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Sports as a Service: How Ted Leonsis Built a Monumental Empire in D.C.

When Ted Leonsis bought the Washington Capitals, along with a minority stake in the Wizards, in 1999, reporter after reporter marveled at the same trait: his ability to answer email. Yes, anyone could send a message to washingtoncaps@aol.com and expect a response from the boss, who was also an AOL executive. A reporter heard back from him within an hour. An hour!

“Clearly,” USA Today’s Jeff Zillgitt marveled, Leonsis and other digital leaders were “changing the way we live; how do they plan to enhance the way we follow pro sports?”

Two decades later, Leonsis appeared in a Zoom window, ready to keep answering that question. A Stanley Cup trophy 20 years in the making sat behind him. Next to it was an NBA 2k League trophy earned last year by the Wizards’ esports team, which joined Leonsis’ growing sports empire in 2017.

A decade ago, when Leonsis took control of the Wizards, Monumental Sports and Entertainment claimed to be the only private company to own three pro sports teams and an arena in one of the top 10 U.S. markets. Now, MSE touches seven team brands, four venues and two media companies. But Leonsis’ impact is felt well beyond that. His vision of Monumental not as a live events business but as a platform that can develop new arms and bring them to scale quickly to preserve consistent engagement—not unlike AOL in its heyday—has influenced the NBA at the highest levels. Just ask commissioner Adam Silver.

“As the chair of the NBA’s Media Committee, he has been a leader in mapping out a long-term, global vision for our league that emphasizes the benefits of digital technology, personalization and direct-to-consumer engagement,” Silver said. “Ted recognizes the NBA’s enormous opportunity for growth as a subscriber-based, global media service.”

When describing Monumental, it can seem overwhelming, the sheer number of entities and investments in the Leonsis orbit. By its strict definition, Monumental is the Capitals and Wizards (and their gaming teams), plus the WNBA’s Mystics, the Wizards’ development team and the esports org Team Liquid. It also includes a 33% stake in NBC Sports Washington, a streaming service called Monumental Sports Network and a group of venues headlined by Capital One Arena. In total, Monumental’s value lies somewhere around $3 billion, up from $550 million in 2010.

Team Liquid is part of aXiomatic (in which Monumental is co-founding partner), a gaming platform that’s also invested in publishers like Epic Games, and new tech companies like Dapper Labs (maker of NBA Top Shot). Then there’s a host of investments, like DraftKings, Clear and Sportradar, made through Leonsis’ Revolution Growth that aren’t technically part of Monumental but contribute to the flow of ideas, data and best practices.

Maintaining that forward-looking portfolio requires constant pivoting, a word Leonsis uses often. “We will look like a SaaS company,” Monumental wrote in an internal corporate report last year, emphasizing a digital-first strategy that the company views as critical to achieving a $10 billion valuation.

“The NBA is still looked at as being a league that’s not a digital-first or all-digital company, but we’re becoming it,” Leonsis said. “For me at Monumental, I’m trying to get us to make the pivot fully. We’re a building, with teams with some digital stuff beside it. And now we have to be all-digital, mobile first—with a building beside it. That’s the big culture and business [shift].”

“It’s a normal evening in our building to have members of Congress or Ambassadors or members of the administration in the stands,” said Monica Dixon, Monumental’s chief administrative officer and president of external affairs.

Back in 1999, a pro sports team was seen as a cash-guzzling distraction to Leonsis’ work at golden egg laying AOL. How times change. When asked then about why he would invest in a money-loser, Leonsis answered with the brashness of a self-made Internet millionaire, “Because I can.”

Truthfully though, he says now he recognized an undervalued business. At the time, teams often sold for around four times yearly revenue. But with loyal subscribers in the form of season ticket holders and long-term sponsors, Leonsis figured they ought to be valued more like the online services companies that pulled in over 10 times revenue. 

There were stumbles along the way. Leonsis overpromised on the Capitals’ success before finally winning a championship in 2018. Being on the frontier of tech adoption in sports meant swings and misses with early gear like virtual reality. And the Wizards have yet to snap a title drought that stretches back to 1978. 

