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Leonsis in line to buy Wizards, Verizon
Abe Pollin's death leaves a void in the D.C. sports scene, but the future of his NBA franchise remains secure.
For nearly a decade, a plan has been in place to ensure that the Washington Wizards remain locally owned. Washington Capitals owner Ted Leonsis holds the right of first refusal for any transfer of ownership.
Under the plan, Leonsis likely will take over majority ownership of Washington Sports & Entertainment, which includes the Wizards, Verizon Center and the area's Ticketmaster franchise. The transfer would make Leonsis the only person with majority ownership of an NBA, NHL and WNBA team and a major sports arena.
Pollin had owned the Caps until selling the team to Leonsis in 1999, part of a $200 million deal that included a minority share of Washington Sports & Entertainment. He also sold the Mystics to Leonsis in 2005. As part of those agreements, Leonsis secured the right to purchase the remaining businesses of Washington Sports & Entertainment if Pollin decided to sell the team or when he died.
Leonsis likely would take over control of the Wizards with his minority partners from Lincoln Holdings, a group of 11 other businesspeople, including BET co-founder Sheila Johnson, Caps team president Dick Patrick and Washington Nationals principal owner Mark Lerner. Lincoln Holdings currently has a 44 percent ownership stake in Washington Sports & Entertainment.
Leonsis lauded Pollin in a statement released by the Caps on Tuesday night.
"My partners and I were proud to work with him and his family during the last 10 years, and we are committed to continuing his tradition of building exciting, championship-caliber teams," he said. "[The 1999] agreement established an orderly process for conducting that transaction, and it is our intention to follow that process. Now is not the time, however, to discuss that subject; our focus now should be on mourning a great man who has done so much for our city."
Wizards officials declined to discuss the future ownership of the franchise out of respect to Pollin. Peter Biche, the team's president of business operations, said his impact on the D.C. area will be felt for a long time.
"Any man that's been around 45 years and has done as much as he has, they're few and far between," Biche said. "The guy is a lion as far as I'm concerned, both in the sports world and in the Washington community. They just don't make them like that very often."
Details on the timeline and financial specifics of an ownership transfer are unclear, but it likely would require several hundred million dollars from Leonsis and his partners. The Wizards alone have been valued at more than $300 million, and taking control of Verizon Center could mean the assumption of debt left over from when Pollin financed the arena's construction in 1997.
"Should Mr. Leonsis exercise his right of first refusal, he will be taking over a great organization from an outstanding owner," said Andrew Kline, managing director of Park Lane, a sports investment bank that is not involved with the Wizards. "The length of time it takes for new ownership to gain full control of a sports franchise varies, especially in these situations. The transaction could prove to be difficult, as potential team owners looking to acquire debt face a challenging environment. However, if Mr. Leonsis is prepared to pay cash for the team, the process could be significantly expedited."
Pollin's wife, Irene, and two sons, Jim and Robert, have expressed no interest in owning the franchise. The agreement with Leonsis was a clear attempt to avoid the controversy involving the Washington Redskins upon the death of Jack Kent Cooke in 1996. While Cooke's son, John, expressed interest in taking over the team, his father's final wishes were unclear, and the team was put up for sale. Marketing executive Daniel Snyder outbid Cooke for the team.
In a statement, NBA commissioner David Stern called Pollin "a study in unparalleled dedication to the city of Washington." A spokeswoman for the league said Stern was not available for an interview and declined to comment on who would own the Wizards going forward.
While the agreement involving Leonsis was rarely discussed publicly, it has been credited with attracting some workers to the Caps and Mystics. In recent years, several Caps employees quietly acknowledged they accepted positions with the team because of the chance to one day work for all three franchises.
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