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Owner's Corner with Ted Leonsis

Friday, 10.28.2005 / 3:42 PM / Features
Washington Capitals
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Owner\'s Corner with Ted Leonsis

We’re less than a month into the season, and it’s great to be back watching hockey. I’m very proud of our team and the way they compete every shift, every period, every game. That type of determination and passion is what Caps hockey is all about. This is the type of team we intended to construct and frankly one that our fans wanted. We want it to be difficult to play against us every game – home and away. We’ve made great strides in adding players with character, and they have demonstrated that character on and off the ice, setting an excellent example for our younger players in the process.

Building a winning franchise takes many small, purposeful steps. I’m happy with the effort we’ve shown on the ice so far, and as an ownership group we have vowed to be patient with the results. We hope you will be too. I now want to take the opportunity to address some of the issues fans have raised with me recently.

Ticket Prices
We brought season-ticket prices down by an average of 11% and offered an additional 5% rebate if they were renewed or purchased by a certain date. We’ve dropped individual-game prices 10%. We have a nice mix of pricing plans. Want to sit in the first row? It’s $165 (the same seat will cost you $750 for a Wizards game). Gate prices for lower level preferred seats range from $90 to $70. You can sit in the upper bowl from $50 to $10. We will now expand our Eagles Nest section to 2,000 seats per game and launch a program where you can purchase four tickets for $20 – or $5 a seat. Cheaper than a movie – plus it’s a live event without a script and a predetermined ending. Hopefully this will allow us to introduce the sport to new fans and re-introduce it to others. This should remove the ticket price impediment and be the best buy in all of local sports.

 DirecTV & Comcast SportsNet
I appreciate your passion for the game and our team as demonstrated in sending me more than 1,500 emails regarding the problems DirecTV encountered the first few home games when it inadvertently blacked out Comcast SportsNet locally. Though we were aggressive in contacting DirecTV, only DirecTV could rectify the situation; it was out of our hands, and it was out of Comcast SportsNet’s hands too. CSN has been – and I’m sure will continue to be – a great partner, and we appreciate them rebroadcasting our opening night win. Everything seems to be working well now, and for this I’m grateful.

Alexander Semin
As you have read, we recently filed a legal complaint against Alexander Semin’s agent. This is not personal; it’s business. This course of action was encouraged by our law firm and the NHL.  We have a contract with Alexander, and we want his agent and Russian hockey team to honor that commitment. Hopefully we can resolve the issue this season and welcome Alex back to D.C. He is a fine young man and a budding star in our league.

Marketing & Sales
I’m confident we have been as open and transparent regarding our business model and tickets sales as any team in the NHL. As I have stated in numerous emails, on our website and in the media – Comcast SportsNet, DC101, WTOP, WMAL, Post, Times, WTEM, NewsChannel 8 and other outlets – we have a fabulous group of fans and they are everywhere – California, Phoenix, Seattle, Toronto, England. Our local fans and a majority of our plan-holders, the lifeblood of our organization, are from Bethesda and other Maryland locations, Northern Virginia and the District. We plan to expand our marketing efforts to better reach the Baltimore area as well as Manassas, Va. And we certainly are open to ideas on how we can expand the paying ticket base.

As you have seen, our attendance is down, and we expected it – the lockout, our strategy to reconstruct the makeup of our team and the arrival of the Nationals baseball club have contributed to our reduced attendance. With the discounted pricing we extended to plan-holders and the 10% drop in individual ticket prices, ticket revenue will be down even further. A major reason is many plan-holders are uncertain about our “youth movement” and did not renew their plans. So that tells us that our strategy of building through the draft, allowing our young players to grow up together and signing free agents at the appropriate time is not resonating well with that segment of our fans at the present time. We have work to do to rebuild that trust and rekindle that relationship. We understand that set of facts and have been prepared for it and will do everything in our power over the years to construct a winning team that you can be proud of as a fan.

