Hockey Hall of Famer Mario Lemieux just made more than $350 million in the sale of his former team, the Pittsburgh Penguins, and it's all because of a payment issue that took place during his playing career and into his initial retirement.
Sports business reporter Joe Pompliano shared a Twitter thread on Sunday (December 26) detailing how the former Pittsburgh captain became the team's majority owner after the Penguins were forced to declare bankruptcy in 1998.
Lemieux, who initially retired in 1997 before making his eventual return as a player-owner in 2000, was still owed deferred payments from the NHL franchise.
"Penguins ownership saw their business collapse throughout the 1990s," Pompliano tweeted. "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."
Pompliano continues the thread by acknowledging Lemieux's decision to offer to purchase the team with an investor group, financing the deal by converting the $20 million of his deferred salary into equity and controlling 25% ownership of the team, rather than file a lawsuit.
Since then, the Penguins have been one of NHL's premiere franchises, having won three Stanley Cups, increasing annual revenue from $55 million to $185 million, successfully building a new arena, and signing lucrative cable deals.
Lemieux's equity stake increased over the years and he's expected to remain a minority owner as part of Fenway Sports Group's recent purchase of the Penguins.
The Penguins' all-time leading scorer released a statement on the team's official website amid the announcement of the official agreement in November
"To our beloved fans, Ron Burkle and I have reached agreement with Fenway Sports Group (FSG) to sell a controlling interest in the Pittsburgh Penguins hockey team. This is an exciting day for the future of our franchise," Lemieux said. We want Penguins fans to know that we would only enter a partnership of this magnitude with leaders who share our values.
"Over the years, we have been approached multiple times by various groups interested in purchasing the team but never found the right fit. In FSG, however, we met an experienced group of leaders with a passion to win championships and a vision that aligns with ours. Just as importantly, they have at their core a stewardship philosophy rooted in local community impact and investment. It is a winning combination."
On November 16, the Wall Street Journal reported Fenway Sports Group, the parent company of the Boston Red Sox, Liverpool F.C., and Roush Fenway Racing, is reportedly in "advanced talks" to purchase the Penguins.
At the time, theWall Street Journal reported the proposed deal "could be finalized later this week" if negotiations "don't fall apart" as terms continue to be discussed, sources with knowledge of the situation confirmed.
Fenway Sports Group is led by principal owner John W. Henry, who holds an estimated 40% of stock in the company, and Chairman Tom Werner, who controls the second-largest block of shares.
In March, the company added Los Angeles Lakers forward LeBron James and his longtime and business partner Maverick Carter as businesses partners.
James and Carter became the first Black partners of FSG and joined Basketball Hall of Famer Earvin "Magic" Johnson and Baseball Hall of Fame inductee, Derek Jeter, as the only Black owners of MLB teams upon their respective purchase of ownership stakes in the Red Sox.
Michael Silverman of the Boston Globe reported James purchased an "undisclosed amount of Fenway Sports Group shares after previously holding an approximately 2 percent share of the Liverpool soccer franchise since 2011," at the time of the deal.
The Boston Globe reported FSG aimed to add more professional sports teams to its ownership portfolio, as well as "betting, esports and data analytics companies" amid the reported agreements with James and Carter.