Ted Leonsis Unfiltered

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Ted Leonsis was a mover and shaker at AOL for 14 years — he’s now vice chairman emeritus — so it’s natural that he’d be comfortable with the Internet. As the owner of the Washington Capitals, he uses his tech savvy to promote his team, philanthropic activities and even book and movie recommendations on his blog, www.tedstake.com.

A headline there a few days ago caught my eye: “Yuck’.

It was Leonsis’ assessment of the Capitals’ 3-2 loss to the Red Wings Saturday and it didn’t sugarcoat anything, including ill-timed penalties by youngsters Alexander Semin and Mike Green. I was so struck by it that I contacted him and he called me Monday morning. Parts of our chat are included in my weekly NHL column but space was too short to publish it all.

Here’s the rest of my chat with Leonsis before the Capitals 3-2 shootout loss to New Jersey on Monday. Kings fans might find it interesting to find out what it’s like to have a recognizable, active owner who’s responsive to fans.

Q: ‘Yuck’ said everything about that game, I guess.
A: On paper we have a very, very good team and it should, it will and contend this year, and we played the old, wise team. They played a game which was pretty straightforward, which was keep them out of our end and wait for them to make a mistake or take a penalty and we’ll score on the power play, and that’s what happened. They’re a great, wise, old team and we’re an up-and-coming, very, very good team, and I’ll say I think our president would call it a teachable moment. I’m sure that’s what our coach [Bruce Boudreau] did today. I haven’t been in the office today. I just got here. I’m sure coach will use it as a teachable moment.
That’s what good and smart teams do. They play to their strengths and they play with maturity and they got a win and it was very frustrating for us.

Q: You’re so willing to interact with fans. Is that something you did to build a fan base or something that’s just part of your nature?
A: I grew up on the Internet and I don’t think you can use the medium at your convenience. And so what I decided to do from day one is I published my e-mail address. And I do owners’ corners, and then I started my blog and I’m walking around with the fans at games.

Then I turned my blog into Facebook. I’m already at 5,000 fans on Facebook. And I send all my blog posts out automatically as tweets on Twitter, so I try to pride myself on being transparent and honest, both good and bad. And so at least you’ll know that what you’re hearing and seeing from me you can believe. And sometimes people don’t like what I say.

A couple weeks ago I had this big press event at the Washington Times. There was, like, 20 editors and reporters and I showed up and this one managing editor said, ‘Are we waiting for somebody else?’ I said no. He said, ‘It’s just you?’ And I said, ‘What do you mean?’

They said, ‘No PR people, no entourage?’ I said no. Why do I need those? I don’t need to be handled. What is someone going to do, tell me what I’m feeling? And I have found that in my career and in my life that has served me best.

Q: You talk about the fact that fans don’t always like to hear what you have to say. A few years ago, before the Capitals started rebuilding, from what I understand you said some things they didn’t like, like things had to bottom out before it would get better.
A: I liken it to two other experiences. When you work in a big public company, like I did at AOL…You work at a newspaper company that’s part of a big public company, right? You guys are still owned by Tribune right? Many times you’ll be in strategy meetings or meetings with your peers and you know the right thing to do but you can’t do it, either because the optics would be very difficult for all of your audiences to understand, and you essentially become slaves to the short term, and so in a public company you moan all the time, I know we should be doing this, we should be investing. The payoff might be two or three years from now but if we do that and we don’t grow next quarter or even miss the quarter we’ll get punished.

And so most public companies find themselves in a jam long- term because they couldn’t do the right thing, even though they knew what the right thing was. So with the sports team I’ve always looked at as a public trust, this is the fans’ team, but it is a private company. I do own it. I have to write the checks. And if it works I get people being happy. When it fails, I get the flame mail.

We have, as owners, really one overriding deliverable, which is ‘Can we win a Stanley Cup?’ An easy question. Unlike other industries there’s 29 people that are asking the same question. That’s your ultimate deliverable.

And so we really had to look in the mirror and say, can this team win a Stanley Cup? And our deep sincere belief was unfortunately, no, it can’t. Well, most sports teams you’re in the business of selling hope and promise, and you always hear fans and media and sometimes owners saying, ‘We’re one or two players away.’ That’s why free agency exists. And so I had to keep probing. Can this team win a Stanley Cup? Is it one player away? We just added one player, Jaromir Jagr, and we didn’t get better. Then we added Robert Lang, another great free agent, and we missed the playoffs.

What is it? Are we still another yet player away or is it just something about this team and the personnel and the culture that’s in the way of us winning Stanley Cup? When you come to that conclusion, it’s very tough. I just said, ‘You know what, let’s tell the truth.’ I know that sounds so odd. Let’s not obfuscate. Let’s say we want to win a Stanley Cup and we don’t think this team can win a Stanley Cup. The lockout is coming. When we researched and looked at who are the teams that won for a long time in leagues that went from nonsalary cap leagues to salary cap CBAs, what happened? And it was they drafted and developed well and when those players came off of their rookie contracts they were able to sign those players because they believed, to long-term deals.

