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  • Abe Pollin will sell a portion of his holdings to a group headed by AOL executive Ted Leonsis.

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    Ted Leonsis
    (Robert A. Reeder - The Post)

    Ted Leonsis

    Age: 42
    Title: President, interactive properties group of America Online Inc., which oversees instant messaging service ICQ and film listing and ticketing service MovieFone
    Approximate net worth: $1 billion
    Lives: Owns houses in Great Falls and Vero Beach, Fla.
    Education: Georgetown University, where he now serves on the president's advisory council
    Family: Married; two children
    Hometown: Brooklyn
    Came to AOL: In 1994 when it bought his company, Redgate Communications Corp.
    Favorite movie: "Chinatown"
    Other claims to fame: Co-inventor of board game "Only in New York"; mayor for five years of the town of Orchid, Fla.

    The Washington Post
    Monday, May 17, 1999; Page WB12

    Last week, two well-known names in Washington's business community burst onto a far bigger stage with the announcement that they were buying the Washington Capitals. Self-described "media guy" Ted Leonsis and "serial entrepreneur" Jonathan Ledecky took their place alongside would-be Redskins owner Daniel Snyder as part of a new guard ready to become serious players in the region's sports community. They're young, rich and unabashed sports fans. On Friday, Leonsis and Ledecky sat down with a group of Post editors and reporters to talk about what they know about running a professional sports team, why Abe Pollin chose to sell the team to them and what their plans are to revitalize hockey in the region. Here is an edited transcript of that conversation.

    So, what makes the two of you qualified to own a hockey team?
    Jonathan Ledecky: Aside from being a lifelong sports fan, at the age of 14 I became the youngest professional sports announcer in the United States. I had a local radio show in Greenwich [Conn.] and I got to interview a sports star who was in and around the [New York] metropolitan area. So I literally got to know everyone from Pete Rozelle to Howard Cosell to Jack Nicklaus, Tom Seaver, etcetera, and that was a dream come true for me because I'd followed sports all along. So my interest in sports cuts pretty deep, and I became very observant about sports.

    Later on in life, I ended up starting in business and ... I've always looked at sports as a business. I told Ted that I think that the fans are the shareholders. Let's face it: Ted did not have to invite me into this transaction but ... he saw that I understood the finance and the business of sports.

    [To Leonsis] Talk about why did you include Jon. Why is the deal set up as a partnership with you having 60 percent, Jon having 30 and [Capitals President] Dick Patrick having 10?
    Ted Leonsis: It's been a pretty successful model for me. Redgate [Communications, the company he sold to America Online Inc. in 1994] was set up that way. ... Many hands make light work.

    Secondly, not a lot of people really get [the business of] sports. It's kind of a left-brain, right-brain thing. The left brain is the fan; the right brain is money, return on investment ... management.

    And [in doing the deal] it wasn't [a situation where Jon was saying] "Let me see the financials, let me see the documents." It was, "Hey, I'm thinking of doing this. Do you want in?" So it fell out of, you know, both of us liking the same thing.

    Mr. Pollin is a real estate guy. I'm a media guy. So we're going to take a different look at [the business]. The value isn't in the building; the value is in the teams. They're the content and where the cash is. No one's going to MCI [Center] for the Velocity Grill or for the museum, right? So it proves that content is really where the asset value is.

    So I would say that my background prepares me for that. I understand how to connect with consumers, I understand how to turn that passion and time online or time with the fans into a business. ... It's really an interesting marketing challenge.

    I would say that we're more prepared and more qualified to own these media brands than anybody. And the second part of it is we love sports. [The other thing is] we live in public companies every day ... everything we do is public. This is a private company, so Jon and I can say: "We're going to lose another $10 million bucks; let's go get [Detroit Red Wings player Steve] Yzerman." And the only person I have to ask is my wife.

    What's interesting is that there's this facelessness that's creeping into sports corporations. ... And the great thing that Mr. Pollin did, and I think we can do, is [to not be faceless]. You'll be able to say, "Ted and Jon are doing a crappy job." Or, "Ted and Jon are doing a good job." Or "Ted and Jon are doing a good job but their team isn't playing well." So I think we're very qualified to do this.

    What have you learned from AOL that you can bring to this enterprise?
    Leonsis: I think that these are communities of interest. They have built-in passion, and when you look at most of the brands out there – AOL, Yahoo,

    "...In 25 years, the hockey team and the basketball team are going to be like the Redskins. So get in now, you know. This is Malibu real estate that's really cheap early on."
    – Ted Leonsis

    Amazon, ICQ – they start with this passionate group of people. The big challenge usually comes when you outgrow that passionate group of people and you have to cross the chasm into the mainstream.

