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Welcome to a new episode of the opening bid unfiltered podcast. Um, Ya finds executive editor Brian Sai. Like I always say it's a podcast that will make you a smarter, uh, investor, period, and we have a real, uh, treat on this episode, someone, uh, whose career I followed for a very long time, and, uh, I'm really honored to have here, uh, at our roundtable at the NASAQ in Times Square. That's Ted.Leonsis, uh, founder, chairman and CEO of Monumental Sports Entertainment. Good to see you, Ted. Appreciate it. Great
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to see you. Thanks for the invite. So
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for those not familiar um with your career, what's on the umbrella of Monumental? Talk to us a little bit about what is under the umbrella of Monumental. What, what sports teams do you own?How'd you come to own all these teams?
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Um, well, I started buying the teams, uh, when I was an executive at America Online, um, which is a part of, yeah,
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there
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you
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go,
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and, um, um, the hockey team, the NHL, Washington Capitals came available and I could buy 100% of that, which I did, and that kind of got my foot in the door.And I was then able to buy 44% of the Washington Mys WNBA team, the Washington Wizards, um, the NBA team, and the building, and I cut a deal where when the owner retired, I could buy the remainder and consolidate it, and we've done that, and now we have built one of the largest sports platforms in North America.We own multiple teams, the Capitals, the Wizards, the Mystics, the Gogo, which is a G-League affiliate team. Uh, we've gotten into eSports. We own an NBA 2K team with the largest investor in Team Liquid, which is North America's most valuable eSports team plays on 11 different platforms, and then we bought our RSN from Comcast. So we've ended up being a umA free IPO, almost tech business, if you will, where we have the IP, um, we're a digital first company, we distribute the IP on our own linear and digital channels.And we are bricks and clicks like business and our business looks like a sass business, but 80% of our business is um under long term contract with um annual um.Annual increases sounds like a perfect business. Well, it, it, and it's why sports teams and these platforms are being valued very, very highly. We were just valued in all of the Sportico and CNBC, um.And Forbes between 7.5 and $8 billion. All the teams that you own. Yeah, the, the, the, the platform monumental sports. What
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did you identify way back when was the early 2000s when you started to acquire these assets? How did you know these were going to be good investments and how did you, you'd be a good steward of theseAssets you come from tech slash media. I mean, you've done so many interesting things.
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Um, well, I love sports and I also believe in community. I mean, that's what we were building at AOL, um, very, very powerful, uh, communities of interest and the ability to, um, sense and respond because we were always connected andUm, and so when I had the opportunity to buy the teams, I did it not because I thought this would be a great business. I did it because I thought it was a way to give back to the city. Nothing brings a community, a city closer together than a winning sports team.And at the time I had the means um to be able to make the investments that I thought were appropriate and players and staff and coaching and data analytics, all all the things that today are kind of table stakes and sports teams, but back then,You know, people were communicating with fax machines. We were the first team to digitize. They gave all the players, all the employees laptops, put them on America Online, and
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that's
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uh
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AI that's aim for the the generation. I mean, I remember dialing up. That wasmy
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my first. So, so, but I soon got to see how underappreciated.As a business asset this was because our contracts, you know, we'd sell naming rights and it'd be for 1020 years, we would sell sweets for 5 or 10 year contracts. We would, we would sell media rights to national players, big players, Disney, Comcast, NBC and they would pay us a lot of money.Guaranteed over a 10 year period with increases. The only variable that we really had was the season tickets and game by game tickets, and our season tickets would renew 80% to 90% every year. So I said this is a better business than an AOL, a Yahoo because it's it's subscription based.Um, it's the advertising is under long-term contract. It's not run of service, and the audience in the market that we're in Greater Washington, our market goes from um Richmond, Virginia all the way to Delaware, almost 10 million people, 1010 million households, and it's the 4th or 5th biggest market in the country. So I thought they were undervalued. I paid.$85 million for the Capitals seemed like a lot of money at the time. Um, now they're valued $2.5 billion. I paid $350 million for the basketball team. Um, now it's valued probably $5 billion. So yeah, they've been good investments because they're good businesses, butIt's all noise. The reason you want to own a sports team is to win championships, to bring the community closer together. And we've been successful there. Our, our hockey team, um, um, I just celebrated 25 years of ownership. Um, I was the 2nd fastest owner in NHL history in 25 years to get to 1000 wins.That means we had a great culture, a great team, great players. Uh, we won the Stanley Cup championship in 2018. Uh, we had this most playoff appearances tied with, I think, Pittsburgh for, uh, over that 25 year period. So we, we built something that lasts, that the brand, the team, the, the culture, um, is replicatable.And we have a historic player in Alex Ovechkin. He just broke Wayne Gretzky's record for most goals.And uh we we've we've made something there that the community is very proud of.
