Trouble in the Verizon Center

And it has nothing to do with Gilbert “Agent Zero” Arenas and gun play in the locker room.  Abe Pollin, the beloved long-time owner of the Washington Wizards and the Verizon Center (nee MCI Center), passed away.  Pollin had an agreement with Ted Leonsis, owner of the Washington Capitals of the NHL and Mystics of the WNBA (who also play in the Verizon Center) to purchase the rest of the Wizards and the arena.  Leonsis currently owns 44% of the Wizards and the arena.

The problem is that Pollin’s estate and Leonsis disagree on the value of the team and facility.  In a battle of dueling appraisers, the Pollin estate reportedly says $600 million and Leonsis says $500 million.  For what it’s worth, Forbes valued the Wizards at $313 million last month, and the Verizon Center cost $260 million to build in 1997.

In the latest development, Pollin’s estate claims that the Leonsis’ exclusive negotiating period is over and they can put the Wizards and the Verizon Center up for sale to the highest bidder.  Leonsis, of course, disagrees.  That sounds like a lawsuit to me.

The NHL, who also happens to be the current owner of the Phoenix Coyotes, are reportedly following this situation closely, since this will be an important indicator of the value of NHL franchises and arenas in the new economic environment.  There are a number of factors affecting the value of the franchise and facility, including the popping of the real estate bubble, the length of the current economic downturn, and the effect of the downturn on the revenue streams generated by professional sports teams.

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