On Wednesday, September 27, I interviewed Washington Capitals owner Ted Leonsis about the upcoming Capitals season for Metroblogging DC. We discussed the CBA, the new Ballston practice facility, the challenges of the D.C. sports marketplace, the Southeast division and of course Alex Ovechkin.
Ted Leonsis bought the Washington Capitals hockey team in 1999 and immediately brought a new perspective to professional sports ownership. The AOL executive made himself accessible to his fanbase by answering personal emails from fans and writing the “Owner’s Corner” column on washingtoncaps.com. Recently, he began blogging as well.
Recently, Mr. Leonsis took the time to answer some questions for Metroblogging DC. The Caps begin their season tonight, in New York against the Rangers. Their home opener is this Saturday with the defending Stanley Cup champion Carolina Hurricanes coming to town.
We are coming into year 2 of the post-CBA era and the Alex Ovechkin era, both of which must be very exciting to you. Why don’t you talk about how the new CBA helps the Capitals in Year 2.
Ted Leonsis: I think we shouldn’t focus on Collective Bargaining Agreements. I think that the league went through a very tough gut check into trying to make for a business model that could be fairer to all 30 teams and would also inject more competitiveness into the league. I think we are rapidly getting to that point where like the NFL and the NBA — no one really knows what their team is spending but feel comfortable that each team has a shot to make the playoffs and win a championship. You do not have that in baseball. In baseball you still have teams that spend 200 million and teams that spend 20 million and in the NFL, the NBA, and the NHL you have more parity, if you will, regardless of market size of if a team owns their own TV network. That is what we were desperate for in our league and we have that and on top of that we have new rules. I think last night was very instructive — the Caps played the Flyers and in the old days the Flyers were bigger tougher and had a higher payroll. And now the payrolls are pretty much comparable…maybe $10 million difference, but the emphasis is on speed, the emphasis is young legs and skill and you want a league where the stars are allowed to shine and where people want to see great offensive skills allowed to prosper and I think that is what we are starting to see. The new CBA, the new rules are making for a more exciting NHL and I think we have built and organization and a team that was designed for the new rules and the new model and I am very optimistic about where we are headed as a franchise.
WFY: One of the contributors to the new exciting NHL is Washington’s very own Alex Ovechkin who won the Calder Cup, which is the rookie of the year in hockey last season, with over 100 points last season. How much has Alex meant to the franchise in the short term; and in the long term, how much is he going to mean to the franchise?
Leonsis: We’re blessed in that we appear to have a once in a generation kind of player, he is a phenomenally gifted athlete and hockey player. The season that he had last year really was the best entry of a rookie probably in the last 25 years, but certainly one of the top 3 first seasons of any player in the NHL in 80+ years history. He is only going to get better as he matures and gets stronger and also learns how the league paces itself. it is a very long season and hopefully playoff games and his engine runs at a very high RPM and he is going to have to learn to pick his spots a little bit more. We’re most blessed that he is really a terrific young man. I remember once having lunch with Red Auerbach, who told me that your best player also has to be your best person, and as you look back at his history in the NBA winning so many world championships that his best player be, it a Bill Russell or John Havlicek or Larry Bird, they were not only phenomenal athletes, but they were phenomenal leaders and they were humble and took great joy, not in personal success, but in the team’s success; and we really do have that with Alex.
Leonsis: This off season he was quoted as saying, “If I scored 20 goals and we made the playoffs, I’d be much happier than scoring 60 goals and not making the playoffs.” That is what you want form your foundational player and we have built a team that has a lot of great young talent and the are all in their early 20s and my goal is to build a generationally-good team. I don’t just want to make the playoffs just one year, I want us to make the playoffs on a consistent basis and win a bunch of Cups along the way and I think the way you do that is that you have a team that at its core are all growing and peaking together. We’re in the second year of this rebuild and I think we are a little ahead of schedule.
WFY: Where are you in terms of the schedule with getting fans in the seats? There are some people who don’t believe that Washington is a hockey town. Recently on your blog you are making the argument that it is becoming a hockey town. How are you doing with marketing the team, especially now that you have this incredible talent in an Alex Ovechkin?
