League on solid ground with extension of CBA
Penguins’ Morehouse eyes financial stability
Penguins CEO and president David Morehouse walked through an eerily silent parking lot outside of PPG Paints Arena a few weeks back when, from a distance, he saw the familiar face of an usher.
“How have you been?” Morehouse asked.
“I just miss all the people,” the usher replied.
Don’t we all. The turnstiles at PPG Paints Arena have stood still for about four months now amid the COVID-19 pandemic. No one knows exactly when Penguins fans will have a chance to extend a sellout streak that dates to 2007.
But Friday brought some better news. Great news, actually.
The NHL ratified not only
return-to-play protocols, but also an extension to the collective bargaining agreement that should ensure labor peace through at least 2025-26.
“The most important aspect of the CBA is it gives the league, and it gives the Penguins, clear financial stability for six years,” Morehouse said in an interview with the Pittsburgh Post-Gazette.
The NHL has a long history of labor disputes. Since Morehouse has been with the club, he has lived through the 2004-05 lockout that wiped out the entire season, the 2012-13 lockout that took away about half the year and several more seasons where uncertainty swirled.
He credits commissioner Gary Bettman, the owners, NHLPA executive director Donald Fehr and the players for their ability to work together during an unprecedented situation to find common ground.
“From the very beginning, there was never any talk of a bargain or a negotiation,” he said. “It was always collaborative. I think all parties involved recognized early that it’s not just the sports that are in trouble. We’re all in trouble. We need to find a way out of this. The best way to do that is to work together.”
Given the Penguins recent success and the fresh banners that hang outside the arena, Morehouse said it’s easy to forget that they’re technically a smallmarket team. However, when the NHL returns, he expects the new CBA will give the Penguins the opportunity to spend to the upper limits of the salary cap, something not all clubs plan to do due to the economic uncertainty.
“This ownership group, led by Ron Burkle and Mario Lemieux, they’ve never said ‘no’ to anything that we’ve asked for, Jim Rutherford asked for, Mike Sullivan has asked for that will make the team better and give us the best chance of winning the Stanley Cup,” Morehouse said. “The ownership group is focused on winning. We know they have the commitment, both economically and competitively, to put the best possible product on the ice.”
This new-found stability and reassurance is especially valuable now. Everyone has felt the impact of the COVID-19 pandemic, the Penguins included.
Six regular-season games that were supposed to be played at PPG Paint Arena were canceled, and who knows how many postseason games would have been played in Pittsburgh under normal circumstances. The NHL, unlike some other leagues with lucrative national TV deals, relies even more heavily on gate receipts to keep the checkbooks balanced. That’s part of the reason it was essential that the CBA and return-toplay format were ratified in concert with one another, even though the CBA wasn’t scheduled to expire for another year.
Morehouse took a 50% pay cut in an effort to shoulder some of the economic hardship. Jim Rutherford, likewise, also slashed his salary in an effort to take one for the team. But in the end, the Penguins made a difficult decision to furlough a number of employees for four months. Morehouse called the video conference with his employees the most difficult moment of his professional career.
“One of the reasons that made it so hard is I grew up here in the ’70s,” Morehouse said. “I watched it happen all around me and people in my family.”
Morehouse made a strong pitch for Pittsburgh to be one of the NHL’s hub cities when the league resumes play this season, partially in an attempt to add a little spark to the local economy. The league was impressed with the medical facilities in the area, the practice rink and its history of hosting major events. However, Pittsburgh didn’t have enough luxury hotels and the facilities were too spread out to keep the bubble tight enough.
“If our development was finished across the street, it would have been easy to create a bubble around the hotels, restaurants, the arena itself,” Morehouse said.
That project, by the way, is in a bit of a holding pattern due to the recent spike in COVID-19 cases in Allegheny County. First National Bank is still onboard to build its headquarters across from PPG Paints Arena. Live Nation is planning a concert venue. And the first 500 housing units are ready to go. However, it’s unclear when they’ll break ground.
“Right now, we’re where everyone else is,” Morehouse said. “We’re kind of in a standstill due to the recent spike in Pittsburgh.”
Looking to the future, no one knows for sure how COVID-19 will impact the 2020-21 season. The Penguins are spending this time trying to make PPG Paints Arena safer from a socialdistancing standpoint by installing more touchless features and rethinking concession stands.
“We’re looking at all kinds of structural changes to the arena,” he said. “That’s all we really can do.”
It’s impossible to put a date on it. But there’s one thing Morehouse is confident about. Once the people return, the CBA ensures they’ll be back for good.
“The most important aspect of the CBA is it gives the league, and it gives the Penguins, clear financial stability for six years.”
— David Morehouse, Penguins CEO/president