Corporate Scene Changed Game for Pollin
By Bill Brubaker, Mark Asher and Tim Smart
Abe Pollin called it his "vision": to build a state-of-the-art arena that would revitalize downtown Washington and his long-suffering sports franchises, the Capitals of the NHL and Wizards of the NBA.
But as the $200 million MCI Center opened on a December evening in 1997, Pollin realized he was taking the gamble of his life.
"I've got everything I've ever done in my life on the line," he said at the time, a few days before his 74th birthday. "I've pledged everything. My advisers think I'm nuts. But I wanted to do something for my town."
Yesterday's announcement that Pollin had sold the Capitals and minority interests in the Wizards and MCI Center signaled that in this age of corporate sports team ownership, the financial risks of controlling two teams two losing teams may be too great for one man, some analysts say.
"I'm not really surprised he's doing this, given the financial pressures," said William Strickland, a Washington lawyer and longtime sports agent.
"Given the economics involved with the ownership of major league franchises these days, it's become increasingly difficult for a single owner to continue to compete with the conglomerates that have come in to own competing franchises. I think this is best reflected in baseball, where you see major-market teams with deep pockets in some cases buying championships."
But the rapid appreciation of professional sports franchises in recent years also has made selling an option some team owners cannot resist, analysts say.
"It's like investing in the stock market," said Andrew Zimbalist, a sports business expert and economics professor at Smith College in Northampton, Mass. "You're sitting on a stock and think it's about at its peak. So you want to cash out."
Pollin declined yesterday to discuss financial details of the sale to Ted Leonsis, an America Online Inc. executive; Jonathan Ledecky, a Washington businessman, and Dick Patrick, president of the Capitals. According to sources, the deal totaled about $200 million $85 million of which went to buy the Capitals.
"I am 75 and I have decided to spend less time in sports and do more for less fortunate people," Pollin, a longtime philanthropist, said at a news conference. " . . . I am not retiring. I will be actively involved and remain in control of the MCI Center and the Wizards."
By retaining a majority control of of his most valuable assets the Wizards and MCI Center Pollin may be testing the marketplace as well as disposing of a longtime financial drain on his sports empire, some analysts say. Dean Bonham, a Denver-based sports business consultant, placed the value of Pollin's holdings at about $600 million.
Pollin is general partner of Washington Sports & Entertainment, a private holding company that now owns MCI Center, the Wizards, US Airways Arena and the Washington/Baltimore franchises for Ticketmaster. Pollin's company also operates the Washington Mystics of the WNBA and has a management contract to operate George Mason University's Patriot Center.
For three decades, Pollin has been Washington's most prominent sports entrepreneur. In 1964, he bought the Wizards then known as the Baltimore Bullets and, later, the Washington Bullets. In 1973, he built the Capital Centre (now US Airways Arena) in Landover. A year later, his NHL expansion team, the Capitals, made its debut.
While the Capitals never won the NHL's top prize, the Stanley Cup, the Bullets won the 1978 NBA championship an accomplishment Pollin cherishes. But over the next two decades his two teams only rarely came close to warranting a victory parade, although last year the Capitals reached the Stanley Cup finals.
And as players' salaries grew, particularly in the NBA, Pollin became increasingly concerned about the economic viability of his pro sports franchises.
"Owners own teams for two reasons: One is as a financial investment, and the other is [to have] fun as an owner," said Gary Roberts, a Tulane University law professor and sports law expert. " . . . I suspect [the Capitals] weren't much fun for him. So, if he's not making money or having fun, why keep the team?"
Pollin's announcement yesterday that he sold the Capitals came after the team's worst season since the early 1980s. After reaching the Stanley Cup finals in 1998, the Capitals finished this season with a 31-45-6 record, failing to reach the playoffs.
Off the ice, the Capitals also struggled. The team's general manager, George McPhee, projected a $20 million loss before a single game had been played this season. In addition, NHL salaries have escalated sharply in recent years in the absence of a salary cap and television revenues remain significantly less than for other major professional sports.
The Capitals reported selling an average of 17,281 tickets to each home game ninth highest total among the 27 NHL teams this season. A Capitals official said yesterday the club sold a total of 7,000 full and partial season tickets, which, according to an industry source, places it in the bottom half of the league in that category. (The NHL's Nashville franchise, which began play this season, was required to sell 12,000 season tickets just to gain entry into the league.)
The Wizards also had a losing season, which was shortened by a league-wide labor dispute. They finished with an 18-32 record, failing to make the playoffs and, along the way, fired their coach, Bernie Bickerstaff. The NBA lockout wiped 16 home games from the Wizards' home schedule, reducing their ticket revenues by an estimated $16 million.
All told, the Wizards' ticket sales dropped from 19,542 (seventh best in the 29-team NBA) in the 1997-98 season to 16,099 (21st in the league) this season, according to team and league officials.
The drop "was due to a number of factors," Strickland said. "You obviously can start with the lockout. But other franchises recovered okay. Obviously, the [Wizards'] lack of success on the floor had a great deal to do with it."
In an interview before MCI Center opened in 1997, Pollin predicted his sons, Robert and Jimmy, would take over the franchises "if anything happened to me." Abe Pollin said of his sons: "They are very familiar with my business, and they know everything, almost on a daily basis."
Yesterday, Pollin said he had discussed the future of his franchises with sons. And they had decided they did not want to take over their father's business.
© Copyright 1999 The Washington Post Company