SBD/Issue 86/Franchises

Ted Leonsis Facing Wednesday Deadline In Talks To Buy Wizards

Purchase Of Wizards, Verizon Center Could
End Decade Of Losses For Leonsis' Capitals
Capitals Owner Ted Leonsis is "negotiating against a Wednesday deadline to buy" the Wizards and Verizon Center from the estate of the late Abe Pollin, according to a front-page piece by Thomas Heath of the WASHINGTON POST. The outcome could have "far-reaching implications for the Washington sports scene, determining whether Leonsis -- or someone else -- will run Washington Sports & Entertainment." Reps for Leonsis and the Pollin estate have been "in discussions since Jan. 6, hoping to settle on a price" that Leonsis' Lincoln Holdings investor group would pay for 56% of the Wizards and the arena. The consortium already owns the remaining 44%. Heath notes when Leonsis bought the Capitals from Pollin in '99, it was "agreed that he would have 10 business days from the day discussions began to reach a deal." If no agreement is reached by Wednesday on the total value of the team and Verizon Center -- which could range from $400-500M -- both sides could "agree to extend the exclusive talks." If the two sides fail to reach an agreement on the sale price by Wednesday and also "do not agree to extend the talks, each side selects an appraiser to estimate what the building and team are worth." If the two appraisers then "cannot agree on the value for the team, they together pick a third appraiser." Heath notes the purchase could be "crucial for Leonsis because Verizon Center generates revenue that could put an end to a decade of losses for his Capitals." The transaction is "expected to be closely watched in professional sports circles because the price could influence the value of NBA franchises" (WASHINGTON POST, 1/18).

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