Name: Ted Leonsis on Washington Capitals, Wizards, Ratings, and More
Uploaded: 2025-04-17T18:15:00Z
Duration: 20 min 54 s
Description: Ted Leonsis, the CEO and founder of Monumental Sports and Entertainment, discusses the sports management company's professional teams, television ratings, and the key elements to starting a successful business.

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Ted Leonsis, the CEO and founder of Monumental Sports and Entertainment, discusses the sports management company's professional teams, television ratings, and the key elements to starting a successful business.

https://m.wsj.net/video/20250417/c411672d-0556-475b-8ef9-32077c8ed69e/1/hls/manifest-hd-wifi.m3u8

Ted Leonsis on Washington Capitals, Wizards, Ratings, and More

Hello, everyone, and welcome to "At Barron's." I'm Andy Serwer. And welcome to our guest, Ted Leonsis, CEO of Monumental Sports and Entertainment, a lot of other things that you've done in your still storied career, I don't wanna do the past tense, still ongoing career. Ted, great to see you.

Likewise. Our careers, our neighborhoods, our communities have intersected for over 20 years and it's great to be here. And I think having you join the podcasting world, that's really fantastic.

Well, thank you, Ted. So tell us about Monumental starting off, we've got, what, eight teams, five venues, and one platform, what does that mean?

Well, if you remember, I was president of America Online, and AOL and Time Warner merged, and I said, "I'm not going to New York. I'm gonna buy my sports teams." And I stayed at AOL. In 1999, I bought the Washington Capitals. I was a season ticket holder. I didn't really get into it thinking that this would be a big business opportunity. It was more to scratch a competitive itch. There's something, when you own a team, there's a finality, there's one winner and there's 29 losers. But I came to sports with a media and technology filter, background, and I was really surprised at how undervalued the industry was. Someone had said to me, "Why are you buying a crappy little hockey team? You paid $85 million for it." Now the team's worth 2 1/2 billion dollars. My basketball team, I paid $500 million, now it's worth 4 1/2 billion dollars.

That being the Wizards.

The Wizards. And the reason is, is that, like a subscription business, we look like a software services business. We have big, big customers that sign up for five, 10-year deals, and the contracts have escalators in them. And so about 70% of all of our revenues is predictable. And what's not predictable, season tickets, they renew 80% to 90% every year, right? You make the playoffs, people have to renew their tickets. So it's such a great business. And if you're in a big market, and we're in Washington DC, but it's really from Richmond, Virginia, all the way up to Delaware, it's 10 million people. And we're one of three enterprises that owns the venues, the teams and the distribution. I bought the RSN from Comcast a couple of years ago. And so we now have become an enterprise of size and scale. And you know, we're probably valued $7 to $8 billion now as a enterprise. And we're focused on, as you said, creating a platform. We could buy another team now and plug it in, and it would be on our network. It would be, you know, like Google making acquisitions or Microsoft making acquisitions.

Right, a lot of jumping off points there. Another team might be the Washington Nationals. You've been named as someone who might be interested in buying that team at some point, then you do own the WNBA team and some other teams in the mix as well. And I'm wondering about how much sway an owner has. And the Capitals are one of the best teams in hockey right now, how much do you have to do with that, Ted?

As an owner, you really set the strategy, the culture, the budget. And you know, in my 25th year of ownership, they had little celebrations for us. And I was really touched, surprised. You know, this is gonna sound like a humble brag, but I got to 1,000 wins the second fastest of any owner in the NHL. And then this year, the 26th season, we have the best record in the league. And Alex Ovechkin is really a unicorn. He's a true unicorn. He will be the only player in the big four sports who started his career and ended it with one team, was an MVP, won a championship, and broke an all-time record.

All right, so if you're somewhat responsible for the Capitals, you know where this is going, Ted?

Oh yeah.

The Wizards, on the other hand, are one of the worst teams in basketball. So are you responsible for that as well?

Well, no one's ever accomplished what, we are currently positioned the best team in the NHL and the worst team in the NBA. It is by design. We had a playoff-caliber team year after year at the Wizards, but we didn't have an ascendant star. We didn't have, you know, the NBA, it's LeBron's world, it's Kevin Durant's world, it's Steph Curry's world. And the way you get those players is through the draft. And so we decided a couple years ago, "Let's rebuild the team around young players in draft picks." Last year, we had three first-round picks. The draft is very, very strong this year and next season. We've loaded up on picks, we have lots of young players. I think we have the youngest team in the NBA. They're gonna go through the growing pain. But if you look, Oklahoma City has the best team in the NBA, they went through the exact same strategy.