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Is ithard? I asked David Rubenstein, of course, you know, he owns the Baltimore Orioles and then in a side job, he's the co-founder of Carlisle. Um, he's what in the 2nd year ownership of the, the Orioles. They had a good year the first year. I asked him, well, there's not a tough year this year. Is it hard? I asked him, is it hard to lose, like, well, they loved me last year, but they don't necessarily love me now. How have you dealt with seasons that haven't gone your way? I mean, how do you overcome that?
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Um.Sports is very different than business, um.You have a very, very successful business with, um, Yahoo Finance and arguably you'd say, well, um, there's Dow Jones, there's CNBC, there's Yahoo Finance, and you're still a winner, right? If, if you're in that echelon in sports, there's in the NBA there's 1 champion and 29 losers, uh.And, and, and there's this, um, finality. You, we, we had a very good season, we had the in hockey, we had the 2nd best record in the league. We won the East, we won the 1st round of the playoffs, we lost in the 2nd round. It's over.It's over. Florida won the Stanley Cup. Um, they, they've won now 2 years in a row. There's no arguing they're the best team.There's this um clarity of victory and, you know, probably one of the great comments of all time is, what's the goal? win the last game.Um, with the most transparent business, it's, we publish stats in real time to our fans. I, I joke and say in business you have an annual meeting. I have an annual meeting at every game, um.People usually don't ask questions at annual meetings. I get booed. You get booed in real time when you
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get from Yahoo Sports,
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so it's a very, very unique business. You have to have thick skin. You have to be very committed. There's noHosers don't work in sports.
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How,how do you allocate your time? I mean, you own all these, these are big high profile assets and and mean a lot to their community, uh, in many respects. I mean, how do you divide your time and how do you know where to go?
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Um, well, just like a real business, you set strategy, you build culture, you have to recruit the right people.Um, you have to agree on a plan, and then you have to trust the people that will implement the plan. And so, you know, we've been able to do that now, and I'm no longer a young owner, I'm 25 years into it.And you know, the NBA, the collective bargaining agreement is different than the NHL, so you have to have experts in each of those businesses and areas. From a business standpoint though, you can consolidate, you know, we have one CFO, we have one general counsel.So we have one chief revenue officer because they're selling inventory, they're using data around the analytics for our customers that they can show to an advertiser sponsor, they can activate e-commerce kinds of apps. So we've built a real business.But the heart of it is the success of the teams and each team has to be managed because the fans, no one comes to see monumental. No one comes to see the CFO or the chief revenue officer, they come to see the team, the Washington Capitals, the Washington Wizards, the Washington Mystics. And so what we've tried to do is get the best people, have continuity, um,Explain to everyone what our expectations are, be very, very, um, transparent with the fan base. We have to communicate all the time. Uh, a lot of ownership groups, um, they're everything is top secret. Um, I have felt that this is a public trust, um, you're almost like mayor of your community. We have 3 million people that come into our building that we own every year.We're spending almost a billion dollars. The city is making a big investment. Um, we're making an equally big investment to reimagine what the arena will be for the next 25 years, but it's redefining a new front door, a new way that downtown DC will be defined.And so you have big social responsibility owning the teams to the fan base, but to the community and to the league.
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Uh, hang with us, uh, Ted, we're gonna go off for a quick break. We'll be right back on opening bid unfiltered.All right, welcome back to opening bid, uh, unfiltered here at the Nasdaq in Times Square. Having a great chat with Ted Leonsis, uh, founder, chairman, CEO of Monumental Sports Entertainment. So you're making a, uh, a big, there's a big investment in what? Capital One
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Arena.
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What is the, what is the stadium or the venue of the future looklike?
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Um, well, it's digital first, and it's designed, uh, fan friendly first, so that means we have to start to think about, um, getting into the arena, um, how do we coordinate and work with the city to make the traffic and the entrance.Easier, faster, please
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make it easy. I mean these lines are out of control.
