It hasn’t been my desire to comment on the status of the discussions between Lincoln Holdings - the partnership group I’m involved in that owns the Washington Capitals and Washington Mystics and WSELP, which owns the Wizards, the Verizon Center, and the Washington-area Ticketmaster franchise. Yet with the news reports out there this morning, it probably makes sense to clear some things up. The first thing I’d like to point out that I think is getting lost in all of this is that I am part of WSELP, too. My partners and I already own 44% of WSELP; that means we already own nearly half of an NBA team, the Verizon Center and the Ticketmaster franchise. So when I hear people talk about this or that happening with WSELP, I’m not sure they understand that I am part of WSELP, a big part of WSELP!
Ten years ago, when Abe Pollin and I forged our partnership, we not only created a set of rights for me as a partner in WSELP, but we also agreed on a orderly process for Lincoln and me to acquire the Pollin family’s share of WSELP when he passed away. The process we agreed to, set out in an agreement that Abe and I both signed, was that if his heirs and my partners and I could not agree on a valuation of the team, we would start an appraisal process designed to arrive at a fair market value for the Pollin family’s share of WSELP (including the Verizon Center and the Wizards). The idea was to make it possible for us to do this transaction at a price that was fair to both sides. I’m not sure how or why someone would object to a process that is simply designed to arrive at a fair market value, so I was very surprised to read in the paper today that the Executors of Mr. Pollin’s Estate are attempting to find a way around the appraisal process Mr. Pollin put into place for my partners and me-and only my partners and me — to pay fair market value for the portion of the WSELP properties we don’t already own. We were even more surprised to see that a memo was circulated to WSELP employees (and keep in mind I already own 44% of WSELP) that didn’t even mention the appraisal process that Mr. Pollin agreed to more than 10 years ago and that the Pollin estate (through their lawyers) have committed to in writing. I’m sure this must have been an oversight on their part.
My partners and I are already very involved in the workings of the Verizon Center, and the teams that play there and keep in mind, we already own nearly half of the Wizards and the Verizon Center. On top of that, the Capitals play 41 regular season games there, as well as pre-season and playoff games, and the Washington Mystics play a minimum of 17 games. We have an extensive knowledge of sports team ownership and economics, and are proud that among the teams that play at the Verizon Center, the Capitals are doing the best financially. The Capitals are one of the fastest-growing teams in all of sports, we’ve created a very healthy business model, which is sustainable and strong. We sell out every game. We generate fantastic TV ratings, are a league leader in merchandise sales, and our sponsorship sales are growing. In fact, in every metric of our business, we’re growing.
Over the years that I’ve been the principal owner of the Capitals, I’ve learned a lot about sports team ownership. It was from Abe Pollin himself that I learned owning a team is a public trust. I have learned that owners have a responsibility to do everything in their power to build a great team that can achieve immortality for their fans by striving to win championships, and I hope with the Caps I’ve shown that that I’ve learned a great deal about the right way to build a winning team. I would like to restore a winning tradition to the Wizards, and help the team - and its fans in the Washington area - achieve the rewards that come from competing for a championship.
I am very confident this process will move forward in the manner Mr. Pollin and I agreed to in 1999. The last thing the Wizards need now is more uncertainty. My partners and I are confident in the rights we have, and will make sure to protect them.
In the first phase of the orderly process Mr. Pollin and I agreed to conduct by which Lincoln Holdings could acquire the share of WSELP we don’t already own, we suggested a price that would have amounted to one of the highest prices ever paid for an NBA team. We did that with full knowledge of the marketplace and an intimate view of the operations of the Wizards and Verizon Center.
The Pollin Estate didn’t agree to sell at that price, which of course was their right. That simply meant that we now move to the appraisal process. We have appointed an appraiser to set a value for WSELP, as required by the Agreement Mr. Pollin and I signed in 1999. Earlier this week, the Estate’s lawyers told us in writing that they are in the process of hiring an appraiser and assured us that they intend to pursue the appraisal in good faith. As the Agreement makes clear, if their appraisers and ours differ on a valuation, a neutral, third appraiser will be chosen to come in and establish fair market value and then Lincoln Holdings has the sole right to purchase the properties at the appraised price. Let me say that again so that it’s clear: at the end of the appraisal process established in my agreement with Mr. Pollin, there is only one person or entity that has the right to buy the outstanding share of WSELP: My partnership, Lincoln Holdings. The point of the appraisal is to establish a Fair Market Value for WSELP, that’s what the Agreement says and I’m willing and able to hold up my end of the deal. I should also note that in addition to the appraisal right I just described, Lincoln has many other rights, including Rights of First Refusal, Tag-Along rights and other related WSELP partnership and Lincoln purchase agreement rights.
Since this is, I hope, the only time I’ll be speaking out until the appraisal process is completed and we have an opportunity to acquire WSELP for the appraised price, I do want to clear up one other matter that has been in the public. Lincoln Holdings is very well capitalized and the Capitals are financially succeeding as a stand-alone company. We have very little debt against our ownership position in our teams, and zero debt against our 44% WSELP position. The Caps are not only playing great on the ice but doing very well financially.
