Kovacevic: One-on-one with David Morehouse, Penguins CEO


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David Morehouse. - GETTY

David Morehouse, the Penguins' president since 2007 and CEO since 2010, has presided over three Stanley Cup championships, four appearances in a Final, and a dozen-plus years of nothing but sellout crowds at PPG Paints Arena and, before it, Mellon Arena.

But 2020 has brought unprecedented challenges for him and the local hockey team, as it has for most of us.

I spoke with Morehouse at length early Sunday afternoon on an array of subjects, not least of which were the new labor pact that'll bring peace between the NHL and NHL Players' Association through the 2025-26 season, how the Penguins are navigating the lost revenue from the ongoing season, the respective futures in Pittsburgh of both Evgeni Malkin and Jim Rutherford, and much more.

The one subject he asked not to address was his rescue of a fallen KDKA-TV photographer, Ian Smith, during a May 30 protest of racial injustice that passed by PPG Paints Arena. Morehouse's explanation was that he felt he'd gotten too much credit for his actions that day.

Our full talk follows:


DK: The first thing I have for you, as you're a member of the Board of Governors, is to ask how you felt about the process that the NHL and NHLPA just went through, particularly Gary Bettman's role. Speaking for myself, it sure seemed to go a lot differently than what we just witnessed in Major League Baseball.

Morehouse: I'll say this: From the commissioner to Bill Daly to the owners, the players, the entire process was literally unprecedented. From the very beginning, it was, 'How can we work together to fix this thing?' And even then, every single conversation we had started with safety. We were talking about the CBA, but we were talking about everything. All parties were smart enough to take a bad situation -- arguably the worst health situation and the worst economic crisis in our lifetime -- and turn it into a positive for us.

Honestly, it was the best work of collaboration I've seen the NHL do since I've been here 15 years.

DK: What's it mean for the Penguins and for hockey in Pittsburgh, particularly the salary cap staying at $81.5 million next season and having cost-certainty for the next ?

Morehouse: I mean, for us, it's kind of funny. Because of the success we've had, with three Stanley Cups and all the sellouts, people think of the Penguins as a big market team. And we perform both on and off the ice as a big-market team. But the fact of the matter is we're not in a big market. And without the support we've had from our fans ... even during this crisis, our season ticket-base has been solid. Our corporate sponsorship has been behind us, too.

You know, none of that success that we've had happens at the level that it happened unless we have that kind of support from our fans and our corporate partners. Because you know, even with a salary cap, trying to keep Sidney Crosby and Evgeni Malkin in the same city for 10 years doesn't happen that often, not in any sport. We had to be able to create an environment where we could pay them and that we can be competitive around them. We've spent up to the cap since 2008. And we've been able to do that, number one, because we have an ownership group that that wants to win more than anything. And number two, because we've we've had this extraordinarily strong fan base and corporate partner base. I mean, it's held us together during this crisis.

And it's going to allow us to operate with a cap certainty at $81.5 million and over the next few years. We don't have to do any buyouts. You know Jim Rutherford. He's always thinking three steps ahead of everyone else. You know, we're situated well from from a player and roster standpoint. And I think the league really put a lot of effort into making sure that everyone will be OK, financially, coming out of this and that we wouldn't start too soon. We wouldn't jeopardize the health of our fans or our players.

Like I said, it was extraordinary to watch.

DK: I'm going to ask you this even though I know that Jim makes the hockey decisions, but we're already talking about the cap and you mentioned Geno. Mario Lemieux and Ron Burkle have both shown a commitment to keeping not just Sid and Geno but also Kris Letang and other players over the years. Geno's contract expires in 2022. I'm purposely wording this in a way that it fits into your wheelhouse and not Jim's, but can the Penguins financially handle Geno?

Morehouse: The Penguins financially will do everything they can -- and when I say that, I mean our ownership group -- to put the best possible team on the ice period. And that's been the case since I've been here. There's nothing that has ever proved otherwise. So there's no there there. There can't be an opinion that it doesn't happen. It's one of those things where, you know, let us do something wrong first.

DK: Oh, hey, this wasn't some preemptive criticism. I'm aware of the history and respect it. Just asking.

Morehouse: No, no, I know. I just think that these are the best owners I could ever have the opportunity to work with, and I think everyone in the organization feels the same way. As you know, every year we start with a mission to win the Stanley Cup. And I think we will always do everything we can to do that for as long we're here.

DK: You mentioned both the season-ticket holders and the corporate sponsors. I know you're not going to give numbers or anything, but do you still feel strongly about the support you're seeing there financially? Is there still a season-ticket waiting list? Let's face it: There are going to be people who lose interest over time.

Morehouse: Yeah, we're not seeing that. We actually had more social media views and hits in March of this season than we did in March of last season. We weren't playing for most of that month.

DK: Wow.

