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Mario Lemieux was prepared to move the Penguins out of Pittsburgh. ((Andrew Rush/Associated Press))

The Pittsburgh Penguins will be staying put in Pennsylvania.

Gov. Ed Rendell confirmed Tuesday that government officials agreed to fund a $290-million US hockey arena with money from the state's slot machine parlours.

"All three governmental entities have reached an agreement for a deal that will keep the Penguins in Pittsburgh," he told the Pennsylvania Gaming Congress.

Rendell later finalized the complex deal with Penguins co-owners Mario Lemieux and Ron Burkle, NHL commissioner Gary Bettman, Pittsburgh mayor Luke Ravenstahl and Allegheny County Executive Dan Onorato.

"This is a great day for hockey," Lemieux said. "I'm glad that I'm here today announcing a deal with the city, the county and the state to stay her for 30 years.

"That was my goal and I'm glad we finally achieved it."

The Penguins have agreed to commit $3.8 million US toward construction and $400,000 US for capital improvements each year for 30 years.

In return, government officials agreed to waive their demand for $8.5 million US up front from the Penguins.

Instead, the Penguins will receive $10 million US in compensation for delays, for property it purchased near the site and for marketing a team already featuring rising stars like Sidney Crosby, Marc-Andre Fleury, Evgeni Malkin and rookie Jordan Staal.

"It's clear that there were a lot of moving pieces and it didn't come together easily," Bettman said.

Visited Kansas City and Las Vegas

Lemieux and Burkle began actively seeking to relocate the Penguins after reaching an impasse in talks with officials on a new facility to replace 46-year-old Mellon Arena, the oldest rink in the NHL.

Lemieux and Burkle visited Kansas City and Las Vegas to discuss relocation plans before finally negotiating a deal to stay in Pittsburgh.

"With the other four stadium deals [Eagles, Phillies, Pirates, Steelers], none of those teams had an open competitor that was trying to take the team," Rendell said. "Here we had Kansas City making a very good, some might say terrific offer and we had to respond."

The team's lease at Mellon Arena expires June 30, but it has agreed to remain there until the new arena opens in time for the 2009-10 NHL season.

The Penguins have played at Mellon Arena since 1967, winning Stanley Cups in 1991 and 1992.

With files from the Associated Press