Creating a buzz with winning and bold-faced names


Washington Kastles' owner Mark Ein speaks before a World TeamTennis match against the New York Sportimes, Thursday, July 12, 2012, in Washington. (Nick Wass/AP)
Thomas Heath
Reporter July 16, 2012

I am perched in the second row at the Washington Kastles World Team Tennis opener against the New York Sportimes, staring at hundreds of millions in net worth across the court.

Sitting in the early-evening sun is former AOL mogul Steve Case, in shades and a baseball cap, schmoozing with Raul Fernandez, vice chairman of Monumental Sports & Entertainment, which owns three local sports teams and Verizon Center.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade. View Archive

Down the line is mortgage bank maven Steve Kuhn of Pine River Capital Management, who flew down on the shuttle from New York. Chris Tavlarides, who owns Capital Outdoor Media, is also in the lineup. Former mayor Adrian Fenty arrives later.

In the seat in front of me is Valerie Jarrett, one of the senior members of the Obama administration brain trust. Sitting to my right is Heather Bresch, chief executive officer of Mylan Pharmaceutical. A few seats to my left is former North Dakota senator Byron Dorgan (D), now with Arent Fox. Farther down is former Louisiana senator John Breaux (D), now a lobbyist with Patton Boggs. Around the corner and down the sideline is John Kane of the Kane Company.

Welcome to Mark Ein’s tennis party, which has become one of the go-to social scenes in the Washington summer.

Entrepreneur Ein, 47, who attended the Harvard Business School and made a pile investing in various businesses over the past 20 years, is sitting one row in front of me and two seats to the right, dressed in a perfect blue suit. He is in his element, entertaining, laughing, working the crowd, doing television interviews. I have attended only two Kastles matches, but my best description is that of an upscale summer party filled with good wine and food, pleasant surroundings — and world-class tennis.

Ein bought the team five years ago as an expansion World TeamTennis franchise, paying an expansion fee and investing a few million on start-up costs. He named it for his Rosslyn-based electronic security badge company, Kastle Systems.

Ein’s sports start-up, in its fifth season, had its home opener Thursday night at Kastles Stadium at The Wharf in Southwest D.C., where this particular guest roster glittered.

The Kastles play seven matches during a three-week season. The league includes the Boston Lobsters, Philadelphia Freedoms, Sacramento Capitals, Orange County Breakers, Kansas City Explorers and the Sportimes. It was founded 38 years ago and is still majority-owned by tennis legend Billie Jean King.

Ein said he is not in it for the money. Of course he isn’t. Who would put their capital in a tiny, professional tennis team? Like many professional sports teams, the Kastles are not profitable.

“As I dug into [researching the economics], I thought generating lots of profits on an annual basis would probably be tough,” Ein explained. “But if you could build audience and a brand, you might build franchise value.”

But like many sports team owners, he is betting that he can build long-term value and sell the team for two or more times the revenue, which would bring him a return of several million dollars. His strategy is to create buzz through winning and drawing bold-faced spectators like Michelle Obama, who attended last year with her children.

To that end, he pays big bucks — I estimate well into six figures — for single-game appearances by tennis superstars Venus and Serena Williams (Serena recently won her fifth Wimbledon title).

“One of the many hundreds of things we did differently was we invested in getting great players,” said Ein, whose Kastles went undefeated last season, the only WTT team to ever do so. In addition to the Williams sisters, he hired Leander Paes, one of the top-ranked doubles players in the world.

The team — whose payroll I estimate ranges between $100,000 and $150,000 per season, including incentives and not including the Williams sisters — has helped produce about 1,000 devoted season ticket holders. That fills about 40 percent of the 2,600-seat stadium. Season tickets range from $150 for all seven games to $6,000 for a courtside dinner table, which includes four tickets and catered dinner. Individual game tickets range from $15 to $85.

I estimate, based on industry sources, that the team takes in roughly $2 million a year in ticket sales and other revenue, which produces a manageable cash deficit in the low six figures, which in turn can be reduced through tax writeoffs.

“We’re getting closer to being profitable,” Ein said.

A glance around the stadium — filled with advertising — tells part of the story. Many of the sponsors — including Cadillac, SunTrust, Geico, Bloomberg, Capital Party Rentals, Residence Inn Marriott, Pepco, Qorvis and Comcast SportsNet — also provide in-kind services such as food, transportation and tents, which help cover costs.

Those costs are divided into four buckets: player salaries, employee salaries, the 2,600-seat temporary stadium and marketing. The WTT shares some national sponsorship with the Kastles. Around two-thirds of the revenue comes from sponsorships and the rest from tickets.

The idea for the team started in the summer of 2007, as Ein and former District city administrator Dan Tangherlini took a walk together while sipping Starbucks coffee outside D.C.’s Wilson Building

“I had just gotten back from Chicago, and I said sometimes we don’t have enough fun stuff for people to have a good time,” Ein said. “Dan said we think about that a lot.”

He was introduced to King at her suite at the U.S. Open in Flushing Meadow later that summer. King said she was looking for the right owner to start a team in Washington, and Ein had the money, the appetite for risk and a love for the game (he had a world pro ranking after playing a few pro doubles tournaments in the past three years).

The team started in downtown D.C. in 2008, at the site of the former convention center at Ninth and H Streets NW, after Ein built a temporary stadium on the asphalt. Not everything went according to plan. When the parking lot where the tennis court would sit turned out to be uneven, he shelled out $150,000 to truck in 1,500 tons of asphalt to level it off. Former tennis champion Murphy Jensen, who won the men’s doubles title at the ’93 French Open, is in his fourth season as the team’s coach.

The team moved to The Wharf in 2011. It sounds obvious, but the first couple of seasons taught Ein something very important. It wasn’t enough for the fans and players to have fun. It was important to win, as well.

“Winning helps the broader mission,” he said. “When we lose, everyone quietly leaves. When we win, everyone is energized. People love coming to support a winning team.”

He also learned that the team’s business success would make everything easier, including hiring, finding corporate partners, getting players motivated — not to mention bringing in more revenue.

“Great people want to work where there is a business opportunity,” he said. “Winning and the business are tied together. Mark Zuckerberg said he built Facebook as a tool, but as a great business it allows him to make the other other thing more effective, allowing him to bring in great people that fulfills the mission.

Ein’s return is multifold. He loves the game and he clearly loves the attention that comes with it. The lifelong Washingtonian, who is courtside at the U.S. Open in Flushing Meadows, Queens, every Labor Day weekend, feels like he is giving back to the city. The jury is out on whether the team will give anything back to him — beyond emotional satisfaction.

For previous Value Added columns go to washingtonpost.com/business.

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