The general entered the room, shook my hand, then Tom’s, and barely acknowledged anyone else. He welcomed us in Russian, the executive doing the translation. He then proceeded to say exactly what Tikhonov and Gushchin had prepared us for. “We love what you’re doing, and we really would love to have you invest in other sports teams. We hope you’ll stay with this.” So then I did what I said I would do, expressing great appreciation for the privilege of being allowed to be part of such an historical and exciting venture. I then said that we would welcome the opportunity to pursue soccer and basketball involvement and that we would like Mr. Gushchin and Mr. Tikhonov to be involved as well.
There was complete silence in the room. The general looked at me expressionlessly, then glared at Gushchin and Tikhonov, who were now practically shaking with fear. All of a sudden the general stood up and raised his fist — and I was thinking, “Is he going to hit me?” — then slammed it down on the table and yelled, “Wrong answer!” in perfectly good English. He looked at Gushchin, who was practically ready to die, and said, in English, “Gushchin, you drink too much and you’ve never been in the army. If you aren’t careful, I’m going to see to it that you’re drafted tomorrow.” He was more respectful of Tikhonov, but he admonished him too. “Your team isn’t doing well at all, and if that team doesn’t get going, you’ll be back in the Army.” He went on like this for a while. Tom and I looked at each other thinking, “What the hell have we gotten into?” and “Thank God we have a charter plane to take us home.”
Then the general very calmly sat down, his whole demeanor softened, and he said, “Now, please, Mr. Baldwin, how is Mario Lemieux feeling after his bout with Hodgkin’s disease? You must tell him that all Russian prayers are with him.” Which was actually incredible, because all during the Soviet era that had just ended, officially there was no religion in Russia.
We proceeded to have a delightful meeting.
When we left, Gushchin and Tikhonov practically sprinted back to our office. Most offices have a desk and filing cabinet, but this one had a locker, and it was full of vodka. That vodka came out and they were just . . . well, it was a typical Russians-drinking-vodka scene. The fact of the matter was that the army could still do whatever it wanted, even after the fall of the communist era. Tikhonov and Gushchin were relieved to get away with nothing more than a severe admonishment, but I think the general just got there in a bad mood. The guy had just come back from the Afghan front and that was not a good time for the Russians. And I think he also felt that Gushchin and Tikhonov were out of line — which they were.
On the ice, the team was still pretty average, but it was better than it had been when we got there. In 1992–93 CSKA finished second-last overall, with a 7–28–7 record. After we took over, the 1993–94 team climbed just over .500, to 21–20–5, and 14th overall in the 24-team league.
It was a young roster, with about 17 or 18 teenagers playing at least one game that year. Nikolai Khabibulin was probably our most recognizable player; he had already been taken by Winnipeg in the 1992 draft. Sergei Brylin went to the Devils in the second round that June, and Yan Golubovsky went to Detroit in the first round even though he had only played eight games for us after coming from Dynamo’s second team. Golubovsky didn’t have much of an NHL career, but at least he played a few dozen games in the league. We, like most other teams, had a lot of players drafted who never played in the NHL and some who never even came to North America. But now that they could finally get players out of Russia, NHL teams were drafting them like crazy.
Over our two years there, we drafted a handful of players from CSKA for Pittsburgh, like Valentin Morozov, Oleg Belov and Alexei Krivchenkov, but they turned out to be AHL types who never made the Penguins. But by being there we knew all about Alexei Morozov, who played for Krylja Sovetov, and we took him in the first round of the 1995 draft. He had a 20-goal season for us seven years later.
That first year, the 1993–94 season, we toured the Red Army team, billed as the Russian Penguins, through the U.S. We played 13 games against International Hockey League teams, with the games counting in the IHL standings. We won two games, tied two and lost the other nine.
