Appraisers to determine value of Wizards, Verizon Center
Thursday, January 21, 2010
Washington Capitals owner Ted Leonsis and the estate of sports entrepreneur Abe Pollin have failed to reach agreement on a price for the Washington Wizards and Verizon Center, automatically leading the two sides to start an appraisal process that could lead to a deal.
Under an agreement made with Pollin when Leonsis bought the Capitals a decade ago, each side will now hire an appraiser who will set separate prices for the Wizards and the arena.
Leonsis and his investor group, Lincoln Holdings, already own the Capitals outright as well as 44 percent of the Wizards and Verizon Center. Representatives for Leonsis and the Pollin estate are attempting to reach a value for the NBA team and the arena so Leonsis and his group may purchase the 56 percent that they do not own.
The two sides have been negotiating for 10 days. The price each side has set for the sports assets, which Pollin built over five decades before his Nov. 24 death, could not be learned.
But the coming days could be key as both sides jockey for a price. Not surprising, Lincoln Holdings would like to value the Wizards, long one of the worst teams in basketball, toward the lower end of the spectrum. The Pollin estate -- headed by Abe Pollin's widow Irene, son Robert, and longtime attorney David Osnos -- has a higher price in mind.
The purchase is crucial for Leonsis because Verizon Center generates revenue that could put an end to a decade of losses for his Capitals franchise, which is a tenant at the arena.
Both sides have hired investment bankers to advise them. Leonsis retained Steve Greenberg of Allen & Co. of New York. The Pollin estate has hired Goldman Sachs. Goldman recently brokered a deal that involved a billionaire Russian businessman buying a big stake in the NBA's New Jersey Nets franchise and its future arena, now under construction in Brooklyn, N.Y.
Sources close to the Leonsis group said that if the two appraisers cannot agree on the value for the team, they together would pick a third appraiser. Leonsis, at that point, could agree to pay the amount set by the third appraiser, or take his chances that the estate might find another bidder willing to pay more, according to two sources who spoke on the condition of anonymity.
Leonsis has a right to match an offer from an outside party, according to those sources. If he does not match an offer, Lincoln Holdings also has the right to sell its 44 percent share of the Wizards and Verizon Center to another qualified buyer, according to several sources. The Capitals would remain with Leonsis.
Both sides declined to comment.