Pittsburgh ? The Penguins have reached a deal with government officials to finance a new $290 million arena, ensuring the team will remain in Pittsburgh despite offers from other cities.

The agreement includes the government waiving upfront money from the team, the Penguins receiving $10.5 million in compensation for delays, and the sides agreeing to share responsibility for some cost overruns.

The Penguins had threatened to leave Pittsburgh if they couldn’t secure a new rink. Their lease at the 46-year-old Mellon Arena, the oldest facility in the league, expires June 30 and the team is free to leave after that.

Team officials weighing a move recently visited Kansas City, Mo., and Las Vegas, and also were contacted by representatives from Houston. The Penguins were offered free rent and half of all revenues if they agreed to play in Kansas City’s soon-to-be-completed $262 million Sprint Center.

Kansas City backers tried to put a good face on the news, noting the Sprint Center had garnered good exposure.

“There is no doubt that Sprint Center will be the first arena considered by any team looking to relocate, and there is also no doubt that there will be attractive options either through relocation or expansion in the very near future,” Tim Leiweke, president and chief executive officer of Anschutz Entertainment Group, the Los Angeles-based company operating the center, said in a written statement. “We continue to speak with potential franchises and firmly believe that there will be a professional franchise playing in Sprint Center in the very near future.”

Gov. Ed Rendell said Tuesday that money from the state’s new slot machine parlors would help fund the arena. The Pittsburgh Post-Gazette reported that the new arena would be completed by the start of the 2009-10 season. The Penguins would share construction costs and spend $400,000 a year on capital improvements, the newspaper reported.

Keys to the agreement included the government waiving up-front money from the team, the Penguins receiving about $10.5 million compensation for delays, and the sides agreeing to share responsibility for cost overruns.

“Well, this is a great day for hockey,” co-owner Mario Lemieux said

Before Tuesday’s game against Buffalo, Lemieux walked onto the ice and stood in the spotlight as the crowd gave him a standing ovation, with his name “Mario” in lights on the scoreboard overhead.

A sign in the crowd said, “Hey Kansas City, in case you haven’t heard. The Penguins aren’t coming.”