? Because it is a winner, a winner with the some best players in the NHL, the league's newest arena and one of its savviest ownership groups. A team's value can be assessed by its assets. The major assets of any team are:

1) Revenue Generation Capabilities

2) Arena

3) Athletes

The Penguins, with a new arena en route, a high-powered roster and skyrocketing profits, would've been a great buy on the stock market.

The Pens reached the Stanley Cup Finals in 2008, leading to a Stanley Cup victory in 2009. For those who remembered the lean years, it was that much sweeter and simultaneously unbelievable at the same time.

From bankrupt and bottom of the barrel to champion and owners of a state-of-the-art arena, it's impressive to see how far the Penguins have come in the span of a decade. Lemieux can take credit as the architect of this final product, a work of art worthy of adulation.

But, it would be disingenuous to say that everything Lemieux did was from an altruistic seat upon a noble throne overlooking the Hill District. There may not have been a specific five-point plan to make the Penguins a successful business, but everything that was done was in the interest of the business.

Keeping hockey in Pittsburgh was fine as long as the business model worked and the Penguins got their new arena. Everything that happened wasn't done simply in the interest of the Pittsburgh Penguins on the ice but also in the interest of the investors and various corporate subsidiaries they would create to run the multitude of branches extending from the franchise.

That is the business side of things. The reality of modern day sports is that the dollar is the first priority and, often, second and third as well. Winning is important because it helps generate more funds, in turn making the business a success. If you win and you're still hemorrhaging funds, you set yourself up for disaster ... just ask Howard Baldwin. Keeping the shareholders happy is just as, if not more, important than keeping the fans happy.

Still, Mario Lemieux and his ownership group deserve appreciation for what they have done for the Penguins and for hockey in the city of Pittsburgh. From a franchise in tatters, operating on a broken model, to the model franchise of the salary cap era, it has been a tremendous, if emotionally draining, ride for the Penguins.

Lemieux, Ron Burkle and the Lemieux Group worked a near-miracle and, finally, the owners and the fans can appreciate the fruits of their labor.

It's still a hockey night in Pittsburgh.

Photographs by dizfunk used in background montage under Creative Commons. Thank you.