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Dot-com strategy for Caps Add to ...

Ted Leonsis, the Washington Capitals' gregarious owner and dot.com jillionaire, is on the line, nominally to discuss what ails professional sport, an industry he describes as "broken" and in desperate need of repair. Now, however, we're comparing notes on a different shared compulsion -- the constant need to compile lists of all kinds.

Once, in 1983, Leonsis assembled his definitive list of 101 Things To Do before he died, and among them was a desire to own a professional sports team. My own obsession is to develop lists of songs for every occasion and the ever-helpful Leonsis, president of AOL Interactive Properties, immediately draws my attention to a Web site for like-minded individuals called shoutcast.com -- accessible through his America On Line service, of course.

This type of instant problem-solving seems typical of the way Leonsis does business. In an era when more and more of professional sports appears dominated by nameless, faceless corporations, Leonsis represents something of a throwback.

His goal is to turn the Capitals, one of the National Hockey League's least distinguished teams over the past quarter of a century, into a leading-edge, new-economy company by closing the gap with his primary clients, the fans. To that end, Leonsis walks the concourse at the MCI Center nightly so he can listen to both kudos and complaints. By his own estimation, he has replied to 15,000 e-mails since assuming control of the franchise from Abe Pollin 18 months ago.

Philosophically, Leonsis believes in a new-age strategy called "viral marketing," which sounds an awful lot like an updated spin on word-of-mouth advertising.

"The other day," began Leonsis, "somebody sent me an e-mail, complaining about the cotton-candy hawker, who was spending too much time near his row and was blocking his view of the ice. My first reaction was: 'With all the things going on in the world . . .'

"But then I thought: 'This guy has an issue.' So I write him an e-mail back and tell him, 'I will personally call our vending people and ask them not to go in your area any more.' That's what I did. Later, I get an e-mail back from him, which says: 'Thank you very much. I enjoyed the game so much more.' And he copies his message to 11 people. Now, I know those 11 people probably sent this correspondence to another two or three people. So I did one little thing, but I'll bet you 100 people ended up seeing that we really care. That's viral marketing.

"If you do that 15,000 times, which I have, all of a sudden, the Caps are moving up on the sales front. We want every person in the organization thinking the same way -- that we care."

Careful not to cast himself as a messiah, Leonsis's primary objective is to get the Capitals on track, and the evidence suggests that his approach is working.

The season-ticket base has more than tripled, from under 3,000 to 10,700, since July, 1999. Average attendance is up to 14,475 a game from 12,813 a game, an increase of 12.97 per cent over last season. According to Leonsis, the Capitals just passed one Original Six team, the Chicago Blackhawks, in overall attendance, and are closing in on other, the Boston Bruins.

On the downside, the Capitals will lose money again this year -- upward of $10-million (U.S.) -- despite their box-office gains.

Even though dot.coms fold every day, Leonsis believes the fundamentals of his other major industry are sound because consumer use of the Internet grows every day.

Sports, on the other hand, is a "fundamentally broken" industry. "Ratings are down, the love of the product is down, attendance is down, and yet, prices for ads and tickets go up. It is directly anathema to what we live with in the new economy, which is Moore's Law -- that you give more and charge less.

"If you continue down along that road, you'll end up like the British Empire. I used to have a college professor who said, there was no one to blame for the fall of the British Empire. They lost 1-per-cent market share every year for 100 years."

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