The Capital Centre had a net profit of nearly $8.6 million dating from its completion in December 1973 to June 30, 1984, according to documents introduced yesterday in Prince George's Circuit Court.
The Centre's chief tenants, the Washington Capitals and Washington Bullets, have suffered sizable losses during their stay at the arena, according to the documents. In their first 10 years, the Capitals had net losses of $27.7 million; the Bullets lost money in nine of their first 12 years and their losses over that period were nearly $4.1 million, before appreciation and amortization.
Edmund Stelzer, comptroller for the Centre and the Capitals, also said the hockey team lost more than $1.2 million in fiscal year 1983, even after the Save the Caps campaign that resulted in, among other things, reductions in the team's rent and in an amusement tax levied by Prince George's County.
The figures were revealed in the 13th day of a trial involving Arnold Heft, a limited partner in Capital Centre, and Abe Pollin, who is general partner of the arena and also owns the Bullets and Capitals. Heft has filed a civil suit against Pollin, contending that in June 1982 Pollin made secret, unilateral adjustments in licensing agreements between the arena and the Bullets and Capitals that in effect returned more than $860,000 to the teams.
Heft asks that the adjustments be rescinded and that an accounting of their effect be made.
The disclosure of a major sports enterprise's losses in such detail was done matter of factly, in almost direct contrast to the arena's traditionally close-mouthed approach to its finances. Capital Centre seldom has given out financial details, although in seeking reduction of the amusement tax in December 1983, Pollin announced the teams had lost $27 million in 10 years.
Burton Schwalb, an attorney for Pollin, said the documents were introduced to bolster the contention that Washington National Arena, Ltd., which operates the Centre, operated "fairly and reasonably" in making the adjustments. Heft's attorney, Stephen Grafman, has said Pollin, as general partner of the Centre, violated his fiduciary duty by not informing Heft of the moves.
Stelzer said under questioning from Schwalb that the arena had $21,682,715 in gross profits as of June 30, 1984. After depreciation and amortization that totaled $13,088,714, Capital Centre had a net profit of $8,594,001, Stelzer testified.
He said Pollin received $9,703,549 in partner's disbursements as of Dec. 31, 1984, and Heft got $4,960,001. John Miles, another of Pollin's attorneys, contended this week his client "broke his health and nearly bankrupted himself . . . while Heft was amassing a fortune."
The Capitals, Stelzer said yesterday, had totaled $22,825,335 in cash losses by June 30, 1984. With depreciation and amortization of $4,904,291 added, the net loss was $27,729,626, he testified.
Stelzer said in fiscal year 1982, which ended June 30 -- one day after the adjustments were made and shortly before the Save the Caps campaign was announced -- the Capitals' net losses were $3,477,797. Pollin lent the team $3,180,000 during that time, Stelzer testified.
In 1982-83, he said, the team lost $1,238,000 despite the Save the Caps campaign, and Pollin made a loan of $1,210,000. Figures for the time since were not revealed yesterday, but the Capitals made the playoffs the last three seasons and attendance in 1984-85 was up more than 2,000 -- to 13,900 -- with eight games left in the regular season.
Stelzer said the Bullets' cash losses were $4,098,647 as of June 30, 1984, and that Pollin had lent the team $4,605,000 during that time. Stelzer was not asked the figure for depreciation and amortization.
He noted Pollin lent the team $740,000 in 1980-81 and $875,000 the following fiscal year.
In other documents introduced yesterday, Stelzer said the Centre earned millions in such team-related areas as concessions, parking and television fees while the Bullets and Capitals got none of that money.
In 1981-82, he testified, the Bullets' net losses were $1,058,512. Capital Centre cleared about $1.1 million from the team-related areas, not including money from lucrative advertising contracts and special-seating arrangements, such as sky suites. Testimony earlier in the trial indicated the Centre receives all money from advertising in the arena and from special seating.
While the Capitals were losing more than $1.2 million in 1982-83, Stelzer testified, the arena cleared just less than that amount in rent from the team, box-office fees, parking and concessions receipts, and money gained from television feeds used in visiting teams' broadcasts via the Centre's Telscreen operation. That figure rose to $1.4 million the next year, he said.
The adjustments in licensing agreements made in 1982 included the Centre's paying the teams for tickets that formerly were complimentary, a refund of Telscreen and box-office charges, and an increase in money paid to the teams for special seating. Stelzer and Jerry Sachs, president of Capital Centre, have testified the adjustments were long overdue and were "righting a wrong."