On that front, Monumental reorganized the basketball side of its business two years ago in the clearest example of Leonsis’ vision. The owner reportedly talked to nearly 80 leaders across and beyond sports while conceiving the shake-up. He ultimately brought in former football executive Sashi Brown, European soccer trainer Daniel Medina and recent Georgetown (Leonsis’ alma mater) coach John Thompson III to lead player development. But those three and their staffs wouldn’t just be working with the Wizards. The WNBA’s Mystics, the G League’s Go-Go and District Gaming would also use their services and exchange ideas. Within Monumental’s centralized structure, shared resources range from accounting to production capabilities.

The dense ecosystem helps on the sales side. About 70% of Monumental sponsorship deals involve multiple brands, according to chief commercial officer Jim Van Stone, and many expand over time. Monumental has another sales advantage: geography. The group’s presence in the nation’s capital, among embassies and government offices allows it to pitch partners on its proximity to power. 

“It’s a normal evening in our building to have members of Congress or ambassadors or members of the administration in the stands,” said Monica Dixon, Monumental’s chief administrative officer and president of external affairs. “I think our partners know, when they participate with Monumental, that they are having a seat at the table in the biggest and most important policy and political city in the United States.” 

One of the group’s fastest-growing departments has been business intelligence, led by former LivingSocial and Orbitz exec Adam Heintz.  “For a long time we all made decisions in this business without data backing it up. It was more on gut instinct,” Van Stone said. “Now we have connectivity with every different touchpoint you can imagine from a consumer data standpoint.”

On that subject, Leonsis points to Amazon and its ability to turn customer data into purchases. Just as Amazon can determine which products to make in-house and who to market them to, Monumental can evaluate areas of potential expansion and deepen relationships with new fans. Its database contains information on 2 million of them. Size also helps at the bargaining table. 

In 2015, Monumental sold the Wizards’ and Capitals’ TV rights to NBC Sports through 2031-32, while getting one third of what is now NBC Sports Washington. Leonsis has said what gave him extra leverage in those negotiations was the existence of his own over-the-top streaming product, Monumental Sports Network. Now, the two platforms pitch and pull fans to each other, showcasing complementary content while also serving as hedges for the future.

“They’ve been willing to make an investment in infrastructure that typically teams don’t make,” media consultant and former NBA executive Ed Desser said. “Obviously the core business is still in a more traditional format, but they are well-positioned to play in multiple worlds, and that makes them pretty unusual for those who are taking a rights fee from a regional sports network.”

Monumental Sports Network happens to run on ViewLift, a service provider partially owned by Leonsis. Developing tech for in-house uses and then offering it more widely comes off another page Monumental has taken from the Amazon playbook. MSN also recently integrated Revolution portfolio company, Kiswe, as it experiments with at-home interaction technology.

“We think live sports rights are the most valuable IP rights in the world,” Zach Leonsis said.

When speaking to those writers back in 1999, Leonsis talked often about how few companies brought a city together like a sports team. What other institution can get other businesses to close early, he’d say. Since then, he’s seen how the digital revolution expands those borders well beyond his Richmond-to-Baltimore base.

When the Wizards drafted Rui Hachimura in 2019, and 100 Japanese media members showed up to his introductory press conference, Van Stone remembers thinking, “This young man is a rock star.” 

“We said very quickly, ‘We need to build an authentic relationship with fans in Japan,’” he said. Monumental hired three people dedicated specifically to Japanese-language content, and Wizards execs have now traveled to the country multiple times. Now, with the Tokyo Olympics likely to increase interest in the sport there, the franchise is set to capitalize. 

It has rolled out a similar strategy in Israel since drafting Deni Avdija in 2020, aided by D.C.’s inherent international ties as home to nearly 200 embassies. “What’s really cool about social and digital content these days is that there are no boundaries,” Van Stone said. The upside is nearly unlimited. There’s a reason why digital companies have traded at higher multiples since Leonsis was walking AOL’s halls.