    We have to find that five, six, seven thousand group of passionate people who are there at the game, who are telling their friends about us. That's the first challenge for us – to reignite the passion of the fans. And then, once we do that, then we'll be ready to [attract] ... the casual person who wants to check this out and wants to go to an event, wants to be entertained. Then as there comes to be a scarcity in seats [it will become a must-have ticket].

    Can you build enthusiasm for a team even if it's losing?
    Ledecky: Well, we don't plan to lose.

    Leonsis: What I've learned so far just from researching is that to win the Stanley Cup you have to make the playoffs.

    Talk about the economics of owning a sports team.
    Ledecky: Here's the funny thing about being involved in sports. I tried to buy the Cincinnati Reds, I tried to buy the Los Angeles Dodgers. I've looked at a lot of teams where it hasn't surfaced publicly that I was looking at them. The amazing thing about sports teams to date has been it doesn't matter whether they've made money or lost money. The capital gain appreciation has continued unabated.

    CBS let the New York Yankees go in 1973 for $10 million. George Steinbrenner turned down arguably $750 million to a billion. I think the reason that entrepreneurs are getting so heavily into sports is because there are these benefits ancillary to owning the team.

    Leonsis: There's also a premium [in Washington]. There are seven opportunities in the country where either an organization or an individual owns a basketball team, a hockey team and the building. Mr. Pollin has been able to build a brand-new building, have a basketball team and the hockey team and have it in arguably the sixth or seventh largest market [that is also] one of the top three markets in the country in new housing starts and growth.

    Why did Abe Pollin decide to sell to you? Plenty of people have wanted to buy these franchises.
    Ledecky: It was interesting to me because he said over and over again, "The money is not the driving force for me. It's the legacy I leave behind in Washington." This is a man who understands that. [Also] his son [Robert Pollin], the college professor, understood that innately and really drove the deal. Professor Pollin really understood what his father's wishes were, and I think once his dad understood that he was not interested in continuing the Pollin legacy, it became a search for someone who could be the guarantor [of the legacy]. And so it became so personal for him.

    When Mr. Pollin said at the conference this was not just about money, he was not giving the proverbial cliche. There was a lot of truth to that, and so I think that's what happened. ... Everybody else who was looking at doing the deal would say, "Well, Mr. Pollin, surely after two years, after three years, you'll no doubt want to retire. You want to get your estate in order." That never came up in the dialogue with Ted. His face lit up like a firecracker when Ted said, "I hope we're partners till you're 100, Mr. Pollin." Mr. Pollin had an enormous number of choices, from what we've been told.

    Resume
    Jonathan Ledecky
    (Robert A. Reeder - The Post)

    Jonathan Ledecky

    Age: 41
    Companies: Founder, co-founder or director of 10 publicly traded companies
    Approximate net worth: $200 million
    Lives: Georgetown in a 200-year-old townhouse once rented by then-Senator John F. Kennedy.
    Education: Harvard College (bachelor's degree, cum laude 1979 in government); Harvard Business School (1983)
    Family: Bachelor
    Current reading: "Titan: The Life of John D. Rockefeller Sr." by Ron Chernow; "Personal History," by Katharine Graham; "Thurgood Marshall: American Revolutionary" by Juan Williams
    Favorite movie: "The Best Years of Our Lives" (1946), directed by grand-cousin William Wyler
    Favorite sports movie: "The Pride of the Yankees" starring Gary Cooper (1942)
    Drives: 1987 Mercedes 190E; "borrows" dad's Jaguar on dates.
    Sports idols: Darrell Green, Art Monk and Brig Owens for the work they do with kids in the Washington community.
    Personal heroes: "My mom for giving me unconditional love; my Dad for fighting the odds as a Czech immigrant dishwasher."
    Hobbies: Marathon running (Marine Corps, London, Dublin); trying to emulate Fred Astaire on a dance floor; golf; frustrated novelist.
    The story of your life would be called: "It's a Wonderful Life."

    Can you talk about the social responsibility of being team owners especially in the community of Washington? About what that means?
    Ledecky: That's one of the reasons I think Mr. Pollin ended up choosing us. [Ted and I] met working on the Best Buddies charity. I think that kind of community involvement is what Mr. Pollin is all about and so I think he saw the things that Ted and I have done in the community. When he called the mayor and when he called some other people and they said, "These guys are good guys," that became important too. He kept saying, "I've checked you out. You know the thing I really think that works here is that you are who you say you are." And that was very important to him, again.