We have been willing to take on the acquisition of WSELP even knowing that the Wizards are losing money this season and facing challenges that were also reported today. We are willing to do this because we want the Washington community to have multiple teams vying for championships. Wish us luck!
Tags: Lincoln Holdings, Ted Leonsis, Ted's Take, Ticketmaster, Verizon Center, Washington Capitals, Washington Mystics, Washington Wizards
thanks for the insight Mr. L I hope all goes well with the acquisition so you can start rebuilding the Zards as you have done with our beloved Caps.
Yeah Go TED!!!
Just found a pretty blog, its made by a Caps fan for Caps fans: http://washingtoncapitalsblog.blogspot.com/
The actions of the Pollin estate are proof that no good deed goes unpunished. Good luck with your efforts, Ted, though I’m not sure why anyone would want to own the Wizards today.
Thanks for clearing this up Ted. We were worried you might not buy the team.
Thanks for a great summary from your perspective. Great to be able to get all the facts directly from the source. What you’ve done with the Caps franchise has been amazing (GMGM deserves his share of the credit too). I hope Wizards fans will be lucky enough to benefit from the best owner in sports too. (Just make sure you dont ever neglect the Caps!)
Thanks Ted!
Mr. Leonsis,
I am keeping you in my thoughts as a fanatic Washington-area sports fan. I implore you to not be frustrated by all of this! We NEED you to run the Wizards. I know you will turn this team into a winning one within a few years, and I will be watching every step of the way. It’s a shame for the Pollin estate to insult his memory, and your agreement, like this. Mr. Pollin surely saw what Washington sports fans see—an extremely sound businessman with a knack for running a great franchise,a caring member of the community and, above all, a passionate sports fan that will run the Wizards with the same love Mr. Pollin did.
couldn’t think of a better owner for any washington team then you and your group.any chance you can call to ashburn and get in there also?
Thanks for the post, Ted; though you did not have to say anything about this issue at all. Wish you good luck in the process and pray that you will end up owning rest of WSELP. You have done a great job with Caps. Thank you for putting together a fun/winning team and good luck!!
Good luck Ted and Thank you for what you have done already with the Capitals.
Caps Fan
Well, that clears that up. Good luck Ted!
You are the best owner a fan could ever imagine. Thanks for being you.
I think everyone who’s lived (and mostly died) with the Wizards/Bullets over the years is rooting harder for you right now than we’ve ever rooted for this team.
I am a Caps season ticket holder, and have been for the last 8 years. This kind of communication is proof that you are the best owner in sports.
Thank you for your candor, your commitment and your caring. Caps hockey is the best sports experience night in and night out. I am sure once Lincoln Holdings completes the WSEP purchase, that the Wizards will join them.
I don’t speak for anyone but myself, but I must say I look forward to your tenure as the full owner of the Wizards! As a fan, I’m very impressed with what you’ve done with the Caps, and I hope you can bring some of that to the Wiz. Good luck indeed! Mr. Pollin will be sorely missed, and this turn of events is unfortunate, but I can definitely see why he woul choose you as his successor. It seems you’re handling this with transparency and class, and it goes a long way in building a good relationship andrapport with us Wiz fans!
Ted,
This evening I read a book entitled The Go-Giver. As I was reading the book, I could not help but see the parallels between the story and what I have witnessed of your life [from my very limited perspective].
Thank you for being a force for good in our community, and being dedicated to serving well.
Good luck, I’m sure many, like myself, are rooting for you to finalize the purchase and continue the success.
Ted,
You are destined to own and lead this organization. We are with you as fans and as citizens. As my uncle would say:
“Life is short, shun not the struggle.”
I was hoping to see something from you when news broke and I am glad you put some pixels out! Good luck Ted and thank you for being you!
Dear Wizards Fans,
As a Capitals’ full season ticket holder I can assure you that you should be hoping and praying that Mr. Leonsis and his partners end up as the owners of the Wizards and Verizon Center. Though we’ve met only briefly in person at a STH rookie orientation and a “Chalk Talk” (an opportunity for STH’s to hear from executives with the team), Mr. Leonsis is approachable, transparent, professional, caring, charitable and compassionate. You’ll consider yourselves blessed if Mr. Leonsis, et al end up as the new owners.
Sincerely,
A delighted and enthusiastic Caps STH in section 410
Thank you for being open and honest with us! I always enjoy reading your website! I’m looking forward to you and your partners buying the wizards and turning the team around! When I was growning up, the Bullets were always a great team that were in the playoffs and even won a championship! Those are the days that we all miss. I never really thought the name, Wizards, really suited the team, although I do understand why it needed to be changed. Any chance we could change the name again? The name doesn’t really fit! I can’t say that I like the colors either. It would be nice if all of the DC sports teams used red, like the CAPS. I love rocking the red! Also, is there any chance you could talk to the owner of the Redskins about running a successful sports team? I think he needs some pointers!!!! From what I gather, he thinks he is the coach instead of the owner. Thanks again! Let’s Go Caps!
