Pittsburgh Penguins - 1998
In what was the second of two bankruptcy filings (the first in 1975), the Penguins’ debts were primarily to private creditors rather than the government and the IRS. Though the team had won back-to-back Stanley Cups in 1991 and 1992, the owners had to spend extravagantly to do so. Howard Baldwin and Morris Belzberg, who purchased the team after its first Stanley Cup triumph, were unable to fund the team any longer and Pittsburgh seemed destined to lose its hockey team (again).
Instead of selling and relocating, the Penguins arrived at an interesting and creative solution to keep the puck in Pittsburgh. While players’ salary deferments had kept the team afloat for a period of time, that method would no longer support the operating costs of an NHL team. Mario Lemieux, the Penguins’ undisputed star, was owed approximately $30 million in deferred salary. Rather than collecting what he was owed in cash, Lemieux converted the Penguins’ debt to equity and thus became part-owner. With the support of the league, the courts, and wealthy entrepreneur Ronald Burkle, Lemieux saved the Penguins and ensured they would remain in Pittsburgh.