Washington Capitals minority owner Jonathan Ledecky sold his 24 percent share in the team back to majority owner Ted Leonsis, upping the AOL Time Warner executive’s share to about 75 percent.
The move was expected given the pair’s friendship, but Ledecky agreed to the sale only after spending four months fielding other offers from around the country. Leonsis’ purchase was approved late Tuesday by the NHL’s Board of Governors.
The NBA also will soon vote on the transaction. Lincoln Holdings, the Caps’ ownership group Ledecky now exits, also has equity in the Washington Wizards, as well as the Mystics’ operating rights, MCI Center, US Airways Arena and the local Ticketmaster franchise. Abe Pollin, with no stake in the Caps, remains the majority owner of those other assets.
Leonsis and Ledecky did not disclose a price for the transaction, but Ledecky, a well-known District entrepreneur, said he made a “healthy, 10-figure profit” on the $58 million he invested in May 1999.
Ledecky is now free to pursue a pro sports team of his own, as has been his long-stated ambition. He unsuccessfully sought interests in the Los Angeles Dodgers and Cincinnati Reds before purchasing the Caps from Pollin two years ago, and last fall he came close to buying the Montreal Canadiens.
Each of the four major sports leagues has complex rules barring cross-market ownership of teams with only a few exceptions. As a result, Ledecky said it was much simpler to divest and then seek a new team. There are no purchase negotiations ongoing with any other team, he said.
“This is the optimal outcome as far as we’re concerned,” Ledecky said. “I get out, having made more money than I ever could have in the stock market and having really learned the sports business from the inside. And Ted is stepping up and making a further commitment in this team and in the promises he’s made.
“It’s kind of ironic, though. Ted’s been the leader in increasing the value of the asset, and he’s the one who had to pay for the privilege of buying that asset.”
The 43-year-old Ledecky was involved in reducing the Caps’ fiscal losses from the Pollin era and played a key role with Leonsis in bringing Michael Jordan into Lincoln Holdings and as president of the Wizards. The Caps still lose about $20 million a year, but with attendance, TV ratings and sponsorship sales all up substantially and two straight division titles in hand, the franchise is much improved.
Ledecky, however, recently removed himself from an operational role with the team in anticipation of the sale and did not attend recent team planning meetings at Leonsis’ Florida home.
“For a minority owner, Jon was very, very involved. How many other sports team minority owners does anyone know?” Leonsis said. “Given this is what Jon wants to do, the situation best serves the interests of the Caps.”
Ledecky fielded about a half-dozen serious offers, he said. But by selling to another Lincoln Holdings member, Ledecky also relieved himself of several logistical hurdles inherent with selling to an outsider, such as detailed background checks required of new owners by both the NHL and NBA.
“This was rather seamless for the governors,” NHL spokesman Frank Brown said.
The deal was agreed upon late last week and was a late entry to the league’s meeting agenda.
Caps team president Dick Patrick, Jordan and Northern Virginia technology executive Raul Fernandez share the remaining 25 percent of Lincoln Holdings.