There is this Washington media and entertainment company in search of new revenue streams as it tries to update its decades-old business model. Faced with perennial losses from key divisions, the company is going aggressively digital, asking employees to broaden their skill sets, collaborate more, produce extra content and find innovative ways to deliver it.
Meet the Monumental Network, a Web site that NBA Wizards and NHL Capitals owner Ted Leonsis is launching this week in a search for new revenue to fund his billion-dollar media-entertainment-sports enterprise, which includes the Verizon Center and everything in it.
Monumental Network is another example of how legacy sports businesses such as hockey and basketball, which haven’t changed much in the past 50 years, must find new ways to make money in a rapidly changing digital age.
“Everyone is trying to find new revenue streams,” said Leonsis, whose company also manages the Kettler Capitals Iceplex practice facility in Ballston and the Patriot Center at the George Mason University campus in Fairfax.
Leonsis, 56, has been one of Washington’s most visible entrepreneurs over the past two decades. He sold his publishing company to AOL for a bunch of stock, then watched that stock climb to ungodly heights during the dot-com bubble only to see it deflate after the bust in 2000.
While AOL was hot back in the late 1990s, Leonsis bought the Capitals, who return to their home ice Tuesday night. He also bought a share of the Wizards and Verizon Center, then known as the MCI Center, with the right to buy the rest some day.
He and his partners eventually purchased the entire enterprise from the late Abe Pollin two years ago and branded it Monumental Sports & Entertainment.
The teams lose between $5 million and $10 million each. To fix that, Leonsis must expand the revenue base beyond the traditional tickets, refreshments, merchandise, in-house advertising, radio and television. One path is to own a local sports network, which is where the possibility of real revenue growth lies.
That path is currently blocked because both teams have long-term broadcasting contracts with Comcast. Monumental’s new media push may be a temporary fix until Leonsis can get his regional sports television network.
The new Web site “is a precursor to a much bigger media play for us,” Leonsis said. “The long-range goal is to own our own means of distribution. The most successful sports teams right now are successful because they own their own regional sports networks.”
His sports empire is uniquely suited to own a regional sports network because it is one of the few sports ownership entities in the United States (another is Madison Square Garden) in which the arena and teams have a single owner.
Leonsis hired a Reston-based Web company called Perfect Sense, run by a former colleague at AOL, David Gang, to build the Monumental Network site.
The sports team has pulled its video production in-house and it plans to hire a 20-person staff to create content. Leonsis also hired three salespeople to help drive digital advertising to the network and even to the giant new signs hanging on the outside of the Verizon Center.
The goal is to put the content on mobile devices, tablets, personal computers and televisions.
“We believe in a three-screen future,” Leonsis said. “There’s the computer. There’s the phone, and there’s the television.”
To boost advertising revenues, the new site will also serve as a portal to blogs such as Caps Today, Wiz Blog and Leonsis’s own Ted’s Take, as well as outside sites and blogs such SBNation, the sports blog run by another former AOL executive and online veteran, Jim Bankoff.
The bottom line is to increase the number of unique visitors and page views, which are the altar at which all digital businesses worship.
“The more ratings points and page views and audio and video streams we generate, the more opportunity we have to sell sponsorships,” Leonsis said.
The new site is broadening to include restaurant reviews, Verizon concert previews and reviews and a going-out guide. To hold costs down, Monumental plans to recruit interns and fans to help with the content.
“We are such a central part of the night life and culture and entertainment, hub of the city, that we should be writing about everything happening in our city,” Leonsis said.
Producing content is an example of the challenges facing legacy media organizations such as newspapers, magazines, broadcasters — and now sports businesses — that require staffs to be more productive.
For example, John Walton and Dave Johnson, the high-profile radio play-by-play announcers for the Capitals and Wizards, respectively, have expanded their responsibilities to contribute extra programming on the new network.
Walton and Johnson even call up radio stations and ask them to start carrying Caps games, which has helped create a radio network of 12 stations.
Even producing and editing duties have been conflated to save on money. The new job title: “preditors.”
As one Monumental executive unsentimentally summed it up:
“It’s adapt or die. “