Leonsis: You could argue that Washington overall is a Redskins town, but you look and the Nationals are struggling at the gate right now, their honeymoon lasted one year and the Caps always struggled at the gate, and frankly the Wizards don’t have an easy time, too. It is all of our challenge to try and connect with our community and be more successful at the gate. What I decided to do is to structure the team in the economic model for the market that we see, and there is nothing wrong with what we see. There is nothing wrong with averaging 15-16 per game which is what I think we can do this year. I would love to have a situation where we sell out, but I think we’re struggling to do that; and right now we are at about 85% renewal of our season tickets and plans, which is a very positive sign for us. We have to sell more season tickets and more groups so we can get to what I would think be a fair amount of attendance which is about 80%. The arena seats like 18,500 we can get 16,000 this year, I’d be very happy.
WFY: As part of that, you are focusing on the season ticket holders. Are you doing a lot of outreach to the former season ticket holders who may not have been happy with the direction the franchise went?
Leonsis: Yes, they mostly came back last year; and this year, I would say the core of the fan base has returned and that is what is so positive for the NHL. Of all the leagues we had the most success post-lockout. Our challenge is crossing that chasm and reaching a more casual fan; and when you look at what our challenge is, we need 1,000 new season ticket holders that buy 2 to 3 tickets per game. That is the difference for us between a modicum of success and a grand slam success, 3,000 more people per game. It’s another 1,000 accounts. That is what our focus is on, trying to tap into the Maryland/Washington D.C./Northern Virginia area to find that 1,000 new accounts.
WFY: What about single game tickets? How are you going to be marketing towards you more casual sports fan or the Redskins fan?
Leonsis: There is no ROI on marketing individual games. The average ticket price is $30 and the most you’ll sell on a walkup basis is 300 tickets, so it looks like $100,000 worth the business and you could spend $100,000 on television or print advertising pretty easily and so that is why you want to build the Washington Capitals brand. You really want to have the online tools through the blogosphere, online marketing, search terms, having an interactive ticketing engine, to make it very convenient for people to buy tickets. It is also why season tickets and plans are the lifeblood of your team, and I’ll be sincere when I say we can sell out Friday/Saturday night games when we play the Rangers, Philadelphia, or Pittsburgh; those are easy sells for us. It is the Monday night game against Calgary, and when you sell season tickets you get that revenue, so that is why season ticket sales are so important to NHL franchises.
WFY: One of the other things that you are doing that I imagine was built with building up the fan base. You are building a new practice facility in Ballston. How did you decide to put it in Ballston, as opposed to further out where land might be cheaper?
Leonsis: The first thing was that we were sub-optimized in the space we had at Piney Orchard. The Piney Orchard camp and practice facility was created when we played at the old USAir Arena and it meant that the nexus of living space for the players and the staff were out near Baltimore or Annapolis. When we moved into the MCI Center, now Verizon Center, it didn’t make sense anymore. The majority of the fan base changed; it had moved from deep in Maryland to be in Bethesda, Washington, DC and Northern Virginia. In fact, Northern Virginia is where 62% of our season ticket base now comes from, so we felt it was in our best interest to relocate the office and the practice facility, and then where the players and staff live to be in the heart of the fan base. So we ended up doing a great deal with the city of Ballston where they donated the land, they owned the parking lot that was adjacent to the mall in Ballston and we built a new office building and two sheets of ice and a big training and practice area for the Caps that we should be moving in November.
WFY: You mentioned blogosphere earlier and on washingtoncaps.com you have a link to several Web sites you call “hockey-friendly blogs?”
Leonsis: The traditional media is not helping us enough. I’ll say it as straight forwardly as possible and I’ll give you a very graphic example — last night the Caps played Philadelphia. When the game ended, in Philadelphia there were highlights of the game on all the Philadelphia news stations and their local cable channel was having a sports show talking about the Flyers-Caps game and here in the D.C. There was nothing on television and our local sports channel was talking about the Navy football game on Saturday. We have to find alternative means to promote our team and our players and I have great faith in people who blog. If they are blogging they are not doing it for a living, they are doing it out of passion and love and we are going to be the most blog friendly team and I hope the NHL becomes the most blog friendly league because it is a way to pay back these people on their passions and it also a way to get the good word out. That I am doing this interview with you is a good example. You blog, you care, so you deserve time and respect.