In the 1994–95 season, our second year, we got up to 25–20–7 and finished 6th out of 14 teams in the new West division, but the main thing was that by the middle of that season we were really starting to make money. Warshaw and his crew were doing a terrific job. The team was playing to full capacity on a regular basis, and we were doing over a million bucks in sponsorships, mostly from American companies. The whole idea was that American companies were itching to get into Russia and were looking for vehicles to get their products there. So we introduced North American culture to the Russians . . . through hockey. It made a profit for CSKA, and for us — which, ironically, is what led to our departure.
We got more publicity from the Russian Penguins than from anything else we did. The Today Show, the Wall Street Journal, Good Morning America, a feature in Penthouse magazine — everything. We were mentioned in a speech by Al Gore about how more Americans should go over to Russia; he used us as an example of how Americans could blend into their culture. But all the attention was a double-edged sword. It woke up the wrong Russian elements to our venture, even in our own office. Periodically, Gushchin would send a message asking for an additional $5K or $10K here and there for “hockey” expenses. The final request was a Mercedes for Gushchin, to “make the team better,” to which we said, “Nyet!”
At the end of that year we had our usual “owners’” meeting in New York, and we requested that Gushchin and Tikhonov bring an accounting of how the money had been spent. It was Tom Ruta, Karen and me, and we did what we always did: we went to Morton’s for dinner and the meeting. Gushchin and Tikhonov met us there, but this time they brought with them two guys, both young and pockmarked, with slicked-back hair, gold Rolexes and black shiny suits. Instead of financial documents, Gushchin produced Polaroid photos — in color! — of his new office and Tikhonov’s new office, complete with a high-tech sauna between them. This was their version of accounting for where our money went.
And then they put the arm on us. It was very simple. It was really obvious that their companions were thugs, but Gushchin and Tikhonov introduced them like this: “These gentlemen are our bankers, and they’re our partners now, and in order for this to continue the way we hope, we hope you’ll invest money with them to be able to continue to maintain the program we have together.” This was right in the restaurant. It was a complete shakedown and we’d have to have been pretty naive not to get that. That kind of intimidation was a rampant phenomenon in the “new” Russia. We politely declined to make any payoff, but we also got the message. We would be saying “Do svidaniya” (goodbye) to Russia.
We finished dinner, picked up the tab, said our goodbyes, and the minute we left the restaurant Tom and I looked at each other and said, “We have to get our people out of there, now!” It was getting dangerous, and we didn’t want to jeopardize the safety of our people.
We brought Stevie Warshaw and his crew home from Moscow as soon as we could. To underscore the danger, the concession company at the arena would not acquiesce to any payoff either, and sadly, right after we got Stevie out of there, their concession manager was gunned down right in front of the building.
So you see, we hit it at sort of the perfect moment, and while it is more stable there now, we got out at the right time.
I loved the experience, and I was very proud of it because we were the first. If the rules hadn’t changed, we might still be there today. Tikhonov and Gushchin were great, fun characters, and Tikhonov, to this day, is one of the great hockey coaches of all time, and not just in Russia. The general who everybody thought was going to shoot us? I’m not sure what happened to him but would love to find out.
It was one of the more interesting chapters of my life. I’d like to think we made a difference in a transitional period for
Russian hockey. If you go to a game there now, they are doing all of the same kinds of promotions, plus more.
To this day we still have the rights to own half CSKA if we wanted to. Once a year or so, we get an e-mail: “Come back.” But now that they’ve got the KHL, they don’t need us. On a number of occasions quite recently, Gushchin has reached out to Stevie Warshaw to see if we might consider returning.
I guess they need a new Jacuzzi.
Reluctant Bankruptcy
and Leaving the Penguins
My final two years with the Pittsburgh Penguins were sometimes dramatic and almost always difficult.