    But isn't the way this deal is structured going to be difficult since you won't know when you'll be taking over the Wizards and the MCI Center?
    Leonsis: It doesn't really matter because we're here. I'm working at AOL. Jon will start two or three more public companies before that first puck is dropped. We have a great organization in hockey. What I am going [to work on] is the broken relationship with the fans.

    So that's what we'll focus on. Mr. Pollin, [Washington Sports President] Susan [O'Malley] and [Wizards General Manager] Wes [Unseld] can work on the Wizards, the MCI Center, everything else. It's a pure division of labor. My bet is before [Pollin] hires a coach, he'll at least call us. If he doesn't, I'm fine with that. And I mean that, I'm fine with that. Our day will come. If he lives to be 100, I'll be his age running the team. If that's what it takes, that's what it takes.

    Speaking of the fans, when the team moved to the District, there were a bunch who used to go to the USAir Arena who didn't follow along. Any ideas about re approaching those fans?
    Ledecky: The thing that's so important is getting the fans in the building. Hockey does not translate well to the uninitiated on television, but if you get someone to try hockey – like the trial thing that AOL's pioneered – you get them to try it and all of a sudden they're hooked.

    Leonsis: I've been really studying the ticketing business, and movies have a similar issue, right? They don't have any problems bringing people inside on a Saturday, Sunday, even Fridays. But their issue is, can you help me to get people in Monday, Tuesday, Wednesday and Thursday. Now there's probably a million good reasons why ticketing hasn't changed in a long time and why it isn't done the way the airlines do it. But I don't understand why ticketing isn't more creative, and maybe there's a way that we can be doing different kinds of pricing or different kinds of offers.

    What about the name of MCI Center: For how long are the naming rights locked up, and would you like to see it named the AOL Center?
    Leonsis: Nope. I think it's right for MCI, and I would like to publicly thank MCI for its support. They have a great deal. They've been great sponsors and it's perfect for them.

    Do you know Dan Snyder? Have you ever had a chance to talk to him?
    Leonsis: Yesterday, I received a bottle of Dom Perignon champagne and a note from him. This morning we had a substantive conversation and he'll do the same with Jon. He said, "I just wanted to talk to you." He said to me, and we were laughing, "I've got 40,000 people that can't get seats." And I said, "Look, get out of my way. How do I convert your spillover?" To me, that's a database of 40,000 people who are being underserved. I know who I'm going after. If you're a Redskins fan and you can't get [Redskins season tickets], now's the time [to get Capitals tickets]. Because in 25 years, the hockey team and the basketball team are going to be like the Redskins. So get in now, you know. This is Malibu real estate that's really cheap early on.

    [To Leonsis] One of the things we've been printing in the paper is that you're a member of the new tech society around here. What role does that play?
    Leonsis: You know, it's funny. I read this article the other day about the brat pack ... but it doesn't work that way. I think it's because we've started companies or we've been involved in companies with creative value. We have wealth and you do lots of things with wealth. You know [AOL Chairman] Steve [Case] started an unbelievable foundation.

    In terms of technology, I'm amazed that there's not a Internet connection here. Hockey [fans] have the same demographics as Internet [users]. [Among NHL owners], there's the TV committee and the best owners work their way up to be on the TV committee. Well, I'm going to ask to be appointed the Internet czar of the NHL and then the NBA. My goal would be to sell the Internet rights to the hockey teams one day for a lot of money. And you laugh, right? That's what they thought about TV.

    Is there a hockey player who comes to mind when you think of the image of the team that you hope to market?
    Ledecky: Everybody loves Olie the Goalie.

    Leonsis: I love Steve Yzerman. Because he's the real deal. He's all business. He's a good-looking guy. He's out there. He works hard. He makes the team better. There's no BS.

    I like [Buffalo Sabres center] Michael Peca. [At a recent Caps-Sabres game], the third period's about to start and Peca is the first one out. Everyone screaming at him, right? Now I'm a screamer and I watch him, he's looking up and he's enjoying it. Then he went out and scored. The guy just made his teammates play better and you could just tell he loved the game. If you can get a couple of guys like that on your team and you can have a good first line and a good second line, if you have a good goalie, and you make the playoffs, and the goalie gets hot. ...

    Ledecky: Anything can happen.

    Leonsis: Anything can happen, right.

    © Copyright 1999 The Washington Post Company

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