The Pittsburgh Penguins were recently acquired by Fenway Sports Group for about $900 million.
The interesting part?
A former Penguins player is set to make over $350 million from the deal because of one negotiation in 1999.
This is the wild story 👇
The interesting part?
A former Penguins player is set to make over $350 million from the deal because of one negotiation in 1999.
This is the wild story 👇
1) First, some history.
After a remarkable career in the Quebec Junior Hockey league, Mario Lemieux was selected #1 overall by the Pittsburgh Penguins in 1984.
He signed a 2-year deal for $600,000, with a $150,000 signing bonus, and got to work.
After a remarkable career in the Quebec Junior Hockey league, Mario Lemieux was selected #1 overall by the Pittsburgh Penguins in 1984.
He signed a 2-year deal for $600,000, with a $150,000 signing bonus, and got to work.
2) Mario Lemieux went on to have a legendary career.
He played for 17 seasons, scored over 750 goals, had 1,200+ assists, and brought home two Stanley Cups in 1991 & 1992.
But that's only part of the story...
He played for 17 seasons, scored over 750 goals, had 1,200+ assists, and brought home two Stanley Cups in 1991 & 1992.
But that's only part of the story...
3) Penguins ownership saw their business collapse throughout the 1990s.
Revenue crashed while expenses tripled, and with $100M in debt, the team was forced to declare bankruptcy in 1998.
Their largest creditor?
Mario Lemieux, who was owed over $26 million in deferred salary.
Revenue crashed while expenses tripled, and with $100M in debt, the team was forced to declare bankruptcy in 1998.
Their largest creditor?
Mario Lemieux, who was owed over $26 million in deferred salary.
4) But rather than chase pennies on the dollar in court, Mario Lemieux came up with a brilliant solution.
Lemieux offered to buy the team with an investor group, financing his part by converting $20M of his deferred salary into equity.
Once done, Lemieux owned 25% of the team.
Lemieux offered to buy the team with an investor group, financing his part by converting $20M of his deferred salary into equity.
Once done, Lemieux owned 25% of the team.
5) Since buying the Penguins in 1999, Mario Lemieux and his ownership group have revitalized the franchise.
Annual revenue is up from $55M to $185M, they've built a new arena and have locked in lucrative cable deals.
Even better?
They also won 3 more Stanley Cup trophies.
Annual revenue is up from $55M to $185M, they've built a new arena and have locked in lucrative cable deals.
Even better?
They also won 3 more Stanley Cup trophies.
6) The Penguins recently ended a 633 game sellout streak that lasted more than 14 years.
And Mario Lemieux is the only person in NHL history to have their name on the Stanley Cup as both a player and owner.
The franchise is now one of the NHL's strongest.
And Mario Lemieux is the only person in NHL history to have their name on the Stanley Cup as both a player and owner.
The franchise is now one of the NHL's strongest.
7) Mario Lemieux increased his equity stake over the years & is expected to stay as a small minority owner after the sale.
But at a $900M valuation, that means Lemieux turned his $26M deferred salary into roughly $360M.
That makes it one of the best athlete investments ever.
But at a $900M valuation, that means Lemieux turned his $26M deferred salary into roughly $360M.
That makes it one of the best athlete investments ever.
8) Mario Lemieux's deal to buy the Penguins might seem like a no-brainer now, but that wasn't always the case.
Lemieux found leverage & got creative, incentivizing himself with uncapped upside and turned a bad situation into an incredible investment.
As they say, equity is key.
Lemieux found leverage & got creative, incentivizing himself with uncapped upside and turned a bad situation into an incredible investment.
As they say, equity is key.
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huddleup.substack.com
1. Follow me; I tweet cool stories like this every day.
2. Subscribe to my free daily newsletter, where I give a detailed analysis on topics involving the money and business behind sports.
huddleup.substack.com
If you want to dig deeper into the details, this is a great breakdown of the 1999 negotiation.
washingtonpost.com
washingtonpost.com
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