On the ice, Mario decided to retire after the 1996–97 season, despite winning his sixth Art Ross Trophy as NHL scoring champion, blaming his back problems. In his final season, the Flyers easily eliminated us from the first round of the playoffs in five games. GM Craig Patrick was behind the bench after relieving Eddie Johnston of his coaching duties late in the season. Kevin Constantine took over the next year and, without Mario (who was fast-tracked into the Hockey Hall of Fame that November), instituted more of a defensive style, and we finished a very strong second in the East with 98 points. Ron Francis had taken over as captain, and Jaromir won the NHL scoring title with 102 points, 11 more than anyone else. But the Canadiens, who had finished seventh, upset us in six games in the first round of the playoffs.
Off the ice, I got a new partner, Roger Marino, and that eventually led to the Pittsburgh Penguins declaring bankruptcy in October of 1998.
I took a lot of criticism in the Pittsburgh media for that, and still do. I get a little sensitive about the bankruptcy. It did not occur because we had to go bankrupt. It occurred, I would argue, because of three commitments — Spectacor Management Group’s stranglehold on the arena income, our Fox TV deal and Mario’s contract.
After the lockout in 1994, Morris Belzberg, at this point a reluctant partner, asked me to get him out of his share of Penguins ownership. He was retired and said he didn’t need the pressure of having to make payrolls any longer. So I contacted my close friend and lawyer from the Whaler days, Bob Caporale, who had founded Game Plan LLC with the former NFL star Randy Vataha. A large part of Game Plan’s business was putting buyers and sellers of sports teams together. They introduced me to Marino, a Boston businessman who made his fortune as one of the founders of EMC, a major computer technology business. He also owned the Worcester IceCats of the American League.
Roger bought out Morris, and Tom Ruta as well. I had honored my commitment to Morris because as a result of this transaction he was no longer liable for putting more money into the team, and he got all of his investment back. Roger’s cost came to $15 million, plus a line of credit for team operations.
Roger and I then began a partnership that would eventually turn into a match made in hell. We became like Michael Douglas and Kathleen Turner in The War of the Roses. Roger wasn’t what he appeared to be. He could be a charming fellow, but in many ways he could be a contradiction. You’d have a great meeting with him and think you’d made some sense, and the next day he’d do whatever the hell he wanted. I believe he cost himself the franchise, he cost me the franchise and he cost a ton of money and aggravation to everybody else.
The new partnership deal closed in May of 1997, just a few weeks after we had been eliminated from the playoffs. Under our partnership agreement we had joint control — I could block him on decisions and he could block me. But make no mistake, he was the money. I had as much power as the money because I had a veto, but I would lose that power whenever we needed extra money because I couldn’t put it in, and that was clear to Roger when he made the deal with us.
Before Roger arrived on the scene, we had structured Mario’s 1996–97 season so that it didn’t come across as a permanent retirement when it ended. We didn’t want the bottom to fall out of ticket sales, and we were all still holding out hope that once Mario had a chance to rest a bit and recover, he would want to come back and play. Everyone felt his desire to retire was a temporary reaction to the trauma of cancer and treatment. But Mario retired because of his back problems.
My own feeling was that he could have and should have played — that it wasn’t his back, it was his mind. But I had no way of knowing, so I was at his mercy. We had to accept Mario’s word on his back because there was no other method to gauge how healthy it really was. There was no way to visually decipher his pain. His doctor, Bob Watkins, from Los Angeles, was one of the most renowned back doctors in the world. He worked on a large number of pro athletes and he did some work on my back too. Bob told me, “If Mario decides he can’t play because of his back, there is no way you can judge that he can’t.”
We had no insurance if he didn’t play because of his back. And therefore we were screwed on his contract. It was serious money, and the deferred portion of it was accumulating too.
That helped cost us the franchise, because from a marketing standpoint, we couldn’t build around Mario, yet at the same time we still had to pay him.
In January of 1998, Roger, Penguins president Don Patton and I met, and we realized that attendance was not holding up. We were doing 11,000 or 12,000 a night, and that would be disastrous on the bottom line.
It was clear we had a problem, and it was about then that Roger became fixated on claiming bankruptcy, and our relationship, which had actually been pretty good, became rocky and started to erode. He felt that the only way to avoid bankruptcy was to redo three deals: our arena management deal, our local TV deal and Mario’s deal.
