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Leonsis, Pollin estate reach agreement on price for Wizards
The estate's trustees -- Pollin's widow, Irene; their son, Robert; and longtime attorney David Osnos -- hired Goldman Sachs. Amid the talks, WSE installed a management structure that made Irene Pollin principal owner and Robert Pollin chief executive. Another son, James Pollin, was named president. Osnos and Richard Brand were legal counsels to management.
In late January, the discussions appeared to unravel as the Pollin estate declared the right to put the franchise and arena on the open market, which contradicted assertions by Leonsis that he had exclusive rights to negotiate to buy the team. The talks were also stalled for two weeks because of the region's giant snowstorms last month.
One of the sticking points in the negotiations was the value of the Wizards and the team's financial prospects. Before the current season began, many expected the team to do well, but it has floundered on and off the court, raising questions about its ability to draw fans in the future. The Leonsis group did not want to purchase a team burdened by huge salaries and heavy financial losses, which could hamper efforts to rebuild the franchise.
Over the past two months, however, the Wizards unloaded several stars with big salaries, including Antawn Jamison, Caron Butler, Brendan Haywood and DeShawn Stevenson, moves that saved the organization nearly $3.2 million. The team also saved money because it was no longer subject to an NBA luxury tax for exceeding league payroll limits. Sources said the player trades helped clean up the team's balance sheet and clear the way for a deal that would give the team a fresh start under new ownership.
If there had not been an agreement on price, the parties would have each hired appraisers, who would have tried to reach a deal. Even if the appraisers did not agree and the team was put on the open market, Leonsis would still have had the chance to match any outside offer. He also could have sold his 44 percent of the Wizards and Verizon Center to the new buyer.
The most recent estimate by Forbes magazine, published in December, put the value of the Wizards at $313 million, down from $353 million the previous year. That ranked the team 19th in the NBA. According to Forbes, the Wizards made a $4.9 million profit for the 2008-09 season.
One wild card was star guard Gilbert Arenas, who had been the face of the franchise for several years until he was suspended for the season in January by NBA Commissioner David Stern for bringing guns to the locker room. Arenas pleaded guilty Jan. 15 in D.C. Superior Court to a felony count of carrying a pistol without a license. He will be sentenced Friday.
Arenas signed a six-year, $111 million contract extension in July 2008 but missed most of the 2007-08 and 2008-09 seasons because of knee injuries. With $80 million remaining on his contract, his situation -- and whether he would be viewed as an asset or a liability to the franchise -- has an impact on the Wizards' value, according to people close to the talks.
Then there is the team's performance on the court. Underperformers for decades, the Wizards reached the playoffs for four straight years until 2008-09, when they finished with 19 wins and 63 losses, tying the franchise record for fewest victories in an 82-game season.
Even in these lean times, the Leonsis group should have no trouble raising the money. His partners in Lincoln Holdings include Raul Fernandez, former chief executive and founder of Proxicom; Richard Fairbank, founder and chairman of Capital One; and Jeong Kim, head of Bell Labs.