Deadline nears in sale talks for Wizards
Monday, January 18, 2010
Washington Capitals owner Ted Leonsis is negotiating against a Wednesday deadline to buy the Washington Wizards and Verizon Center from the estate of sports entrepreneur Abe Pollin, a deal that could put him as lead owner of the region's biggest sports and entertainment empire.
The outcome could have far-reaching implications for the Washington sports scene, determining whether Leonsis -- or someone else -- will run Washington Sports & Entertainment, the sports holding company Pollin built over five decades before his death on Nov. 24.
Since buying the Capitals from Pollin a decade ago, the former AOL mogul has transformed the franchise from a National Hockey League also-ran with a niche following into a marquee team and the hottest sports franchise in the Washington region. After a few bumps in the road over the years, the Capitals have one of the NHL's best records, not to mention one of its top players, Alexander Ovechkin.
Local sports fans wonder whether Leonsis could do the same for the Wizards. They are one of the worst teams in the National Basketball Association, and their off-court antics have become the butt of jokes nationwide.
At 54, Leonsis is one of the most accessible owners in professional sports. He maintains a blog and a public e-mail address, and he frequently walks the concourse between periods at Capitals games to greet fans. To remake the Capitals, Leonsis endured the ire of fans as he traded away high-priced stars so he could start from scratch with prospects and draft picks. It was a risky process that paid off.
"In a short amount of time, he has turned the Capitals into one of the premier franchises of the world in a non-hockey town," said businessman Mark Ein, a Wizards season-ticket-holder and owner of the Washington Kastles, the city's World Team Tennis franchise. "Given that Washington is a basketball town, the opportunity for the Wizards [under Leonsis] is almost limitless."
Representatives of Leonsis and of the Pollin estate have been in discussions since Jan. 6, hoping to settle on a price that Leonsis's investor group, closely held Lincoln Holdings will pay for 56 percent of the Wizards and Verizon Center. It already owns 44 percent.
If no agreement is reached by Wednesday on the total value of the team and arena -- which could range from $400 million to $500 million -- both sides could agree to extend the exclusive talks.
If not, an appraisal process would kick in, allowing Leonsis further opportunity to reach a deal.
The purchase could be crucial for Leonsis because Verizon Center generates revenue that could put an end to a decade of losses for his Capitals.
"The franchise is most valuable to Ted, who might be willing to pay a slight premium because he already owns the Capitals and doesn't want to continue to be a tenant in that building," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon. "Being a renter is not good, modern sports business."
Leonsis bought the Capitals, as well as a share of the Wizards and what was then called MCI Center -- it was renamed in 2006 -- from Pollin in 1999. Leonsis's stake in Washington Sports has gradually increased over the years and now stands at 44 percent, which includes ownership of the WNBA's Mystics. At the time he bought the hockey team, Leonsis and Pollin set conditions that would allow Leonsis an exclusive period to negotiate a purchase of the basketball team and Verizon Center upon Pollin's death, according to a memo that the Pollin organization sent to the staff of Washington Sports & Entertainment.