The $200M deal that AOL Studios President Ted Leonsis'
group reached with Abe Pollin for the Capitals and minority
shares in the Wizards and MCI Center "allows [it] to strike
other deals that could enlarge" its stake in Pollin's sports
holdings, according to Tim Smart of the WASHINGTON POST. In
the current agreement, Leonsis and partner Jon Ledecky will
control 92% of the Capitals and "slightly less than" 20% of
Pollin's sports businesses under Washington Sports &
Entertainment (WSE), including the Wizards and properties
such as the MCI Center and USAirways Arena. Sources
familiar with the deal said that part of the purchase price
"includes money that could be paid to unidentified minority
partners of Pollin if they choose to sell their stakes in
the Wizards or the sports venues." Both Leonsis and Ledecky
said yesterday that they are paying for the deal "entirely
in cash and are not taking on debt to finance it." Leonsis:
"I have cash to use. I am not paying anything in stock."
Sources said Pollin "may have wanted" to sell the Capitals
because he "needed cash to service the debt he took to
finance the MCI Center. It is not clear how much of the
debt will be paid off by the new investors." Pollin sold
two management contracts to SMG to operate Baltimore Arena
and a Cleveland facility, and it was rumored that the deal
"may have signaled a need for cash." A source: "It was a
big, big sign there was trouble. You don't give up these
things unless you need cash" (WASHINGTON POST, 5/14). A
WASHINGTON POST editorial praises Pollin for "divesting
himself of his Washington sports teams in much the same way
he has run them and his other affairs over the years: with
considerable care and regard for this community" (5/14).
CAPPING IT OFF: In DC, Rachel Alexander profiles
Leonsis and Ledecky's plans for the Capitals and writes that
"they will be loud and full of opinions." Leonsis: "Jon and
I are not going to be those obnoxious kinds of owners; we're
not going to be George Steinbrenners, telling them how to
manage the team and what we think of every play. We're not
going to be sitting in the owner's box -- we'll give that to
kids. We're going to be sitting in the seats with everyone
else." They are contemplating changes in ticket prices,
marketing tactics and where players live and practice in an
effort to get fans to feel more like "shareholders."
Ledecky: "We'll make it a great experience for them, and
they'll love it." But Alexander notes that when Leonsis
called the team's ticket office yesterday to find out how
many extra season tickets had been sold after the sale was
announced "the answer was zero" (WASHINGTON POST, 5/14).