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What are we going to provide as entertainment and programming and data as they're coming to the game?Then when they enter the arena, we need to know who they are. Facial recognition is gonna play a really, really big role, um, big data analytics so that we know, um, when you come to a game, you go right to the hot dog stand or know you're a vegetarian and you go to this part of the club.Um, your seats are here, but if there are available tickets, um, because we didn't sell them, that you would take those, you should be able to, without friction, be able to get the better seats very, very quickly and efficiently. You're driving
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a shareholder value. I know you're not a public company. I'm thinking, you're driving value in real time. I never before a stadium. And
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we listen to our fans, I mean, a lot ofTeams say that they do, but we have to listen to our fans. Washington DC, it's a very educated, very digital savvy kind of community, and their expectations from us are very, very high. Safety and security really job one for us. We work very, very closely with all the federal.Groups, uh, Homeland Security, FBI, we have a metro right under our building that has to be safe and clean. We, we have to worry about a lot more, uh, for our fans, um, you know, the lighting has to be appropriate outside, the bathrooms, we don't want long walk um waits getting into the bathroom.And so, this is a whole new way of looking at the fan experience, but the fans not only expect it, they deserve it. Ticket prices have gotten high, revenues have increased because ticket prices have gotten higher, suits have gotten higher. To put that in perspective, we now have bunker suites, $2.5 million a year.
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That's
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a bunker bunker suite is uh like a private room that you as a company or people getting together can mingle, eat, drink, dine. Um, sounds
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amazing. I've never gotten an invite to a bunker suite but hopefully
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then you walk through the suite.Down to your seats and the seats are on the floor, the seats are on the ice, but $2.5 million when the building first opened, the suite was $200,000. So we have to really make investments for the experience and for the materials and for the, the way we service people, their expectations have havegrown.
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Just listening to your talk, I, I, I want to ask you about what you thought about some of the valuations that the teams are selling out now, billions of dollars, but I'm listening to you.And I think I can make the case that there these assets are still undervalued. People are so focused on the billions that they're going for, and they're not thinking about the billions more that could be sold, they'd be sold for decades down the line.
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Well, I, I think there is a lot of upside in sports and building the value. Um, there's a scarcity that is very unique. Um, there's one NBA team, one NHL team in Washington DC.So if you wanted to buy in or you wanted to buy control,And you wanted to be in Washington.You you've got to come through us. That, that's, that's very unique. Um, secondly, we do these big media deals and obviously the, the value gets out and there this latest one with the NBA it's a big, big number and it's for 11 years. So there's a predictability in the business model thatIt is very, very unique. There's a a comfort there and you can do time value of money, you can take a look at what the estimates are. I think one day now that private equity has started to make investments into sports teams, sovereign wealth funds we brought in the sovereign wealth fund is one of our investors that the bigger teams and the bigger markets, we're gonna become.An asset class. Um, I'm now starting to operate our business like it's pre-IPO. Do you want
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an IPO? Is that something you look at?
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I would like to be ready if that ever were to happen, be an opportunity, um.Because the assets are getting so highly valued, I'll give you a great example. I had a very close friend, a partner, and he passed away.And he owned a small piece, 4%.Forbes just said we were worth $7.5 billion.Not a lot of people have 4% of $7.5 million in cash laying around.So you have to find someone to buy it. If you were a public company, they could sell to the public. They there there would be a mechanism for liquidity, and I think we're going to see as people start to make investments at the much higher valuation, that they're gonna want some kind of exit, and public markets would be a way to do that. Um,
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is it, is it your intention to keep the business?In, in your family, I mean, who do you have your family members workingwith
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you? Well, the way the leagues have set everything up and it's appropriate, there's debt limits, and then there's ownership limits for control, and every team has to have a control owner, so I own about a third of the business right now, and yeah, we intend to keep it in the family, um.Because you have to have a control owner and we're having a good time with it and you know, it's built, it's building value for generations to come, but I have minority partners. I've got a sovereign wealth fund. They all have their own fiduciary responsibilities, so I have to start thinking of them like their shareholders in a big company.You know, we're, I'm a venture capitalist, revolution, um, growth with Steve Case, and we make investments in companies, $50 million.60 million dollars investments, these companies go public and, um, you know,Cava was a big hit. Tempest was a, a big hit. These companies that go public, they're sometimes valued less than monumental sports is, right? But they have that advantage of liquidity, of having infrastructure like NASDAQ, um, where you can place a value and you can trade if you want.