So rebuilding phase you. How is the NBA going right now? I mean, people are a little bit concerned about say TV ratings. Talk to us about the league in general, Ted.

The NBA I think is right now the world's most valuable sports and entertainment enterprise. Nike held that position, they're under $100 billion. I think the NBA is the growth stock, it's very ascendant. And remember, we've built this huge enterprise just in North America. We've gone to China, a couple years ago, we did Africa. And you've been reading about now maybe we'll be going to Europe. Well, why do we wanna do that? Well, the partners who license our IP, they already have 100% of North America. They wanna be more global. And our brands, are players, you know, NBA and the players and the teams are the number-one search on Google. I think it's been five or six years in a row. So I think that we had the opportunity to go from $125 billion today to be, you know, a really, really company organization of size. And that benefit from the league flows down to all of the teams.

Right, some people are concerned though about the TV ratings, right? They could be better, right?

Yes and no. I mean, I look at engagement and I look at a platform. So our social has been growing like crazy. Our direct to consumer's been growing like crazy. The cable world has shrunk. So I'm was chairman of the NBA Media Committee, we're very, very focused on making sure that we could get back on broadcast television. We've done a deal with NBC, NBC had the rights for a long, long time. It's kind of in their DNA. So I think we're still the convener, I think, you know? People really wanna watch sports. And when you compare our ratings, I know even locally we have a really good team with the Capitals, we could get two, three, four rating points. CNN on a good night gets less than a one rating point, in Washington DC. So sports still has this ability to attract users, get engagement in long form. It's three hours, you know, pre-game show, the game itself, post-game show. And then the advertisers really wanna go where there's this passion, this engagement from the audience. So I think that's why the media companies have been rewarding us with these long-term, really, really significant media contracts.

And just one quick last sports question. You're renovating the arena in Washington DC. How's that going?

Well, we just started, and it's funny, the building's almost 30 years old. It still looks great, it functions great, but it's missing a lot of the next-generation accoutrements for the fans and for the players, for the neighborhood. And so we've worked out a deal with the city. It'll be around $1 billion. The city will be putting in 515 million. We've already put in 200, we've committed to 300. But I have to do the cost overrun. So I can pretty much tell you we've just broken ground that there'll be cost overruns. But these buildings are so iconic and so important. We will be the front door for 35 million tourists that are on the mall. They wanna come into downtown DC where this magnet, almost a portal, we bring three million people into downtown, most from Maryland and Virginia, about 1/3, 20% to 30% in Washington DC. And when they come in, then they go eat in the restaurants, go in the bar, shop. So we play this really, really pivotal role, and venues are really, really important in cities.

Shifting gears, I wanna ask you about entrepreneurship. You're a serial entrepreneur, not born with a silver spoon in your mouth. What are some keys to starting and growing a successful business?

The best saying I ever heard in sports was, "No one knows nothing." And I think that's pretty--

Scratch my head. Okay.

That's pretty much on business, that you can find a niche, you can find an industry, you can take a contrarian view, and force of will, you know, when we started AOL, it was illegal to get on the internet. The internet was owned by DARPA. And we said, "Well, then let's build a private internet." Crazy, right? We had a rollout in every area code so you could make local calls. And you know, we built that and got America online. That was a crazy idea at the time. Now it just seems so, you know, self-evident. And most entrepreneurs, if they start out, and this generation sometimes is too focused on the reward, you know, they're talking about exits, they're talking about valuations. If you start out with, "How can I make a better product, simpler, easier to use, less expensive for a customer?" If you nail that, then the venture capital will follow, the margins will follow, the profits will follow. So I've always looked at, my first business was at Georgetown University, the bicentennial, 1976. 30 million tourists coming in, "What can we sell these people? Snow cones, red, white and blue snow cones." Still to this day, the product with the best margins, it was ice, paper cup, with like some Kool-Aid on top of it. And we introduced variable pricing into the marketplace. If it's 80 degrees or less, it's 50 cents. If it's 80 to 100, it's $1. If it's over 100 degrees on the barometer, the humidity ratings, we'll negotiate. We'll do a deal. And you know, I just learned from that experience that you can put a twist, you can do something with the consumer, you can introduce innovation and build something that has value.

You talked about AOL, you also worked at Wang and Harris, I didn't even realize that, earlier in your career. What excites you most about the tech industry right now? And where would you invest in it?

