The deal that last week dazzled the Washington sports world got its start back in September, when basketball superstar Michael Jordan first met Internet mogul Ted Leonsis at Jordan's restaurant in Chicago.

Leonsis, the voluble, billionaire owner of the Washington Capitals hockey team, fumbled around for a small-talk subject and then stopped, as it sank in that he was simply stunned in the presence of the sports icon whom he wanted to bring on as a business partner.

"I said, 'Excuse me. I get nervous,' " Leonsis said in an interview on Saturday. "I asked him if he got nervous."

Jordan said he did, adding that he handled nerves by falling back on fundamental moves mastered in hours of hard work. " 'If you practice, practice, practice,' " Leonsis recalled Jordan answering, " 'you let those things take over when you get nervous.' "

Leonsis recognized at that moment that he could talk to this man as a potential partner, not as an icon. A hard-nosed business deal between them just might work.

But Leonsis still called his wife and kids excitedly afterward to tell them he had just met Michael Jordan.

That meeting in Chicago began a delicate, complicated and up-and-down series of negotiations that resulted last week in the deal that brings Jordan into the ownership and management ranks of a Washington sports empire. According to interviews with several of the participants, the negotiations weren't punctuated by ultimatums and shouting matches among men with big egos and millions of dollars to burn. But they did once have to order a $3,000 bottle of wine to shut one guy up.

Although participants refuse to confirm some financial details, Leonsis said Jordan will buy an initial stake of 10 percent (estimated by sports industry evaluation experts to be worth between $20 and $30 million) of the Leonsis holding company that owns the Capitals and a significant stake of Washington Sports & Entertainment, the complex that controls the Washington Wizards basketball team, the Women's National Basketball Association's Washington Mystics, MCI Center, US Airways Arena and the local Ticketmaster. Jordan will pay for that stake in incremental cash payments over the next several years.

The most visible impact, though, is the naming of Jordan as president of basketball operations for the Wizards, a new spot. Jordan will oversee the team as well as Coach Gar Heard and Wes Unseld, its executive vice president and general manager.

Jordan also will participate in the Washington Capitals' Web site, one of the more innovative online venues for a professional sports team. Leonsis said Jordan will participate in online chats with sports fans at www.washingtoncaps.com as part of a plan to create a "portal" site for local hockey fans. It would be a place to view video clips from previous games, see snapshots of a game in play, buy tickets and perhaps eventually get personalized sports statistics delivered over cell phones and wireless computers.

Jordan could not be reached to comment.

The deal represents a new phase in sports business--the evolution of sports superstar into sports owner/executive with significant financial involvement in a team. It also is a victory for National Basketball Association Commissioner David Stern and the league, which is struggling to recover from last season's protracted player lockout and Jordan's retirement. It's a shot in the arm for the city, which needed a big name to draw people downtown and bring excitement to MCI Center, whose teams are wheezing after years of disappointments.

Jordan, 36, is known on the court for his intense competitiveness, leading the Chicago Bulls to six NBA championships. He's known off the court as a savvy businessman worth well in excess of $300 million, according to Fortune magazine, from the $30 million annual salary he got his last two years as a player to his huge corporate endorsements and his interest in Internet companies such as MVP.com and Sportsline. Leonsis said Jordan's name will help generate national interest in his teams, juicing up new business opportunities.

"Jordan is impact," Leonsis said. That's what led Leonsis to Chicago back on Sept. 9, less than four months after his purchase of the Capitals was announced. He had been mightily frustrated after his purchase because he saw no quick way to make a big splash with his new team. "There were no free agents, no overnight moves," Leonsis said.

This was especially galling because Leonsis is a senior executive at America Online, a place where he's known for his marketing savvy and his ability to create buzz. He needed something big.

So he got on his private Challenger jet at Dulles International Airport and flew to Chicago. Leonsis brought with him one of his partners in Lincoln, Washington entrepreneur Jonathan Ledecky, and an adviser, George Stamas of investment bank Deutsche Banc Alex Brown. These guys had laughed at him a few weeks earlier when, over steak at the Capital Grille, he told them, along with another Lincoln partner, Dick Patrick, about his idea of going after Jordan.

But after their chuckles, they started to see the logic. "We were trying to take Michael off the market so no other team would have his services," Leonsis said.

After an exchange of phone calls with Jordan's agent, David Falk of SFX Entertainment, Jordan, dressed in a silk suit, was waiting to meet Leonsis and crew at his restaurant, one sixtyblue, at 160 N. Loomis St. in Chicago, that September afternoon. Falk was there with his partner, Curtis Polk. Falk and Polk declined to comment for this article.

The restaurant was empty, except for the dealmakers. The chef sent out dish after dish. Leonsis got over his nerves. Things began to relax.

"Everyone became quite loose," Stamas recalled. "Everyone was thinking there was something to this. It was clear Ted and Michael were hitting it off. There was respect between the two."

Ledecky said in an interview that he took it as his job amid all the get-to-know-you-niceties to ask tough questions. "How do I know you're going to give it your all?" Ledecky asked Jordan, point-blank. Jordan answered that he had only one speed.

Jordan said he intended to be as successful a businessman as he was an athlete. Jordan told them that if he said he was going to do something, he would do it.

Leonsis then asked: Did Jordan want to be a partner with them in Lincoln Holdings?