Roger hated our contract with Spectacor Management Group, and he was absolutely right about that. But when I originally made that deal with SMG, it enabled us to acquire the Penguins in the first place. At the time, Ed Snider was the primary owner of SMG, but it was now under new ownership and they were inflexible about trying to help us through our problems.
As well, we weren’t making enough from our regional TV deal with Fox. So Roger flew to L.A. and we met with the Fox people, with whom I had a close relationship. I’ll never forget it, because it was right out of a comedy movie. Fox was great about it, and we rewrote the contract and Roger was like a kid. We walked out of the office and he jumped in the air and clicked his heels like Charlie Chaplin. I was kind of amazed that he performed the move so well.
I thought everything was all settled, but it wasn’t long before Roger said, “You know what? I don’t like the Fox deal.” And he’d already clicked his heels over it. So we went back to Fox and got an even better arrangement.
Next Roger said, “Now we’ve got to attack the Lemieux contract. And the way to do that is go to battle.”
I said, “We’re going to lose that battle. Don’t pick on the biggest star in the world, particularly in Pittsburgh.”
I had already talked to Mario and Tom Reich about making some adjustments to his contract, and I told Roger that, but he didn’t listen.
It was at this point that the bankruptcy discussions increased in intensity. I was just as intense as he was in my refusal to sign off on a bankruptcy. Bankruptcy wasn’t the way to solve our problems. We had solved Fox and we could have solved Mario too, without reverting to that.
We were at an impasse, and Gary Bettman called and said, “Look, we have to end this thing, Howard, because he has the money and you don’t.”
So Gary brokered a meeting at Boston’s Logan Airport in the first week of July. We all met with Roger, and I sold out to him. I was to receive $500,000 a year for 10 years, which was a lot of money to me, plus the practice facility. And I got the dormant American Hockey League franchise that we had bought from Colorado.
We shook hands on the deal, I thanked Gary Bettman and Bill Daly, and off I went back to my home in Massachusetts, figuring I was done in Pittsburgh. But later that month Gary called and asked if I’d received any paperwork on the deal yet, which I hadn’t. Nobody could reach Roger, and the next thing we knew, we were read
ing in the paper, “Roger Marino, owner of the Pittsburgh Penguins, flies to Houston, and then to Kansas City.”
He was looking to move the team out of Pittsburgh. And to me it seemed clear that he wasn’t going to honor the deal we had made.
Quickly, I got calls from Tom Reich and from Gary, saying that I was the only guy who could block Marino and would have to fight him on the bankruptcy. The deal with Roger wasn’t done, so I still had co-control of the team.
Mario did not want the team to move, and he had a lot of deferred money that he was owed on his contract, so I had a number of meetings with Mario and said that I would fight for him. I could have walked away. I had a pretty good deal, on a handshake, from Roger, and I could have just said, “Screw you guys” and stayed away. But I gave up that deal and came back to the Penguins — and Tom Reich will back me up on this — to fight for Mario in any way I could.
And that was when it really became The War of the Roses.
With Mario not playing, one of our primary goals had been to sign Jaromir Jagr, our other mega-star, to a long-term contract, and I was working closely with his agent, Mike Barnett. In the fall of 1997, we were close to signing Jaromir to a five-year deal at $5 million or $6 million per year. But then the Flyers extended Eric Lindros’s contract for two years, with his salary going up to $8.5 million per year in 1998–99. And right away I knew I was in trouble.
Then, in December, after Paul Kariya had held out for 32 games, Anaheim signed him to a short (two-year) deal too, that would pay him $8.5 million in 1998–99. It was clear that agents felt that the value of free agents would keep going up, so they wanted shorter terms. I talked to Jaromir about the value of a longer guaranteed deal over a shorter one, and he was good about it, but with those two deals out there, I knew we weren’t going to be able to sign him.
Slim and None Page 20