The general counsel for Capital Centre, the Washington Bullets and Washington Capitals acknowledged yesterday in Prince George's Circuit Court that adjustments in license agreements made in June 1982 between the arena and the teams were "a major matter" that warranted consultation of the Centre's limited partner.
David Osnos, the general counsel, also testified that in 1981, the financially struggling hockey Capitals were offered to a prospective buyer for $4 million, but the buyer, Jacques Moore, turned down the offer.
Osnos said when he met on June 3, 1982, with Capital Centre President Jerry Sachs and Abe Pollin, general partner in the arena and principal owner of the teams, to discuss ways to help the Capitals, he did not think of consulting Arnold Heft, a limited partner in the Centre. Heft contends in his civil suit that Pollin, as general partner in the Centre, failed to consult him on the license adjustments despite advisory provisions included in two signed agreements between the men.
On the 18th day of the trial, Stephen Grafman, an attorney for Heft, noted that in the second agreement -- signed in April 1980 -- Pollin contracted to consult Heft "in a timely manner on any and all major matters" regarding Capital Centre. Grafman also introduced a letter from Osnos to Sidney Silver, another attorney for Heft, that indicated Osnos would consult Heft if Pollin was unable to do so.
After Osnos testified that the purpose of the June meeting with Pollin and Sachs was "to discuss a serious problem," Grafman asked if the adjustments were a major matter.
"The crisis was certainly a major matter," Osnos responded.
Asked why Heft wasn't consulted regarding the adjustments, Osnos answered, "I didn't focus on whether it was major within the context of the 1980 agreement . . . I testified in my deposition and I'll testify now: If I had my life to live over, I would have sent immediate notice by registered mail."
Osnos maintained under persistent questioning that the adjustments, covering such matters as a refund of Telscreen fees and the teams' charging the arena for season tickets that formerly were complimentary, were necessary because license practices that had developed over the years had unfairly hurt the Capitals and Bullets.
Osnos also said the adjustments, which were made June 29, 1982, were not done to lower the teams' debts to place them in accordance with the Centre's bond agreement, and that on June 3 he did not know what the debts were.
Grafman has alleged that the adjustments, which in effect returned more than $860,000 to the teams, were made because the Bullets and Capitals' liabilities at that point exceeded $1 million, well above the $400,000 ceiling established in the arena's January 1978 bond agreement. In his suit, Heft is asking that the adjustments be rescinded and an accounting of their effect be made.
Earlier, Osnos testified that the Capitals were available for $6 million in 1980, and that during that year Pollin rejected an offer by Moore of "somewhere between $2 million and $4 million." He said several other potential buyers approached the Capitals during 1980-82, but negotiations never reached the point where a price was mentioned. Testimony introduced last week revealed the Capitals had cash losses of $22.8 million as of June 1984.
Exchanges between Grafman and Osnos often were heated and pointed. Asked to give hypothetical examples of "a major matter" and how long the ensuing "timely manner" might involve, Osnos said testily, "I don't think it's necessary to play this game." Grafman replied, "I assure you, Mr. Osnos, this is no joke."
Pollin is expected to testify Monday.