Monumental Sports & Entertainment isn’t a publicly traded company, but the Washington, D.C., sports empire is starting to act more like one, according to Zachary Leonsis.
“We’ve talked a lot about acting and operating more like a pre-IPO company—acting with a lot more financial rigor,” Leonsis, Monumental’s president of media and new enterprises, said in an interview. “That’s part of the natural evolution of sports as an asset class.”
A recent shakeup of Monumental investors is reflective of that new mindset, Leonsis said. In a series of transactions, Qatari sovereign wealth fund QIA is increasing its stake in company, which owns the Washington Wizards, Capitals and Mystics. Arctos Partners is also investing. Both groups are buying equity previously held by billionaire Laurene Powell Jobs. The deals give Monumental an enterprise value of $7.2 billion, Sportico reported Wednesday, up from $4.05 billion when QIA invested two years ago.
“We are starting to attract and work with a more sophisticated level of investor, who should be demanding greater financial rigor and greater expectation on business performance,” Leonsis said. “The [new] partners that we have are passive, minority and long-term oriented. They don’t have special rights; they don’t have board seats. But that doesn’t mean that we don’t take our responsibility to them as seriously as if they did.”
As another example of this pre-IPO mindset at work, he cited two recent executive hirings from publicly traded companies—chief strategic and corporate communications officer AJ Jones II came from Starbucks; CFO Steve Miller joined from Warby Parker.
As for an actual IPO, Leonsis said there’s “no immediate plan” to pursue it. Teams that are publicly traded, like the New York Knicks and Rangers, tend to see valuations below those enjoyed by privately held teams, and leagues obviously have a vested interest in keeping league-wide finances private. That said, Monumental managing partner Ted Leonsis has been vocal in the past about his belief that more sports teams could test the public markets in the near future.
Monumental has helped pioneer the mold of the modern sports platform company, with a portfolio that includes the three major franchises, plus Capital One Arena, Monumental Sports Network, professional gaming organization Team Liquid and a number of other related assets. While the equity in this latest transaction was previously held by Powell Jobs, Sportico reported earlier this week that some of the money was flowing back to Monumental.
Zachary Leonsis said in the interview that the company has its mind on growth, both internally and externally. For venues and teams, Monumental is only interested in the D.C. area, but the geographical restraints are looser for other potential opportunities.
“We certainly enjoy being geocentric because that’s where we find the most operational leverage, that’s where we can drive the most value from a P&L performance perspective,” he said. “But if there’s a technology business where geography isn’t a key advantage, then it doesn’t matter.”