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BETTER OFF TED: AOL EXEC BUYS CAPITALS FROM ABE POLLIN
Published May 13, 1999
Washington Sports Chair Abe Pollin reached a deal yesterday to sell the Capitals and minority interests in the Wizards and the MCI Center to a group headed by AOL Studios President Ted Leonsis, according to Rachel Alexander of the WASHINGTON POST. The cash deal is "valued at about" $200M, with roughly $85M being used to acquire the Capitals, and the remaining $115M going toward the purchase of a minority share of Washington Sports & Entertainment (WSE) and "the right of first refusal to buy the remainder of [Pollin's] long-held empire." Pollin: "Let me say I am in perfect health, but I am 75 years old and I have decided to spend a little less time with sports and spend a little more time with those less fortunate than I am." Pollin noted that he could have sold his sports holdings "for a lot more. ... But my decision has never been about the bottom line." Leonsis said he "initiated" talks with Pollin four months ago and now will control 60% of the Capitals, U.S. Office Products Founder Jonathan Ledecky will own 32% and team President Dick Patrick will hold 8%. Leonsis said that although he will be an "active" owner, he plans to remain as President of AOL's interactive properties. The Capitals are projected to lose $20M this season and the Wizards lost $16M in ticket revenue during the NBA lockout (WASHINGTON POST, 5/13). Leonsis, when asked if he will be involved in running the Capitals: "No, I'll be the fat guy with the cigar in the owner's box yelling and screaming" (USA TODAY, 5/13). BREAKING IT DOWN: Pollin will retain a controlling interest in the Wizards and his other WSE holdings, including the MCI Center, USAirways Arena, the Patriot Center in VA and the local Ticketmaster franchise. Pollin, whose two sons, Jim and Robert, "expressed no interest" in entering the sports business, said he "did not want a repeat of the mess the Redskins went through" (WASHINGTON TIMES, 5/13). Leonsis said the front offices of the Wizards and Capitals will remain unchanged (WASHINGTON POST, 5/13). The Leonsis group's initial stake in WSE will be around 40%, and the deal values Pollin's holdings at around $375M. Leonsis: "These are media and entertainment properties that can scale and grow fast. I think first and foremost this a brand- building business. You get a lot of customers, you sell a lot of ads" (WALL STREET JOURNAL, 5/13). Pollin said Leonsis will get the "first and last crack to own" all of WSE, but said that there was "no timetable" for when he would completely sell his properties (USA TODAY, 5/13). I'VE GOT YOU, ABE: In DC, Tony Kornheiser assesses Pollin's impact on the Washington sports scene and calls the Pollin ownership "the last of the Mom & Pop stores" (WASHINGTON POST, 5/13). In Baltimore, Jon Morgan writes that Pollin "won respect" as a team owner, but that his operations beyond sports have been "streaky." Morgan: "The marketing has been notoriously under-funded and drawn little notice in the industry. He has a reputation for excessive loyalty to key employees, to the detriment of the operation, according to several sources." But Pollin was a "visionary" with his facilities (SUN, 5/13). In DC, Brubaker, Asher & Smart note that Pollin became "increasingly concerned about the economic viability of his pro sports franchises" as player salaries increased (WASHINGTON POST, 5/13). TED'S EXCELLENT VENTURE: In DC, Henry & Behr describe Leonsis as "colorful, charismatic, loud and [an] extremely competitive man. He makes frequent use of the word `cool'" (WASHINGTON POST, 5/13). Leonsis, on the Capitals: "Everything we do with the Capitals will be, `more entertainment.' I may not be able to tell you the two top defensemen in the NHL, but I can tell you how to present and package the brand" (WASHINGTON POST, 5/13). CENTER OF ATTENTION? In DC, Eric Lipton examines the MCI Center's impact on downtown Washington a year and a half after its opening, and writes that the expected "economic bonanza" of the $200M facility "has not materialized." Fewwer fans have "hung around the arena for dinner or drinks" after games, "and fewer non-sports events have been booked ... than initially expected" (WASHINGTON POST, 5/13).