Morehouse: So we feel we've maintained our connection with our fan base. We definitely see that. One thing we've seen is that, anytime any news came out, there was a spike with everything we'd do. I mean, it's been relatively quiet around hockey because of the way the CBA talks went, but I think, even with that lack of noise, we've been able to maintain our connection points with our fans in a very strong way. And I think our fans are still with us. Our partners are still with us. Everyone understands the circumstances we're all working under.

DK: You've made a lot of hires in your position, but I'm betting you've never made one that was more significant or more successful than hiring Jim. What's the best, most accurate way to describe his status with the organization? And, obviously, obviously, I'm not implying anything even remotely negative when I ask. Basically, is he GM as long as he wants to be?

Morehouse: Our view is the same as it is throughout the NHL: Jim Rutherford's a Hall of Fame general manager and, as a human being, as a caring individual, it's even higher. That's his status with everyone here, from the ownership to the coaches to the players. There's no one with better character. There's no one, as you know, who's more of a straight talker and is going to tell you the truth. There's no one's smarter at making making player moves and putting teams together and making us all look good.

Yes, it is definitely the best hire I've ever made. And that being said, as you also knew Jim before he came to Pittsburgh, it doesn't make me a genius. Kind of like it didn't make us mental giants to draft Sidney Crosby, right?

DK: There's no question that every team in sports will lose money this year. But how bad will 2020 be for the Penguins? How dangerous is it?

Morehouse: It's bad for all sports. We will be, I think, the last economic lever polled when we come out of this crisis as far as large venues and having large groups of people gathered. However, like I said, because of our strong fan support, because of some of the measures we took early, and because of the strong corporate support, I don't feel like we were hit as hard as we could've been. So you know, we're not in any danger. But, you know, I would rather have finished the season in a normal way.

DK: I'm sure.

Morehouse: Yeah. It's been been a difficult time to navigate, but I think because the organization is so strong we've been able to do it as well as we could.

DK: Historically, and I'm going way back, the Penguins used to budget for two rounds of playoffs. Is that still the case?

Morehouse: They used to talk about that?

DK: Ha! Yeah, they used to tell us everything!

Morehouse: OK, yeah, we're not gonna talk about our budget. But I'll say this: What are we averaging in the last 11 years?

DK: Meaning rounds of playoffs? Off the top of my head, it's got to be close to three, right?

Morehouse: Yeah. Something like that.

DK: I've never asked you this before, but how linked are the Penguins to general event revenue at PPG Paints Arena? Because there obviously aren't concerts or other shows happening there, either.

Morehouse: Most of that revenue goes to the promoters. And we still pay rent. So when you look at our overall budget, it's not significant, but it's also not nothing. What we've been able to do because it's such a good, well-built, well-respected arena is to attract concerts that we weren't able to attract under the old Civic Arena. One thing we will do is bring more shows here almost like a public service. Some of those 'Disney on Ice' and 'Sesame Street Live,' some of the kids' shows we get, there's not much revenue in those. But it's good enough, and it's good for the region.

DK: I see. I was asking more if missing out on 200 other dates really, really hurts the Penguins.

Morehouse: I'd be more concerned for ushers and concession workers. That's what bothers me most about missing those shows.

You know, I ran into an usher out in the parking lot two weeks ago. And I said, 'How you holding up?' And he said, 'I just miss all the people.' He works full-time, but he's also an usher. And just misses his friends and the fans he knows in his section. That shows the kind of people we have. We get letters from fans praising them. We have ushers who crawl under the seating sections to pick up people's cell phones that drop through. We had one usher who walked a person to Mercy Hospital after they were hit with a puck. It was an older fan who was at the game by himself. The usher brought him back to the game, then gave him a ride home.

That's Pittsburgh. That's what I miss. And those are the people I worry about.

DK: Last thing I have for you, David, and I know this is a subject that's always been important to you. What are the Penguins doing to address racial injustice and inequality?

Morehouse: We're in a very critical state, an eye-opening state. And I think, as a sports organization, we have a platform that we stand on that not only gives us the opportunity but also the responsibility to use that platform for the greater good.

Outside of hockey, we've done that numerous times in different ways. It's the ethos of Mario Lemieux and Ron Burkle in our ownership group. It's in our mission statement, right after winning the Stanley Cup, to help the community and grow the game of hockey. Those are the three things in our mission statement.

One thing we can try to do from the hockey perspective is to get more Black children playing hockey. We're starting initiatives right now that are geared toward not just getting kids to the rink but getting them to higher levels. Getting kids to the NHL is a 15-year process, I've always said. Just to get a kid into elite hockey requires five days a week on the ice, requires someone bringing them back and forth to the rink, requires taking them to Detroit, Toronto, Columbus, all the places that the most advanced kids play ... so we're trying to build a program now that is kind of identifying kids in the Learn To Play programs and offering the support to put them on an elite track. In the Hill District, we're working with the Ammon Community Recreation Center, putting up a sport-court there.

There's a lot of work we're doing in the Hill, not just with sports. If you look at all of the things we're doing, it's probably the best community benefits program associated with the development of one minority community in the country. What we were tasked to do by our ownership group was to do something great there. Don't just build buildings. That's what we're trying to do.

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