PPG Paints Arena Pittsburgh, PA (Photo- Owen Krepps/National Hockey Now)
Boy, a billion dollars doesn’t go as far as it used to.
Pittsburgh Penguins fans frothed on Monday as a new report emerged linking the Chicago-based Hoffman family, who own the aptly named Hoffman Family of Companies, to interest in acquiring the Penguins from the Fenway Sports Group.
David Hoffman, the founder and chairman, has an estimated net worth of $2 billion, though that figured seemed to jump by about $700 million from 2024 to 2025.
While the chatter again peaked, Pittsburgh Hockey Now reached out for a comment from FSG, which quickly responded.
“Fenway Sports Group continues to evaluate potential equity partners to support the long-term growth of the Pittsburgh Penguins. While the process remains active, there is nothing to confirm or discuss at this time.”
Clarification: The statement was the second on-the-record statment FSG gave to PHN Tuesday morning. The first statement was more informal, and included the closing line, “Despite the reports.”
FSG ran the same play with Liverpool FC, and after a few months of British tabloid speculation, FSG found an investor, things settled, and continue to run smoothly. Liverpool won the Premier League Championship last year.
As part of their minority investment in Liverpool, FSG took somewhere between $100 and $200 million from Dynasty Equity to pay down debt, fund stadium upgrades, and upgrade training facilities.
FSG has repeatedly stated publicly and privately that they are looking for a minority investor and are not for sale. There have been contrary reports from both Sportsnet and TSN, so readers will have to evaluate and judge for themselves.
Now, more context.
Over the past five years, the valuations of professional sports teams have essentially doubled. The explosion of new revenue streams from broadcast streaming, new TV deals, and good old-fashioned price hikes have boomed revenues, sending valuations soaring into astronomical numbers.
Public valuations placed the Penguins at around $500 million, then $700 million when the Fenway Sports Group swooped in to buy the Penguins in 2020. They paid a reported $900 million, and the league values launched.
In 2017, the Vegas Golden Knights’ expansion fee was $500 million. In 2018, Seattle paid $650 million. By 2020, the escalation was only beginning.
Currently, the NHL is setting the new expansion fees between $1.8 billion and $2 billion. Public estimates place the Penguins’ value at $1.75 billion, but if an expansion team costs $2 billion, the current owner, Fenway Sports Group, isn’t stupid. In fact, they’re far from it, and the educated guess here is that the price tag on the Penguins is well more than $1.75 billion.
How could the value not be more than expansion–as it was in 2020–with a land development started, a merchandise juggernaut already in place, practice rinks built, and a generationally established fan base?
The Hoffmans and Lemieux Bids
There are significant problems with the potential suitors, the Hoffmans and the Lemieux Group. Most notably, the problem seems to be a lack of overwhelming funding.
As a counter, a reader who is a banker and has some experience in business sales sent a note (but asked not to be named):
“In most cases, the buyer of a business only needs to put up about 20%-35% of the purchase price. The lenders put up the rest, holding the stock in the business as well as any assets as collateral. Thus, if the franchise was valued at say $2.1MM and the acquiring put up 33% of their own money, that would be $700MM, an amount Burkle or Hoffman could manage.”
The above is accurate, but it’s not the entire story. Recent reports suggested the Lemieux Group’s bid was well short of expected figures. Publicly available figures put the Lemieux Group (Ron Burkle and Lemieux) at a combined $3.4 billion. The Hoffmans are in the $2 billion range.
Here is the rub with purchasing the Penguins and one of the reasons why FSG is seeking a minority investor: Land development. It will take hundreds of millions to complete the Hill District development, which is also scheduled to include a concert venue modeled after the MGM Music Hall at Fenway.
While it seems incredible to write, it will be difficult for a person or group “only” worth a couple or a few billion to buy the Penguins. The debt service to purchase the team would be significant, and the additional debts needed to complete the land development would put a significant strain on inadequate finances.
In case you haven’t noticed, Federal Reserve interest rates are still above 4%, making capital more costly to borrow.
If NHL revenue growth were to stall, if the Penguins were to languish in a rebuild suppressing attendance, if the city were to enact unfavorable taxes, the challenge of maintaining the debt would only grow.
Don’t forget, the Penguins franchise still leads the league in surviving bankruptcy. They went through one in the 1970s (when owners couldn’t pay a $6.5 million debt), avoided one in the 1980s while the Debartolo family had very deep pockets, but again faced the possibility of padlocks on the doors in 1998.
Like condos atop the Manhattan skyline, the franchise prices have quickly quadrupled, if not risen by more. The richest of the rich are getting richer, and toys cost more. A few billion might be able to buy the Penguins, but operating them, being able to absorb losses, and fund growth is an entirely different matter. After all, even the very wealthy at the top of FSG are looking for a capital infusion.
So, anyone want to loan me a few billion?
Tags: Fenway Sports Group Hoffman family mario lemieux Pittsburgh Penguins
Categorized:Penguins Pittsburgh Penguins