I've been disappointed in the last 10 years on technology and investment. It has felt very derivative, right? You said AOL, we introduce instant messaging and AIM, and then Twitter and Facebook were God children of AIM. You could find your buddies. In fact, Twitter's 140 characters, we had a feature in AIM called status messaging, was 140 characters. So there really haven't been great breakthroughs. But AI, which I was introduced to AI at MIT in 1977. Dr. Minsky, think about that, it's taken this long to have enough computing power, enough knowledge out there that can inform these engines. And AI, I think, will be a game changer. It'll build value for the big companies, the Googles, the Apples, the Microsofts. But where the big, big advantage will come is in the medical field, the healthcare field, the food sciences field, because now you can verticalize with unbelievable knowledge and certainty. And so, you know, that excites me. And that's where I'm making a lot of my investments in the verticalization. And these industries don't have software developers, they don't have AI experts. Now they can basically use the collective knowledge and be able to go and build something faster, cheaper, better and more precise. And we need precision medicine. We need, you know, better ingredients in our food. We need to have that kind of planning. And AI will deliver on that.

So you have a portfolio of companies you've invested in, and is that through Revolution Growth with Steve Case or it's different?

Some of it's from Revolution Growth. We're the lead investor in sports. We did DraftKings, we did Sportradar. And the reason for that is we saw what was happening in policy in Washington DC and we understood the technology, we understood sports, and so those turned out to be two public companies we did great. In Revolution now, we have a thesis around precision medicine in healthcare. We were the first and lead investor in Tempus. Tempus has raised a couple of billion dollars. It went public last year. It's got a $10 billion market cap. And it's the largest database of genomic and related information for cancer, cancer treatment. And all because, if God forbid you got cancer and you went on your journey, there'd be this magical moment in question, you and your wife would be sitting to the doctor and you say, "If this was your husband, what would you do?" And the doctors would say, "I think one of my partners had a case similar to this," or I read a 'New England Journal of Medicine' article that had 15 people in the trial." We have 70 million genomically, you know, lab-tested customers and patients in our database. And now we can say, "Hey, Andy, this is his genomic makeup. And his father had heart disease and his mother had, and this is his diet. And we have 88,000 people around the world, and when they use this treatment with this prescription and they adhere to it, they're still alive and they're going on eight years, nine years, 10 years." And it informs the oncologist at that moment. So it has great consumer benefit. They can speak with more precision about the treatment. For the drug companies, it's been eye-opening, right? Because now for the first time they go, "We didn't know that for people with the genomic makeup of Andy, that he shouldn't take radiation. He should be taking this treatment. Go tell all the doctors, when Andys come in, this is the kind of treatment that they should look for, and it includes our drug." So that precision medicine is going to be so incredibly important. There's all these discussions on vaccines.

Right, right, right. I wanna ask you, it's sort of a segue about policy in Washington and what's going on in Washington DC. You being a prominent person in that city, are you concerned about the layoffs of government workers and what's going on with the economy in Washington DC right now?

Well, it's a two-edged sword. I mean, I'm in Washington DC. During the pandemic, we're shut down. We were eminent domain by the city. We couldn't play games in the building. And we said, "Okay." And then as we reopen, we open five days a week. How can I tell three million people, "Come to my building," but not have our employees in the building? And I watched as Washington DC and the office buildings, and federal workers didn't come back to the office. They were in the suburbs, they were working one day a week, two days a week they would come in. And I said, "This is not gonna have a happy ending because if there is a regime change, it's gonna say, 'Well, we don't have to be in Washington DC, you've just proven that.'" And so NASA, "It should be in Florida. Let's move NASA to Florida and we'll cut expenses." And the government is going through what big companies go through. You have your reckoning, if you will, and now you're trying the right size. But it's breaking our hearts, and it's really hard on the local businesses. We're a driver, we bring three million people in every year. But, you know, if you're a restaurant in town, I used to look out my window and I'd see 10 food trucks. There's not a single food truck. Go, "well, what happened to all of those small businesses, entrepreneurs?" There's no one coming down at lunchtime to, you know, use the food trucks. And I mean, it just goes on and on. The union negotiated this. They made it a deliverable, if you will. And I think we are going to pay this price on right sizing. The biggest issue will be that these buildings are now going into the marketplace and it's driving real estate prices down. So that has an effect because the real estate developers, they pay a lot of taxes into the city. So if the tax base goes down, how are we gonna pay for the police? How are we gonna pay for the first responders? And so everything's interconnected. And when we make decisions kind of in a vacuum or just for one part of the value chain, this is what happens.

All right, Ted Leonsis, CEO of Monumental Sports and Entertainment, thank you so much for joining us, Ted.

Great, thank you so much.

This is "At Barron's." I'm Andy Serwer. We'll catch you next time.

Ted Leonsis on Washington Capitals, Wizards, Ratings, and More

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