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Volume 24 No. 156
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SMT Conference: Leonsis Notes Digital Media Has Made Strides, But Not Digital Advertising

Digital media has made huge strides since Ted Leonsis spoke at the first Sports Media & Technology conference more than a decade ago, but he said digital advertising has been slow to catch up. Leonsis, the subject of a one-on-one interview at the '13 edition of the conference, estimated that when he made that first appearance, people spent three hours a day online, and that amounted to 17% of their media consumption. But at the time only 5% of advertising was devoted to digital media. His goal was for that ratio to become 1:1. The ratio has improved today, but as more people are spending more time online, advertising spending is still behind the pace. He expects that to change. “Young consumers, first and second generation, are spending the majority of their time on the net ... but still the advertising and promotional dollars haven’t followed in lockstep,” Leonsis said. “But as these young people move into positions of management at agencies and companies, that will sort itself out and the floodgates will open.” Returning to the conference to speak this year helped Leonsis appreciate just how far digital has come from his days at AOL and his early days of sports ownership when he bought the Capitals 14 years ago. “We’ve gone from being a ‘new’ media to being ‘the’ media,” Leonsis said. “Everything centers around digital.”

ENTREPRENEURSHIP TODAY: Leonsis said digital and online efficiencies today have made it a great time to be an entrepreneur because people can take traditional businesses and make them more efficient. His investment group, Revolution Growth, has invested in several online companies that are digital iterations of other businesses. Groupon is a company that digitized the coupon. Zip Car digitized the car rental business. And CustomInk, which just received a $40M investment from Revolution Growth, is digitizing the apparel business. “It’s never been a better time to be an entrepreneur,” Leonsis said. “It’s never been a better time to start a company. The consumers are there. The devices are there. The tech is there. The capital is there. It’s just waiting for someone to launch these businesses.”

MONUMENTAL SPORTS & ENTERTAINMENT NETWORK: Leonsis said his long-term goal is to turn the broadband network behind the Capitals, Wizards and Mystics into a production house with “the ability to show something in our arena, in real time, in all the televisions in the arena and outside on the signs and in those virtual screens on everyone’s site and everyone’s phone.” Leonsis would like to see it broadcasting concerts, and pro, college and high school sports games that take place at Verizon Center. “We can look at all of that as ancillary opportunity for us,” Leonsis said. The Wizards and Capitals both have long-term rights deals with Comcast SportsNet -- the Wizards have seven years left on their deal, the Capitals have three. Leonsis said that he envisions doing one of three things with those rights when they become available. “One would be that we would partner in a big way with Comcast,” Leonsis said. “I certainly believe we should have ownership in that network and a large voice in the programming of that network because we know our fans and our community extremely well. Or we would launch our own network, the Monumental Sports & Entertainment Network, or we’ll partner with some other sports network.”

TED'S TAKES: * Biggest inspiration: A 75-year-old Jesuit priest at Georgetown Univ. who helped Leonsis, an English major, use a computer to determine that Ernest Hemingway wrote "The Old Man and the Sea" in the '30s, not the '50s. Leonsis said, “I went from being a liberal arts major, an English major, to someone who understood algorithms.”
* On sports ownership: “No other business gives you the psychic uplift like owning a sports team. But the down beat, you lose a game seven in the playoffs, it’s like death.”
* His favorite part of ownership: “It’s the fan interaction. I’ve probably exchanged half a million e-mails. ... I’m an extrovert by nature, and I get a lot of energy from that. It’s absolutely amazing. ... People will come up to me in a mall or a restaurant and say, ‘Do you remember me? I sent you an e-mail in 1999.’ The passion and enthusiasm fans entrust in you is like no other business.”
* The downside of ownership: “In sports, there’s one winner and 29 losers. The assets, from a business standpoint (of the teams I own), have dramatically increased in value ... but we haven’t won a Stanley Cup or NBA championship, so I’m a failure. That’s what this business is about. One winner and 29 losers.”
* In his downtime: “I read an awful lot. I try to read in totally different areas. Getting outside your comfort zone is important. I’m trying to reinvent my way of thinking to be more data driven. I am an English major, so studying a lot of math and reading about a lot of math thinkers ... exercises important parts of the brain.”
* Why he blogs: “It’s left-brain, right-brain. I’m outgoing. I’m creative. I grew up living my life on the net. ... It’s a natural way to communicate. In the second, other part of your brain, it’s a good business move to control your message. I’m a media company.”

BY THE NUMBERS: * $28,000: His family’s maximum income growing up in Brooklyn where his father was a waiter and his mother worked at a chewing gum factory.
* 200: Number of consecutive sellouts for the Capitals
* $40M: Invested in CustomInk, a custom apparel company, by Leonsis’ investment group Revolution Growth.

Check our On The Ground blog for continual updates from the conference, including a podcast recapping the highlights from Day 1 of the event.