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  •   Buying, Selling the Caps

    By Rachel Alexander
    Washington Post Staff Writer
    Friday, May 14, 1999; Page D1

    NHL: The key is a tough security and background check. The league expanded its investigative procedures in 1997 after John Spano was approved to buy the New York Islanders, only to end up in jail on fraud charges seven months later. The NHL spent a significant amount more money evaluating the next set of potential Islanders buyers, led by Howard Milstein. Milstein was approved for that transaction, although he was rejected by the NFL when he bid to buy the Redskins earlier this year.

    NHL Vice President Bill Daly said that the NHL has never rejected an ownership candidate, but that prospective owners are scrutinized with "due diligence." Once the security report is finished, an executive committee of 10 owners will review it. If the committee approves Leonsis's bid, it will recommend him to the Board of Governors for a full vote, in which he must gain a three-fourths majority. The Board of Governors meet four times a year; the next meeting is scheduled for June 22. Daly also said that the approval process can be fast-tracked, with the governors voting by phone or fax.

    NFL: The financing plans of prospective buyers are examined by the NFL's eight-member finance committee. Although not mandatory, the approval of that committee is considered necessary to gain approval from the full membership.

    The league also investigates buyers' backgrounds; it hired a private investigator to look at Milstein. If a bid passes the finance committee, it must be voted on by the full NFL ownership and receive approval from 24 of 31 owners.
    – Rachel Alexander

    When Ted Leonsis and Jon Ledecky own the Washington Capitals next season, they will be loud and full of opinions. And they will be yelling them from the stands, just like the rest of the fans.

    "We're going to let the hockey people run the hockey team," said Leonsis, who could take over the Capitals from longtime owner Abe Pollin next month if the sale of the team is approved by the NHL. "Jon and I are not going to be those obnoxious kinds of owners; we're not going to be George Steinbrenners, telling them how to manage the team and what we think of every play.

    "We're not going to be sitting in the owner's box we'll give that to kids. We're going to be sitting in the seats with everyone else."

    At times this past season, the stands at MCI Center were just as open and airy as any of the arena's plush boxes. But in a wide-ranging interview yesterday, Leonsis and Ledecky discussed several of their plans for the Capitals, including how they intend to fill the building with fans.

    They have ideas about changing ticket prices, marketing strategies and where the players live and practice. They want to run the team more like the successful businesses they manage, and they intend to be an integral part of the Washington sports scene for the next 30 years.

    Leonsis, Ledecky and team president Dick Patrick struck a deal with Pollin earlier this week to buy the Capitals for about $85 million. If they gain NHL approval as expected, Leonsis, a top America Online executive, will own 60 percent of the team. Ledecky will acquire 32 percent, and Patrick, who had been a minority owner under Pollin, will increase his share to 8 percent.

    They also bought a minority interest in Pollin's NBA Wizards and in MCI Center, with arrangements to buy those entities when Pollin retires.

    "I've gotten more and more excited about this," Capitals General Manager George McPhee said yesterday from his office overlooking MCI Center. "There were a lot of naysayers two years ago when I first came here, saying we couldn't do it, and we ignored them and we went to the Stanley Cup finals. We lost a lot of that feeling this year. Now it feels like we're coming back; we've been empowered."

    At the steel and blue-mirrored AOL building in Northern Virginia where Leonsis works, there was similar excitement, with colleagues cutting large photographs of Leonsis out of newspapers and pasting them at key points around the building. Hundreds of e-mails from well-wishers crowded Leonsis's computer screen, and his desk was cluttered with balloons and champagne.

    "Dan Snyder sent us each a bottle of Dom Perignon, which was unbelievably classy of him," Leonsis said, referring to his fellow young tycoon currently trying to gain the NFL's approval to buy the Redskins. "I've already communicated with a few fans, just talking about the team. People are going crazy."

    But while enthusiasm seems to have spread around the Capitals' organization and around Leonsis, 42, and Ledecky, 41, Washington's owners-in-waiting know they have a lot of work ahead of them to make the community as excited about the Capitals as they are.

    If they needed an indication of just how far they have to go, they got it yesterday when Leonsis called the Capitals' offices to find out how many extra season tickets were sold after news of the sale was announced Wednesday. The answer was zero.

    Leonsis would obviously like to see that number increase, although he and Ledecky have different ideas about the way tickets are sold.

    They want fans to feel like "members" or "shareholders" in the Capitals, not merely ticket holders. They intend to investigate a new pricing system, perhaps charging less for tickets bought in advance, similar to the way airline tickets are priced. They said they would like to meet every season ticket holder and establish a better line of communication between themselves and the fans.

    Their main focus, however, will be marketing. Asked whether their deep pockets Leonsis' net worth is estimated to be $1 billion would mean a beefed-up roster on the ice, Leonsis answered by saying, "the team is ranked seventh [out of 27 teams] in payroll and last in ticket sales. How much more can you spend on players?"

    That doesn't mean McPhee and Patrick won't necessarily be able to add the players they think they need, Leonsis said. But he wants to focus his energy and money on widening the team's fan base and then enriching fans' experience once he gets them into MCI Center.

    "When you watch hockey in person, it's completely different than seeing it on television," Ledecky said. "Ted is going to do such a fabulous job bringing the fans to the arena with his brilliance in marketing, the fans will walk in and it'll be over. We'll make it a great experience for them, and they'll love it.

    "The suburban youth hockey programs around the area are a huge potential untapped market out there; we need to get people from the suburbs coming downtown. I've gotten a lot of e-mails from my friends whose kids play youth hockey, and they say that when the kids have met the players how friendly the players have been, how they go so far out of their way to sign autographs.

    "We need to take advantage of that by getting both the kids and the players downtown."

    About two-thirds of the Capitals live closer to Annapolis than Washington, near the team's Odenton practice facility. Since arriving two years ago, McPhee has been trying to find the right location for a practice facility closer to MCI Center, in part to bring the players closer to the city and in part to make their practice routine safer.

    "I think the ice surface out there has been causing some of our injuries our guys can't do drills," McPhee said. "In addition to that, we want to create more of a profile in the area for the players have them live closer in the middle of the community."

    Leonsis agreed, saying better practice conditions will be "a top priority" and that the facility "should be downtown like Rockefeller Center."

    "Word of mouth, being on the public mind is the key," Leonsis said. "We both grew up in New York City, and the Rangers sold out every game they played, whether they were good or bad. They key is demand. We want to be the hottest ticket in town."

    The same "hottest ticket in town" expression has been used as motivation around the Capitals organization for years, with varying success. Many empty seats greeted the Capitals this season as they struggled on the ice, missing the playoffs entirely, but even last season, when the team made a successful playoff run, MCI Center was often littered with fans wearing opponents' jerseys.

    Whether all the ideas Leonsis and Ledecky have can improve the situation remains to be seen, but if they can gain NHL approval next month they intend to spend a long time watching their plans develop.

    "Mr. Pollin was 40, younger than us, when he bought into sports in this area, and he's 75 now," Ledecky said. "We figure we've got at least 30 years of happiness and fun ahead of us."

    © Copyright 1999 The Washington Post Company

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