WFY: And it is certainly appreciated. In particular on one blog that sticks out — that you have certainly appeared on and the Capitals have gotten a lot of mention on is Off Wing Opinion. You have even worked with Eric McErlain to work on some standards and practices for allowing bloggers into the press box. Could you elaborate on that a little?
Leonsis: I think that we have to start looking at the bloggers as part of the landscape and there will come a time when you have to invite the bloggers to come into your press area and come into your locker room. I felt we should be leaders in working with some of the leading bloggers with a fair set of rules of the road and we have been working on that and we have published it and let other bloggers bang away at the rules and I feel very comfortable that it can be self policed well and no one will take advantage of what we are trying to create.
WFY: What’s going on with the uniforms? It seems every year we have people scratching their heads wondering if you’ll be going back to red, white, and blue uniforms.
Leonsis: We will eventually go back to red, white, and blue. For every person who sends me an email that wants the color change or new uniform, I get as many mails, mostly from mothers, saying “please don’t change the uniform because then I have to buy the new jersey for my children and they are very expensive.” I am very cognizant of that and when we’re changing the uniform I don’t want it to look like we are doing it to generate money. To be honest, that is not even how it works. We’re not the recipient of individual, additional jersey sales. That is a misconception. The NHL overall is looking at changing the style, the weight and making the uniforms more contemporary. So, I think we’ll just wait and see when the NHL goes to a new design and style and new color scheme and logos ready and that would be the time to do it.
WFY: I imagine there will be a lot of effort put into that when the time comes, so there is not a repeat of the Buffaslug disaster.
Leonsis: *laughs* Yes, we will make sure we have total fan buy-in before do anything.
WFY: Getting back to the ticketing, how does the Southeast division impacted you ability to sell tickets?
Leonsis: The realignment was not good for us. We didn’t have long-term rivalries with Tampa Bay or Florida or with Carolina. Ironically, the last two Stanley Cup winners have been Southeast division teams. We used to hear about how weak the division was, both Tampa Bay and Carolina won the Cup. Atlanta looks like it could the next great young team and I think we won’t far behind. It probably emerged as the strongest division in hockey and yet because we have not had long playoff competition history with Pittsburgh or the Flyers or the Rangers, the fan base doesn’t turn out in droves and secondly there is not the built in local fan base of the opposing teams. When we play the Flyers, or Detroit, or Boston or Chicago or Pittsburgh, we probably get 2,00 to 3,000 who grew up fans of that team that come. When we play Tampa, if you see five opposing fans in the arena wearing Tampa bay jerseys I’d be surprised. If I had my way we’d play Pittsburgh, and the Flyers and Detroit and Boston on a Friday or Saturday and sell out every game. That’s not the cards that were dealt to us and now we are in a very tough division playing teams 8 times a year that don’t draw that well. That has been one of our biggest challenges.
WFY: I have a question about Pittsburgh. There are a lot of displaced Penguins in this area. If the Penguins are to leave Pittsburgh will you make any effort to grab some of disenfranchised Penguins fans who now live in this area?
Leonsis: I have no idea what is going to happen. It would be in our best interest that if Pittsburgh moves that the Caps take their place and move into that division. There has never been a single conversation, e-mail, anything on it, so I have not spent five seconds thinking about it.
WFY: I recall when Hurricane Katrina happened all of the local teams got together for charity purposes. There were donations at RFK during Nats and United games. Is that something we can expect to see in the future? The local major league teams working together on charities.
Leonsis: Lots of things…Ovechkin is throwing our the opening pitch at the Nats game tonight and we’ll have a bunch of our players there. The Nats are promoting the Caps and the Mystics. The Caps and Mystics are going to be promoting the Nats. The Lerner family owns a small piece of the Mystics and Caps and we’re going to try to be good cooperative co-marketing partners. Our belief is that if the tide rises maybe boats will rise with it. it is in our best interest to be mutually supportive of each other.
WFY: Another issue that comes up regularly is why hasn’t there been an All-Star game or NHL Draft in the District yet. Is this something that we can expect to happen or that you are lobbying to have happen?
Leonsis: I have not actively lobbied, mostly because I don’t own the building. We have had our hands full in trying to build our franchise. I know there are some discussions here right now about getting the WNBA all-star game to D.C. I am sure at some point we’ll have the NHL All-Star game.