The encouraging news is that new sales are extremely strong (40 to 50 new plan-holder sales per week), our walkup sales on game night are at an all-time high and sponsor revenue is up. Our Comcast SportsNet viewership is up more than 50%. So thanks to the fans who have stuck with us, and welcome to the new fans who have come to the arena and watch on TV. Thanks for the loyalty during the lockout. We had to refund only 250 people their deposits back during this period. We know the best way to fill our seats is by building an exciting team that fans can relate to, and we know that isn’t easy. Let’s hope our growth continues, because we firmly believe that once we get people to the MCI Center, they will fall in love with hockey and embrace the new Caps.

And just so we are all clear: the attendance we announce at games represents the number of tickets that have been distributed for that game – paid and complimentary. Our comp tickets are approximately 1,000 per game, which is higher than past seasons as we try to attract new fans and sponsors. We will not indiscriminately give away tickets, which only devalues our product. Today our season-ticket base is about 7,000. It was about 3,000 when we purchased the team in 1999 and maxed out at around 11,000. We definitely have room to grow, but there has been a demonstrated interest in the past, and I feel confident we can reignite our fan base to my goal of 12,000 season-ticket holders.

The NHL produces reports on what clubs spend in terms of overall marketing dollars and a report comparing marketing dollars in relation to individual team revenues. In our six years of owning the team, we have been one of the top spenders by any measure. Our marketing budget includes a variety of media options: online, in-arena, print, radio, TV, outdoor, retail, website, game presentation, ticketing and in movie theaters. We also have great promotional media partners who work extremely hard with us on joint marketing efforts.

WashingtonCaps.com Message Boards
Most of the people on our message boards are thought-provoking, genuinely interested in the team, clever and many times downright funny. The original intent was for this to be an online community for fans to converse about the Caps and hockey in general. The demographics are varied, but the commonality is they are all Caps fans. There are, however, a few posters that continually misrepresent the facts, intentionally make false accusations in order to provoke negative threads, attack other posters, use inappropriate language and basically poison the environment. So much so that new season-ticket holders have recently emailed me urging several posters be banned and suggesting the boards be shut down because they did more to hurt the franchise than help it. I don’t want the action of a few to hinder our online environment. We’ve been more aggressive in banning posters and deleting threads, but that’s no fun for anyone. Let’s relax and use the boards as they were originally intended; it will make for a fun and lively exchange of ideas without the hurling of insults and personal attacks. There is no place for that on WashingtonCaps.com. I would also ask that some of you tone down the tenor of some of your emails to me. Some of the foul language and personal attacks I am being subjected to is really discouraging at times.

Retired Numbers
In the last month I’ve received numerous emails demanding that we retire a variety of uniform numbers including 3, 6, 11, 12 and 90. We don’t have a written policy regarding who should have a jersey retired and when, but I plan to initiate a fan advisory board to solicit and receive input. We may adopt a system of honoring players and numbers without actually taking a significant number of sweaters out of circulation. This system has worked well for some other teams with longer histories than ours, including the Toronto Maple Leafs.

Infrastructure
We have invested greatly in the infrastructure of our franchise. Most notably we are in the process of constructing a two-rink community and practice facility at the Ballston Common Mall, we have switched our minor-league affiliation to the Hershey Bears and have hired a significant number of new staff.

The Ballston facility will be the best practice site available to an NHL team. It will accommodate the demand for youth, high school and adult hockey as well as provide an outlet for figure and recreational skating. It also will become a recruiting tool for us as we attract free agents. We will have a best-in-class practice facility that is located near the MCI Center and our players will live in one of the most attractive areas of the country. We expect the new facility to open this August.

In a prior Owner’s Corner we discussed our affiliation with Hershey, one of the most respected franchises in hockey. We will continue to promote each other and encourage our fans to take the two-hour trip to the new Giant Center, which is a tremendous arena located at Hersheypark.

We also hired new, experienced staff in hockey operations: an assistant coach, several scouts, a physiologist, a video coach, a training staff assistant, a scouting department member and an internal legal representative to help us navigate the new CBA and salary cap issues. We have hired new front office personnel in amateur hockey, community relations, fan development, game operations, guest services, information technology, media relations, promotions, support services, ticket operations, tickets sales and website/publications. We have a very nice working environment in downtown D.C. The office is buzzing and it’s fun to see so many people working toward the success of our franchise. 

