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If local and state officials accept the team's plan for a new Uptown arena -- financed in part with revenue generated by a proposed horse-racing and slot machine development along Route 28 in Harrison -- the Penguins want a lease deal similar to those granted to the Pirates and Steelers.

The Pirates and Steelers pay far less in rent than the Penguins do now. The Pirates' and Steelers' leases also allow them to manage their venues, keep most of the revenue and control development of the land between PNC Park and Heinz Field. In exchange, the teams pay to maintain the stadiums.

Under the Penguins' Mellon Arena lease and an arena proposal drafted by the city-county Sports & Exhibition Authority last year, the authority would retain arena management and naming-rights revenue, non-hockey revenue and land-development rights for the 28 acres surrounding Mellon Arena.

The authority, which owns PNC Park, Heinz Field and Mellon Arena, also would require the Penguins to pay an annual rent of $3 million.

These terms appear much less favorable than those for the Pirates and Steelers, which have paid a combined $3.5 million to the authority in their first two seasons in their new buildings.

"We are interested in receiving the same treatment as the Pirates and the Steelers," said Penguins President Ken Sawyer. "We don't want any special treatment."

The Penguins say they have struggled for more than a decade under a sublease from Mellon Arena's primary tenant, SMG Inc., which controls the lion's share of parking, concessions and non-hockey revenue. The Penguins pay annual rent to SMG. From 2004 to 2012, Sawyer says, the team is required to make total payments to SMG ranging from $10.8 million to $14.8 million, depending on revenue.

As part of the team's bankruptcy settlement, the Penguins take over as the primary tenant on July 1, 2004. The rent payments are a condition of buying out the lease.

SMG paid about $24 million in 1991 to then-Penguins owner Edward DeBartolo for the master lease on the arena through 2012.

The team's subsequent owner, Howard Baldwin, and his partner, Roger Marino, who joined the ownership group in 1996, tried unsuccessfully to buy back the lease before the team filed for bankruptcy protection in 1998, citing the lease as a primary reason for the Chapter 11.

"The Penguins are not aware that either the Steelers or Pirates had to incur costs to remove SMG as manager of Three Rivers Stadium and note that both manage their new stadiums without an intermediary, including the use of the stadiums for occasional concerts or other events," the team said in a document supporting its $278 million arena financing plan announced Tuesday.

The Pirates, who contributed $47.7 million to the $260 million PNC Park -- the same contribution proposed by the Penguins for a new arena -- pay $100,000 a year in base rent. The team gets to keep the first $1.5 million in revenue from a $2.50-per-ticket surcharge.

The Steelers surrender 15 percent of non-football event revenue at Heinz Field. One event so far, an 'NSync concert in September 2001, netted about $30,000 for the authority.

All told, the Pirates have paid $1.3 million to the authority in their first two seasons at PNC Park. The Steelers have paid $2.2 million over two years, primarily from ticket surcharges.

The Pirates and Steelers each are required to pay $25 million in "statutory rent" once every 10 years to the state to cover the state's contribution to each project. But the payments are offset by credits the teams accumulate from various state taxes paid by all team employees, stadium vendors and the venue itself.

It's possible the teams will have amassed enough credits to cancel out the statutory rent payments, said Stephanie Weyant of the state Department of Revenue. Weyant said it is too soon to determine whether any tax will be owed at the end of the first 10-year period, which includes a 25 percent discount, lowering the required payment to almost $18.8 million.

In addition to rent payments to SMG, the Penguins pay $170,000 annually to the county's Regional Asset District on a 1997 bond issue to improve Mellon Arena and add club seating. That debt will be settled in two years, Sawyer said.

The team also pays a 3 percent ticket surcharge on hockey games and will pick up SMG's 5 percent surcharge on non-hockey events when it takes over the arena master lease.

Stephen Leeper, executive director of the Sports & Exhibition Authority, says the team is making a bigger deal out of the arena management issue than the team's own financial projections bear out.

He said numbers from the Penguins show the team would pocket only $79,000 from managing the building themselves.

Leeper said the authority's new arena proposal, which calls for the team to pay $3 million in annual rent, is a good deal compared with the cost of being responsible for arena operating expenses.

He said the authority wants a professional building manager to book the new arena as completely as possible and is unsure whether the team could handle this on its own.

"There is a big difference between managing an arena and a football or baseball stadium," he said.

Generally, indoor arenas can host more events than open-air venues.

Leeper also said that for the taxpayer portion of the new arena project to be underwritten by bond firms, an arena revenue source -- from naming rights or non-hockey events -- must be pledged to pay the annual debt service.

"We're talking about a team that is three years out of bankruptcy and a league that by its own admission is not on solid financial footing," he said, referring to the National Hockey League.

Leeper said the Pirates and Steelers put up almost all of their cash for their new buildings up front -- $123 million from the Steelers and $47.7 million from the Pirates -- by floating bonds to be paid off by the teams.

Only the Steelers used the authority to float part of their bonds, about $13 million, which are being paid off with a ticket surcharge.

Leeper said the Penguins have yet to present a plan for development rights around Mellon Arena.

"If they come up with a proposal," he said, "they could get development rights."

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