Jordan said he might, if the group could meet a list of conditions, from which he never wavered: Jordan wanted to run an NBA franchise, he wanted to own equity in that franchise, he wanted to win more NBA championships and he wanted to have an interest in other potential money-making projects, such as Internet ventures that Leonsis could help engineer.

It sounded great, but there was a huge problem: Leonsis didn't control the Wizards basketball team; Abe Pollin did. Leonsis's holding company owns a minority stake in the Pollin enterprise that controls the Wizards, although Leonsis does have the right to purchase the rest when Pollin decides to sell.

If Jordan's wish to run basketball operations was to be fulfilled, Pollin would have to agree to it. Leonsis didn't know if he could make that happen. Jordan and Pollin had traded sharp words in a meeting during the NBA lockout in 1998. Both had said that they settled their differences, but had they? And Pollin's relationship with Falk, Jordan's agent, had been frosty ever since the two tangled on a deal to keep another Falk client, Juwan Howard, in Washington for $100 million.

As the three-hour meeting came to an end, both sides agreed to talk on the phone in a week. Falk and Polk rode on Leonsis's jet back to Washington and spoke positively about the meeting. Falk's support was key if a deal with Jordan was to be made, and the Lincoln partners knew that. Falk had managed Jordan's career since the star left North Carolina in 1984, and he was known as a zealous advocate for his clients and a tough negotiator.

In the months that followed, Falk helped the Lincoln partners shape an offer that would cut to the heart of what Jordan wanted and provided the basis for an efficient negotiation that didn't get bogged down in details, according to the Lincoln investors.

"Falk told me we had clicked," Leonsis said. Another meeting was set up for November in New York. In the meantime, Ledecky took Falk and Polk on separate golf outings to Columbia Country Club to feel them out more.

"I wanted them to understand that Michael would have real responsibility," Ledecky said.

Jordan, Falk, Polk, Leonsis and Stamas met again on the evening of Nov. 20 in a suite in the St. Regis Hotel off Fifth Avenue in midtown Manhattan. As the five men sat around the living room, Leonsis began to read an outline of the offer. Jordan would invest in Lincoln Holdings, half now, half later, for a total percentage ownership stake of 20 percent. Jordan would become a passive partner in Lincoln; if and when Pollin retired, Jordan could run the basketball operations, but that might take as long as 20 years.

Falk kept interrupting Leonsis during his presentation to make points or ask questions. "I jokingly turned and asked him to shut up," Leonsis said. But Falk did it again. This time Jordan spoke up.

" 'Hit him where it hurts--in his wallet,' " Leonsis recalled Jordan saying. Jordan picked up the telephone and ordered a bottle of 1961 Chateaux Latour, a French Bordeaux that costs more than $3,000. He asked that it be billed to Falk's room.

That stunt put the group at ease, although Leonsis said, "You could see that [Jordan] liked the presentation but was uncomfortable with not being able to run the basketball operations."

So, Leonsis decided to make that happen. In early December, he laid out his plan to Pollin, 76, in the boardroom next to Pollin's MCI Center office. Pollin said he wanted to talk to Jordan himself. Alone.

The two met at Pollin's Bethesda home in late December. "It was clear to me this was the kind of guy I want running my basketball operation," Pollin said in an interview after Wednesday's news conference announcing the deal.

But Pollin had one concern. Unseld, who was general manager of basketball operations for the Wizards, was a close friend of Pollin's and had led Pollin's team, then named the Bullets, to the 1978 NBA championship. Pollin was extremely loyal to Unseld and wanted him treated with respect.

According to Pollin, Jordan told him: "Wes needs to be part of this. I need Wes. I respect Wes. I can't do it without Wes." The owner told Jordan to tell that to Unseld. "They had two or three meetings, and Wes understood he was going to be part of this," Pollin said.

Unseld declined to comment for this article.

There were several more meetings over Christmas and New Year's, including a conversation in Pollin's living room with Jordan and Leonsis. It was then, over sodas and beers, that Leonsis realized Pollin would allow Jordan to run basketball operations.

"All of a sudden I said to myself, 'Aha, I think we can get a deal now,' " Leonsis said.

Leonsis was working on a related transaction to buy out one of Pollin's minority partners, Arnold Heft, and increase Lincoln Holdings' stake in Washington Sports to 44 percent. Leonsis wanted to bring in another investor, Raul Fernandez, a longtime friend and chief executive of Proxicom, a Web site design company in Reston. Fernandez would be a deep-pocketed investor and a colleague in building cutting-edge functions into the team's Web site.

As in any negotiation, details were hammered out in a blizzard of telephone calls, letters and faxes. Falk played a key role in ensuring that Jordan's far-flung investments and corporate sponsorship deals did not conflict with Leonsis's businesses and with deals Pollin held with companies at MCI Center.

Things really kicked into high gear on Jan. 13, when the story broke that Jordan was negotiating with the Wizards. "I knew we had to get this done or we would lose him," Leonsis said.

Last Monday night, Falk called Leonsis at his Great Falls home. He told Leonsis they were at the 2-yard line. Falk said they could be "creative" with the deal.

Both sides spent Tuesday jiggering terms. Late Tuesday night, Jordan called Leonsis. He felt good about the deal, Jordan said, but wanted to talk to his wife, Juanita.

At 7:30 a.m Wednesday, the phone rang at Leonsis's home. It was Jordan. They had a deal.

CAPTION: Unveiled as Washington Wizards' president of basketball operations, Michael Jordan, left, is all smiles with Internet mogul Ted Leonsis, who led the deal.