None of this is official, of course, but both the Washington Post and Washington Times are reminding everyone that, in the wake of Abe Pollin's death, Ted Leonsis' group has dibs on the franchise and will likely exercise their first right to buy it.
The man who led a turnaround of the Washington Capitals likely will become owner of the city's NBA franchise now that Wizards owner Abe Pollin has died. As part of an agreement granting him the right of first refusal for any sale of the team, he also could purchase Verizon Center and the area's Ticketmaster franchise, giving him a sports empire that would be the envy of executives around the country.
The arrangement between Pollin and Leonsis, struck in 1999 when Leonsis bought the Capitals, is unusual. Typically, when a franchise owner dies, the team passes on to a spouse or children, who are happy to take over. In cases when family members wish to sell the team, they do so later, placing the team on the open market and looking for the highest bidder. That Pollin was willing to see his team passed on to Leonsis is a testament to the relationship the two men had and a final example of Pollin's love for the team.
Both papers talk about the major economic advantages Leonsis will receive if he purchases the team. For example, if he purchases the building rights to the Verizon Center, he can keep all the profits gained from ticket and merchandise sales. There's also the leverage Leonsis gained in negotiations regarding television broadcast rights, though I doubt he'd move teams off Comcast SportsNet onto a new broadcast station. But there's also this truth: Leonsis wouldn't have bought the Caps and 44 percent of Washington Sports and Entertainment if he wouldn't one day have the chance to purchase the Wizards and the rest of Pollin's holdings. That's kind of the bottom line that convinces me that Leonsis isn't passing on this chance.
As for when the inevitable transfer of power occurs, the Times says it depends on the price that's negotiated and whether Leonsis uses straight cash to make the purchase.
No one knew when Pollin would pass away or give up control of the team, so financial terms of the sale were not prearranged. Forbes magazine last year valued the Wizards at $353 million, which suggests that the share of the team not already under Leonsis' control would cost nearly $200 million. Verizon Center and the Ticketmaster franchise could double that figure, but Leonsis also would assume considerable debt from construction of the arena.
Since Leonsis has been designated as the heir apparent, the sale of the team could go more smoothly than most. But much of that will depend on how much cash Leonsis and his partners have on hand. A sale involving mostly cash would be completed quickly, investment bankers said, but the need to borrow money or bring in new investors could drag out the process.
Someone more in-tune with these kind of business deals can explain this further to me.
The obvious question now is, what effect will Leonsis have on the on-court product? Judging from his tenure as the Capitals owner, Leonsis believes in building slowly through the draft and not splurging on veteran free agents until the right time comes. In other words -- almost the antithesis of the Wizards' strategy the last few years. This could mean that Ernie Grunfeld and the Big Three could be on thin ice going forward if the Wizards do not improve their play.
However, it's far easier to build through the draft when a) we're talking about hockey, where it's easier to move bad contracts, b) it's a recession, further making it more difficult to move bad contracts, and c) you don't get the chance to draft Alex Ovechkin. I definitely think Leonsis will eventually want to rebuild this team and get a GM in here that's more up-to-date with new-age stats and modern thinking (our own Daryl Morey/Sam Presti), but I don't know if that will happen as soon as we all think.
We'll see though. It's fun to speculate on a Leonsis-filled future, that's for sure.