WFY: What are Alex Ovechkin and now Alex Semin going to mean to this team and the city? Are you going to market both of them a little more?
Leonsis: I think we have to market the team and let the breakout players stand on their own. I do believe we will have some young, gifted players who will grow up together. We will have four of the top young forwards in the NHL for a long time to come. Ovechkin, Semin, Nicklas Backstrom when he comes and plays… hopefully next year and Eric Fehr — will be four young, great forwards that will play together for a long, long time. Defensively, Mike Green and Jeff Schultz and Steve Eminger, and Shaone Morrisonn are four young top #1 picks that will grow up together. That is a very very strong core nucleus of #1 draft choices who are all in their early 20s that are getting lots of playing time. they have had success in the AHL — our AHL team won the Calder Cup last year. We hope we create a culture of winning with higher and higher expectations year after year.
WFY: You mentioned the culture of winning, your AHL affiliate is now the Hershey Bears which is probably the most distinguished minor league hockey team — they’ve been for a 100 years or so. How is teaming up with Hershey working out?
Leonsis: It worked out spectacularly well for us. They have a great system, we have a great working relationship. Very close — when we want to call up a player they drive 100 miles and their hear and they don’t have to fly and try to get in and out of a place like Portland, Maine where the is not a direct flights. The system worked so well last year we won the championship. A lot of those players will have the opportunity to make our team this year and that is exactly what we wanted. We felt that doing Hershey, that building a new practice facility, continuing to draft well, managing our cap well so that when people’s contracts expire we can keep them and that all of this would culminate into a very, very valuable franchise that is on the incline. That is what we want, we wanted to build an identify. We wanted to basically create a team.. I call it NHL 2.0, it’s Washington Capitals 2.0. Be ready for a new league economics, be ready for the new rules, the new NHL and try to anticipate and understand what that will all mean and build a team that takes advantage of what the new rules would be.
WFY: Olie Kolzig means a lot to the Capitals. He’s been there for about 10 years.
Leonsis: I think Olie has been in the system for about 15 years almost half our lifetime. He’s a remarkable leader, a great athlete and a great person. He and Alex are really the bedrocks of our team right now. He is very loyal to us and we are very loyal to him. My sincerest goal is to build a team he can a cup from.
WFY: He’s certainly one of the most popular Capitals ever. What about some of the most popular Capitals ever? Will we be seeing more of the Dale Hunters, Rod Langways around?
Leonsis: Rod, we have totally embraced…Rod has carte blanche with us. Dale we love, but Dale is fully engaged in is hometown. He owns a junior team and the arena, he is very happy up there but, he is still a member of the court here and he brings great tradition and great history and great learning’s when we are around him. He is personally one of my favorite people.
WFY: Recently in your blog you noted that every regular season game is televised. Was that not the case when you came on board?
Leonsis: That was one of the deliverables that I promised. We are trying to meet our commitment. The glass is being replaced with brand new glass at the Verizon. Not a big deal, a very nice thing for Washington Sports and Abe Pollin to do for us. It cost a lot of money, but it’ll make the viewing experience that much better. Working with television to get every game on was important. Last night, we tried to broadcast our game in broadband, we had some difficulties. You were only able to listen to the game through internet radio. We are tying to do lots of little things to make the whole Capitals experience more pleasant for our fans.
WFY: Speaking of little things, will you be putting up any banners downtown?
Leonsis: We’re not allowed to do it. The city has to do it fro you. You can hardly do any outdoor advertising. A couple of walls they’ll allow you to do it. I do think the city needs to help us. It needs to help promote baseball and hockey. In case anyone hasn’t noticed, Verizon Center is one of the catalysts for the turnaround of downtown D.C. The City is going to put up $600 million or so, they need to continue to help make these franchises successful.
WFY: Are there any parting notes you would like to say to the fans who are excited about Caps hockey or interested in learning about it?
Leonsis: I think we’re trying to do right now is explain to people there has never been a better time to invest. I like to explain to people that the Chicago Bulls when they drafted Michael Jordan still had tickets available and then they started to make the playoffs and win championships and you couldn’t get near the place. Now is the time to buy in. This is like a young stock — great company about to IPO and there has never been a better time and it’ll never be easier or cheaper to get tickets and get involved and I do think the team is on the upswing and we will build a really good team for a long time.