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I was talking to uh Jason Wright, former.the president of the Washington football team, now he's working with Ariel, and he told me that he's really leaning into women's sports, uh, notably the WNBA. He said, uh, WNBAA is like a, it was like a small cap stock. I mean just so much growth potential. What is your, what is your 5 year outlook for the WNBA asset that you own?
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It, it certainly is the growth stock. Um, we're the 2nd longest tenured WNBA ownership group, uh, in the league, Herb Simon in Indiana's first.Um, I believe a long, long time, and I believe that you have to make investments. Um, we were the first, um, WNBA team to build a practice facility, and they share the practice facility, the infrastructure with the NBA team. Um, we were the first to put all of our games on our own network, and then we did a pre and a postgame. These areInnovation, these are new things for the WNBA and we were patient, and it took 25 years for the league to kind of hit its stride. Now, it all grows out of Title 9, which was created in Washington DC because the women athletes had to be treated equally. Their athleticism, their skills, the the quality of the game is great.Uh, the competitiveness is great.The networks have taken notice. They'll now pay us money to put the games on air. The fans have taken notice. The media now is treating the game and the athletes with respect. So the spiral is going up, and I would expect as the NBA continues to expand, uh, we're NBA China, NBA Africa, there's talk of us going NBA Europe.That there'll always be an NBA and a WNBA component. And I think the WNBA has a lot of upside. 4 years ago, my team was valued at 0.Um, no team as a comparable had sold for money.This year my team is valued at $250 million. So we just sold 3 expansion teams to NBA owners for $250 million apiece. So I mean, it can turn around very, very quickly. You can look really, really smart if you're, you're patient, and, uh, but the league needs more investment from ownership. It needs more investment from the WNBA at corporate, um, the players are very, very talented.And we have to capture this moment in time right now and make sure that we can get to the promised land, if you will, where the league uh is fully developed and it's built value for all of its constituents. Lastly,
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before I, I let you go, um, you're sitting on, I mean, an amazing collection of assets that have significant value, as you've explained here today.Are you in the market for another team? Like, the, the Nationals, I mean they're sitting right there. I wanna raise some, some money off of that value, uh, in the portfoli mean yeah,we,
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we have the means to do that, and we very much would like to buy a baseball team, uh, in our hometown. I love the game.Um, but the team is in good hands. It's owned by the Lerner family. We're very close friends. They also own a small piece of Monumental.And they don't seem focused on selling the team right now. They're rebuilding the team, rebuilding their business, and I, I have to respect that. Maybe
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David Rubenstein if he's not, uh, liking the Orioles in a
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few. Yeah, well, I tried to, I tried to buy the Orioles too. And, and the reason is I think scale really matters. These are, these teams in markets, you have to compete with teams in much bigger markets. So,The Nationals, the Orioles, they're in Washington DC and they're competing with the Mets and the Yankees. They're competing with the Dodgers.There are teams that are spending $400 500 million dollars in baseball, and then there are teams that are spending 50 to $75 million. You not very hard to compete that way. The CBA and the NBA, the CBA and the NHL, it's more about parity. There's not, can't have that, those kinds of differences. Also, if you're gonna go direct to consumer in a subscription basis.It really is a better offer to fans to be able to say, buy a season ticket for the whole year and watch every hockey game, every basketball game, every baseball game, that'd be great and pay the cost of one courtside ticket, right? And so, and we're all learning that because OTT is a relatively new phenomenon. The cost of acquisition of a consumer is high.But if you don't make the playoffs or you get eliminated in the first round, and cancels, then you have to wait till the next season starts and then you have to go reactivate them. So I, I think you'll see a lot of basketball teams, hockey teams, baseball teams either merging or doing virtual mergers so that you can have year-round programming and an offer that's very endemic to the city and the community on a year-round basis.
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Thank you for giving me a ton of time. I didn't even get into the AOL days. We'll have to have you back because I, I'm fascinated with the early days of the internet. Uh, 10 Leonsis, um, is a real treat to spend some time with you. I
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appreciate it. Thanks for the invite.
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All right, uh, do continue here, uh, with all that love on the social media and podcast platforms. Uh, I love all the feedback. It makes me a better interviewer and it makes me just better at what we do here at Yahoo Finance. We'll talk to you soon.