We Are Not Moving
I’m baffled why we’re still fielding these questions. WE ARE NOT MOVING. We will lose significantly less money this year than we have in prior years. We are committed to making this work. We own 100% of the Capitals and the Mystics and 44% of the Wizards and MCI Center. We have a new CBA in place that “right-sizes” the NHL market and creates a path for us to breakeven financially and hopefully lead us to profitability. We have a young, exciting crop of players and prospects who will only get better with time. Life is good. (A few more paying fans would make it even better.) There is a price to pay to be good at anything, and we are willing to pay that price when it comes to the Capitals.


Health of the Franchise
Revenue steams Pre-lockout vs. Post-lockout
National TV  same
Local TV  same
Sponsorship better now
Single-game ticket sales better now
Game-night walkup sales  better now
New season-ticket sales better now
Group sales same
Season-ticket renewals down (62% renewal rate; 80% is the norm)
Salary cap  now in place
Revenue sharing  now in place

Here is the truth: In the last three years we have lost about 1,500 accounts (full and partial plans) that represent approximately 4,000 tickets per game. Our focus in marketing is on that group. This will be a long, hard road, and it requires continued personal interaction in order to regain that faction’s loyalty.

The bottom line: Our franchise is in its best economic health in all the years we have owned the team and probably in the best shape in the last dozen or so years.

The NHL has been right-sized, and the Caps are economically viable. We have isolated our issues and will work hard to be successful.

We adopted this strategy because we want to win a Stanley Cup. This is not a plan of omission; it is a plan of commission. We don’t want to be a good team; we want to be the best. We will stick with the plan because it is the right approach. We have good, young players and will invest in building the team. We won’t make moves to make headlines; we will make moves that make hockey sense in the short term as well as the long term. We will construct a team that wins, and I ask for your patience and enthusiasm on this journey we are taking together.

Our Start to the New Season
It’s been an interesting ride to a 4-6 start, some close wins, some not-so-close losses and a shootout victory against the defending Stanley Cup champions. Some have referred to us as an “overachieving” team, and though much work remains, it certainly sounds better than the “underachieving” tag we had been saddled with in recent years.

Obviously we’ve been giving up too many shots and taking too many penalties, but overall I’ve seen a lot of things I like, such as our team speed, our five-on-five play, the way we bounce back from a loss, our locker room chemistry, our aggressiveness, our “coachability” and the mentoring our veterans are providing to our young players. Many of our young players are exceeding expectations, playing significant and meaningful minutes as well as producing offense.

In recent years we’ve been a relatively slow starting team, and only once since we’ve owned the Caps have we had more than four wins after 10 games (2001-02, 5-4-1). Three of those years we didn’t get our fourth win until the middle of November. I’m not sure where we will stand when the season is complete, but for the Capitals this is not only the start of the season, but it also is the start of a new era.

Our team is young; it will have lapses; it will make “rookie” mistakes. We are restarting and have decided to play some of our young kids here while others mature in Hershey because we believe it is the right thing to do and the right climate in which to do it.

There are even experts who say this rebuild is overdue; it’s the first time a Washington Capitals team has rebuilt in 25 years. There are 30 teams in the National Hockey League, but only three who have gone through the last 25 seasons without missing the playoffs in consecutive campaigns: Detroit, St. Louis and Washington. For more than 20 years Capitals management has tried to win a Stanley Cup by tweaking, re-tooling or juggling the roster. Some teams and methods came closer than others, but ultimately they all failed. We now have decided to go with our draft selections, prospects and young players we acquired in trades, and we have been honest and open about this plan. I am very excited about our future and am happy with our team performance to date. We will improve year after year until we get to our collective goal.

This team has significant upside. The miscues are understandable, just so we learn from them and limit them in the future. It was more frustrating to see breakdowns with a veteran team. This team is youthful, skilled and passionate – and a great group of guys. I can’t believe anyone who attended our home games didn’t come away excited about our team. The game has opened up under the new rules, and we have the speed and skill – coupled with veteran leadership and an overall team toughness – to be entertaining and highly competitive night after night.

Keep the emails coming and keep the faith.

Let’s Go Caps!

Ted
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