PITTSBURGH -- The Penguins moved a step closer to leaving Pittsburgh, declaring on Monday an impasse in their new arena negotiations with state and local leaders and saying they will actively pursue relocation.
The breakdown in arena talks came only three days after Gov. Ed Rendell said he felt an agreement was close. It also increases the possibility the Penguins will be playing in Kansas City next season.
"We have made a single-minded effort to bring this new arena to a successful conclusion and keep the team in Pittsburgh," owners Mario Lemieux and Ron Burkle said in a letter to Rendell and local government officials. "... Our good-faith efforts have not produced a deal, however, and have only added more anxiety to what we thought at best was a risky proposition for us moving forward."
In the letter, Lemieux and Burkle put the blame for the impasse on government officials, arguing they agreed to pay $120 million over 30 years to help build a $290 million arena and cover construction cost overruns, yet still have not reached a deal.
NHL commissioner Gary Bettman became involved in the talks several weeks ago, but also has been unable to finalize an agreement.
"We can do no more," Lemieux, the longtime Penguins star, and Burkle said in the letter.
The Penguins had an agreement with Isle of Capri Casinos to build the arena at no expense to the team or taxpayers in exchange for a license to build a Pittsburgh slots casino, but a state board in December chose a competing bid.
On Jan. 4, the team, state, city and Allegheny County began negotiating an alternate arena funding plan. At the time, government officials were asking for the team to contribute about $4.1 million per year but suggested they were willing to come down.
However, the amount being sought from the team has changed little, according to the Penguins' calculations.
Kansas City has offered its nearly completed Sprint Center to the Penguins rent-free. The Penguins would also gain revenue from development projects around the arena.
However, the Penguins would be leaving one of the NHL's strongest U.S. markets for a smaller one that lost an NHL team in 1976 after only two seasons because of lack of support. The Penguins' home attendance and local TV ratings are among the strongest of the 24 United States-based franchises.
When Lemieux's group bought the team in federal bankruptcy court in 1999, the Hall of Fame player said he did so to ensure the team's existence in Pittsburgh.
The Penguins' hardball negotiating stance comes with the team contending for a playoff spot for the first time in six years. A youthful team led by NHL scoring leader Sidney Crosby and rookies Evgeni Malkin and Jordan Staal has become one of the league's prime attendance draws.
At home, the Penguins are playing to nearly 96 percent of arena capacity for the season. All of their remaining nine home games are expected to attract standing-room-only crowds.
The Penguins also have begun selling season tickets for the 2007-08 season in Pittsburgh, even though they have not agreed to play there another season.
"They're tough negotiators," Rendell said.