Look in the NBA. Tim Duncan. [The San Antonio Spurs] were really bad. They get the first pick in draft and they take Tim Duncan. They’ve won three or four championships. Go through, league by league, except for baseball, which is still for the most part he who spends the most money will have the best teams.

So I said, ‘Let’s tell people we’re doing this because we want to win a Stanley Cup. We’re not going to use words like reload or retool. We’re blowing everything up. We’re changing who our AHL minor league affiliate is. We’re changing where we practice and where we work. We’re changing our uniforms. We’re changing all of our players and my belief is that in three, four, five years we will have hit a reset. In Internet parlance we’ll be Washington Capitals 2.0.’

If we don’t, what’s the worst that’s going to happen? We won’t win the Stanley Cup and we won’t be selling out. Well, we weren’t selling out and we weren’t competing for a Stanley Cup. So when I looked at what’s the worst that could happen, it had already happened. So I didn’t view it as high-risk as everybody else. I didn’t think I had a choice.

The risk was you’d get bad press, people would be mad, the business would get even worse. So here we are now. We’ve sold out every game, we’ve raised our prices, we’re one of the glamour franchises and we’ll constantly be picked as a contender for the Stanley Cup I think for the next 10 years.

So, ultimately it worked as planned. We still haven’t accomplished anything. We still haven’t won a Stanley Cup. But we’ve built a very valuable franchise. It was good for the business. We’ve built a very, very good team. We have the best practice facility in the league. We have the best relationship with a minor-league franchise [Hershey, Pa.] We’ve won two of the last three championships in the AHL.

So, overall it’s working but until we win a Stanley Cup we still have lots of work to do. That’s all I want everyone focused on, trying to remove every impediment and say, okay, we’re spending at the top of the cap, we’ve sold out every game. We have the best minor-league affiliation, we have the best training facility. Our brand is pretty cool. Everything is there but we still get an incomplete because we haven’t won a Stanley Cup.

Q: Twenty-nine teams are after the same thing and only one can win.
A: I think it’s the hardest thing to do in pro sports.

Q: Having gone through all you went through, to blow it up, to rebuild the minor-league relationship, does that give you more patience now that your team has lost three in a row [before losing in a shootout Monday]?
A: We have a plan and a strategy. We have young players. And now we want them maturing and against Detroit it was two of our best players, who are two of the best players in the league, who took the penalties. That’s what I meant by like spoiled teenagers. They’re fantastic players and they’re beloved by the coach, by their teammates, by me, by the community, and they were trained and told not to take those kinds of penalties and they did.

Q: That’s part of growing and learning. Or so you hope.
A: Also, it’s not how you start, it’s how you finish. It’s still early in the season, so there’s no panic. I’ve been through a hundred times worse than this.

Q: I’ve been covering hockey for a long time, and I go back to the days of the Capital Centre, how dark it was in there. And some very loyal fans that would show up, but not fill the place. What are your advance ticket sales looking like now?
A: We have about 17,000 season ticket holders. Tonight it’s a Monday night game early in the season, and we keep about 1,500 tickets per game to sell to individuals and groups and the like because we just think that’s the right thing to do, to introduce new people to the game…..We’ve raised our prices the last two seasons. We raised our prices last off-season about 7.5% and our renewal rate was 96%. We’re now what I call a “have.”

And a big thing that happened to us is that we drafted [Alexander] Ovechkin and he liked it here and he believed in the plan and we had to renegotiate his rookie contract and we ended up keeping him for a 13-year extension. He’s got 12 more years after this year, and I think that really gave the fan base the permission, that when the world’s best hockey player — two-time MVP, rookie of the year — says I believe, I want to win Cups here, I love this fan base, I think that was a ‘We have permission to believe and now they’ll build around him and players will want to play here and only good things will happen.’

Q: I think people underestimate the emotional connection fans have. The owner here in L.A. [Philip Anschutz] doesn’t do interviews, doesn’t appear in public and won’t have his picture in the media guide and I’ve talked to Tim Leiweke about this and said, ‘Fans make an emotional connection with a team and owner and executives,’ and they seem not to think so.
A: There’s different personality types and the like. I believe that this new consumer who’s grown up on the web doesn’t want the glass between them and the players, so I encourage the players to be on Facebook, be out in the community, volunteer, sign every autograph, be on Twitter, read the message boards. [Ovechkin] reads the message boards. They’re young and they’ve grown up with the Internet. It’s a generational thing that works in our favor, and as owners, how can you not gain?

There’s going to be 10% of a consumer base passionately on the opposite end of any issue. But there’s going to be 90%, the majority, that you can learn a lot from. We have a guy here who jokes and says about people on message boards that we can win the Stanley Cup and they will complain the parade doesn’t wind its way under their window.

But even from the harshest critics, that just means they’re really passionate and there’s a lot to learn from them as well. I’m not afraid of wading in, and 99% of the interactions have been positive, so it’s a small price to pay for the positive feedback and it’s certainly helped our business as well.

-- Helene Elliott