Monumental isn’t abandoning its brick-and-mortar venues. It’s beefing them up. And few topics get the MSE executives as excited as sports gambling. Leonsis was an early investor in DraftKings and Sportradar (both through Revolution Growth), and he was the first NBA or NHL owner to have a retail sportsbook inside his team’s arena. That temporary William Hill betting parlor will soon be replaced by a permanent 30,000 square foot sportsbook with a broadcast studio, three bars and a restaurant.

While the sportsbook will be accessible from the arena concourse for some events, the biggest benefit may come when the Caps and Wizards aren’t playing inside. The sportsbook will be open 365 days a year from the street, meaning anyone in D.C. can wager there. In fact, because of issues with D.C.’s mobile sportsbook, which is controlled by the local lottery, William Hill is now the dominant operator in the district. In February, William Hill took 75% of all wagers in the district, despite only being allowed to take bets within a two-block radius of Capital One Arena.

In the future, MSE plans to experiment with opening its doors on non-game days for big betting moments, thereby turning the 20,000-seat arena into possibly the country’s largest sportsbook for events like the Super Bowl or March Madness.

“We have grand aspirations for the sportsbook,” said Zach Leonsis, senior vice president of strategic initiatives at MSE and Ted’s son. “I think that will be a flagship location, not just for William Hill, but for sports betting venues across the country.”

Ted Leonsis wasn’t the first traditional sports owner to invest in esports, but he has taken a unique approach. In addition to the Wizards’ and Capitals’ gaming teams, Monumental is a co-founding partner and co-owner of aXiomatic, an esports organization that owns Team Liquid, one of the most valuable franchises in the industry. The portfolio also includes equity in publishers Epic Games (Fortnite), Niantic (Pokemon Go) and Nifty Games (NFL Clash), plus a stake in gaming media network VENN and digital collectible company Dapper Labs, known today as the company behind NBA Top Shot.

With aXiomatic, Leonsis is essentially building the gaming version of Monumental, a family of strategic investments all built around a core, team asset.

“They’re trying to make a diffuse bet across esports, and even wider with gaming and entertainment,” said Avi Bhuiyan, an executive at gaming talent agency Loaded. “All these things are connected.”

For Monumental, gaming is a complementary business. Team Liquid can teach the Caps and Wiz how Gen Z consumers develop fan avidity while the traditional divisions help the newcomers maximize their media and sponsorship potential. But, Zach Leonsis adds, esports is also a “strategic hedge.” If the NBA and NHL aren’t the biggest sports properties in 30 years, there’s a good chance that organizations like Wizards Gaming and Team Liquid are the ones that have eclipsed their MSE family members.

That’s true of a lot of the MSE portfolio, but one thing that likely won’t change—at least not soon—is the importance of the teams at the center of the Monumental ecosystem.

“We think live sports rights are the most valuable IP rights in the world,” Zach Leonsis said. “So we’re encouraging our leagues to think more digitally, and less brick and mortar. Let’s hedge ourselves. Let’s become more digitally savvy, because frankly, it’s the digital companies that are driving biggest value when it comes to public markets.”

COVID-19 was devastating for Monumental, cutting its revenues in half. But it also established a proof of concept. As other sports organizations handled the shock, Monumental moved quickly last spring. Capitals and Wizards games on NBC Sports Washington were replaced with digital versions, leveraging the company’s esports expertise. Wizards District Gaming added its trophy to Monumental’s mantle in August. Team Liquid topped its American rivals in esports revenue over 2020, according to Forbes.

Every owner was forced to reckon with sports’ digital future. Then this past February came, and things really got weird. Streaming, everyone could understand, but now there was Top Shot, Blockchain and NFTs. “This is like the birth of a new internet,” Leonsis has said. “This is that significant.” 

With tech stocks booming this year, there’s talk of a new generation of online entrepreneurs buying into sports. Jeff Bezos could even become Leonsis’ neighbor as a Washington Football Team owner. 

“For those of us who have been activists on innovation and digital, we’re, like, in vogue now,” Leonsis said. A couple decades after writers wondered how a new generation of owners planned to disrupt sports, they now have the sway to show us. “There’s not even a balance,” Leonsis said. “It’s, ‘Yes, we have to do the pivot.’

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