SBD/Issue 94/Franchises

Leonsis' Takeover Of Wizards, Verizon Center Now In Jeopardy

Leonsis' Attempts To Assume Full Ownership Of
Wizards, Verizon Center Thrown Into Question
Washington Sports & Entertainment claims that it "has the right" to put the Wizards and Verizon Center "on the open market, throwing into question attempts" by Capitals Owner Ted Leonsis to assume full ownership of the two properties, according to a front-page piece by Thomas Heath of the WASHINGTON POST. WSE President of Business Operations & CFO Peter Biche, whose organization controls 56% of the NBA team and Verizon Center, in a memo to employees Tuesday acknowledged that Leonsis "has the right to match any offer submitted" to the estate of Abe Pollin. Leonsis' Lincoln Holdings already owns the remaining 44% of the Wizards and the arena. But Biche in the memo also said that "no one has an exclusive right to negotiate a purchase" for the entities in Pollin's estate, which also include the local Ticketmaster franchise. Sources indicated that Leonsis believes his investor group "has an exclusive period to reach a deal," and Leonsis "thinks that period is still in effect." Heath notes the news will "probably complicate what has been a civil negotiations process between representatives of Leonsis" and Pollin's estate. These events "point to an unraveling of what many thought would be a smooth transition from Pollin to Leonsis." When Leonsis bought the Capitals from Pollin in '99, the two "set conditions that would create a path for Leonsis and his investors to buy the basketball team and Verizon Center upon Pollin's death." However, the two sides are "thought to be more" than $100M apart in their "respective valuations of a package" (WASHINGTON POST, 1/28). A source close to Leonsis said Lincoln Holdings is "surprised and disappointed" by Biche's e-mail. The source said of WSE, "They are forced to sell if we want to buy" (AP, 1/27).

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