Mr. Leonsis,
Once everything is sorted out with WSLEP, any chance you could go give Dan Snyder some advice on owning a franchise in the DC area and how to build a successful championship caliber team?
Ted, you are truly a gentleman, a visionary and an exemplary business and community leader.
To take the time to explain what really isn’t our business is a testament to the respect you have for the fans and the local community.
I say, Ted Leonsis for President, 2012!
Thank you Ted, you are the man. Please don’t sell the team! The whole Caps thing shows that the whole city is just dying for successful sports, turn the zards around and the place will be packed each night, you’ll see.
I’m not sure if you respond to questions on your blog but I’ll ask you or the other readers–
How could trading players away such as Caron or Jamison for expiring contracts affect the purchase price of the team?
Go Ted. DC and the Zards need you. You are the best and most honorable owner in DC in my lifetime. Also get GMGM to aquire a tough mobile Dman to clean up the crease.
I didn’t think you had to say anything. I understood the process, and am not sure where the confusion came from. I do agree that if there was a time for clarification, this was it. I learn a lot from your writings, spectrum wide. Thank you for that.
Best of Luck! Go Caps!
Best of luck to you. Count me as an avid Caps fan and Wizards “hater” since my youth. I wish you the best, but in the long run I hope your emphasis remains on our Caps.
In the community, however, I’m sure that your ownership of both teams will be a tremendous benefit.
Can Lincoln Holdings purchase Versus and Comcast too, so that I can see hockey games (more importantly the Caps) out here in Colorado? Thanks.
Hi Ted -I was concerned when WaPost reported this news and am happy to hear your take. Everyone in DC are such fans and want to see you successful in this transition. All the best to you!
In light of these events I think all true CAPS fans would understand if you forgo your rights to buy the remaining portion of WSELP and instead decide to move the CAPS to a new venue. Perhaps upper Montgomery County Maryland would be a good fit.
Somewhere near Germantown seems appropriate……
Buy them…and then blow them up!!!! We have patience, but they are obviously way way way off the rails. Get rid of everyone. Free cap space. Start over with a blank canvas.
Thanks and make us proud to be Whiz fans…not the laughing stock we have become.
I support Ted 100%. He’s a fantastic, hands-on, accessible owner who has proven he loves his teams and their fans. He is the person to turn around the sagging Wizards. He could teach other sports owners how it’s done. I hope this transition is completed quickly and without too much acrimony.
Keep dragging the process out…Gil is lowering the value of the franchise every day.
On another note: Are there really three companies in the world that are qualified to appraise the value of an NBA franchise?
Good luck, Ted and company!
Personally, I couldn’t care less about basketball - professional or college. I just hope you get VC and charge outrageous amounts of rent so that the Caps become profitable for you.
we could sure use you in new york!!!!!!!!!
For the love of God, PLEASE let this transition go the way it’s supposed to happen! Mr. Leonsis, you are hands-down the best owner in town and I hope that you will be allowed to work your magic with the Wizards.
We all wish you the best of the luck with the acquisition of these properties. However, as a long time Caps fan, I wouldn’t mind it if the deal fell through, and you built a new home for the CAPS in NOVA.
Ted,
You are the best owner in all of sports. Good luck with this transaction.
Ted, thank you for the update… I’m hoping you and your partners are eventually successful in acquiring the rest of WSELP… No one faults the Pollin estate for wanting to get the fair share for what they own… Hopefully, they do not try to circumvent what Abe Pollin agreed to ten years ago… I think you and your partners will be fantastic stewards over WSELP, and believe you will be able to make both the Wizards and Mystics winners, just like you have done with the Capitals… Good luck, sir…
Mr. Leonsis,
I thought it was very clear from the tribute to Abe Pollin, that he designed this agreement with you to ensure that the Capitals, Wizards, and the Verizon Center would end up in the hands of an owner who would run the organization as a public trust. I’m absolutely amazed at what you’ve done with the Washington Capitals in the 10 years you’ve owned them. They are a bright spot for our city and our community.
I’d hoped for the same, and though saddened deeply by Abe Pollin’s death, I see the opportunity the Wizards have now to start over, and through effective leadership become a stable productive organization, one we can as a community can be proud of.
You are the one owner remaining in the area, who I have faith in to turn a Washington team into a respected and loved organization. I’d ask the Pollin family to use their considerable influence to make sure that Abe’s wishes are honored. Anything other than a smooth transition at this time, tarnishes those involved, and demeans Ted, Abe, the Family and the executor’s of Abe’s estate. Abe wanted Ted to own the Wizards and Verizon, for reason’s that ought to matter more than getting another 10-20million in the sale.
Good luck Ted! I turned in my Redskin season tickets a few years ago and now I am becomming a serious Caps fan! Can we interest you in buying the Redskins?
Bad news… the Wiz aren’t going to win the title anytime soon. The good news? You’ll have plenty of shooting guards.
The Wizards ? Are they still in the league ?
[...] Leonsis blogs about Wizards, Verizon Center sale January 29, 2010 | Posted by admin An Update on Today’s News – Ted’s TakeWashington Capitals owner Ted Leonsis issued a statement via his blog about [...]
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