Ted Leonsis appeared on Forbes’ Sports Money podcast this week to talk about a range of topics. You will care a lot about some of them.
As owner of the Capitals, Wizards, Mystics, two arena league teams, an esports team, and Verizon Center, Leonsis has an important perspective on general sports-business matters, but Ted also tipped his hand regarding the future of his teams’ home, Verizon Center, as well as internet legislation that may affect literally everyone on Earth.
Speaking with Forbes’ Mike Ozanian, Leonsis discussed the current status of Verizon Center.
We have a great deal with our city in that they gave us the land. They put a Metro station underneath, and we own the building. I think I have five years left on my mortgage and can’t wait to play that off.
It’s been a very, very expensive deal. We’ve been investing in the building. I think I’ve spent 100 million since I’ve owned the team. Next year we’ll redo the seats. We have to redo the roof. […]
Maybe we stay there, maybe there’s an opportunity to look at some point to go look at a different part of the city and go build an arena there, but right now I’m fairly content with where we are.
Ozanian pivoted to naming rights for the arena, currently owned by telecom giant Verizon, which are due to expire in 2018. Ted briefly addressed the renaming and why the next deal should be very valuable for Monumental.
Our naming rights do come up, and we are in negotiations with several partners.
Verizon’s been a great partner. Verizon picked up the naming rights when they acquired MCI. […] And that was a 20-year deal, and they’ve been fantastic.
But you’re right. The city has blossomed. The media reach for the teams, and we now own six teams, and DC has become one of the great vibrant communities.
Leonsis goes on to discuss DC’s status a supercity (“who’s got Philly?”), with the implication that his building’s value has grown as a function of its occupants and its city, and he’s right on both points. (If you’re interested in the sociology of supercities/megalopolis, I recommend The City In History by Lewis Mumford.)
Finally, Leonsis spoke about net neutrality, which Cory Doctorow defines as “the simple principle that your ISP should give you the bits you ask for, as quickly as it can, and not deliberately slow down the data you’re looking for.” Leonsis has a different take.
I ran a company once, America Online, that had to build a private internet. We had most of our expense in building out the infrastructure to be able to support bringing users online and be able to do the things that we now take for granted. And that’s a very, very expensive thing to do, so I empathize with the cable companies and the telecom companies. They’re spending the money to build out that infrastructure, and there are companies like Netflix that have built a huge business – Netflix now has more subscribers worldwide than the entire United States cable plan. I think there’s 96 million cable homes and 100 million Netflix subscribers, and so they’ve made a really, really big business, and they are riding over other people’s pipes.
So that argument of who should be paying – should Netflix or Hulu and all web providers be paying for some of that ride-along access? There’s probably a good argument to say that they have been getting a free ride.
Ted’s thoughts are expected from the perspective of a large-business owner, but I should mention that the perspectives of a small-business owner or a consumer would likely be different.
For example, I pay a telecom for my access to the internet with the expectation that traffic be treated equally, without preference – as it has since the dawn of the internet, a topic about which Leonsis knows a great deal. If the company I subscribe from slows down traffic from non-preferred sources, I’d be getting an inferior product, and considering the meager level of competition in ISPs in the United States, I don’t have any market power to choose another provider.
Or, as a small-business owner, if I were to start a new streaming-video service without net neutrality, I would first have to offer kickbacks to large telecoms so they would not suppress my traffic and slow down my customers’ experience, thereby creating a barrier to entry that is the very nature of anti-competition.
Arguments against net neutrality offer perversions of the free market with the intent of creating a new, less regulated, less open market wherein only the already rich and powerful have a say in what you get to see on the internet and how.
Ted then changed topics from net neutrality to universal access, which is both not strictly related to net neutrality and also entirely uncontroversial.
At the same time, I believe that universal access for consumers, for young people, is mandatory. We have a world of seven billion people. There’s about five billion people that have some kind of subscription to some kind of access.
The great thing about iPhones and little devices is we’ve put little computers now in the hands of everybody. We believe that North America and the United States – we’re small now – we’re 200 million of the five billion internet connections. So all of the growth is outside of the US.
It’s predicted that the next Bill Gates the next Mark Zuckerberg is probably somewhere in China […] The US can’t fall behind. That should be our fear right now. We’ve built the biggest, most important companies with Apple and with Facebook and with Amazon and the like, but the next generation entrepreneurs – there’s no guarantee that they’re coming from Silicon Valley or Washington, DC, or New York, and we have to continue, with young people, giving them access to all of the tools, encourage them, especially young women to learn how to code to study math to be competitive for the next generation.
Leonsis discussed a lot more, including esports, marijuana, gambling, the future of watching the Caps on TV (i.e. without a cable subscription), and how desirable being a team owner is. Considering Ted is one of the least hate-able owners in that pantheon, I heartily recommend listening to his thoughts.
Headline photo: Chris Gordon
Russian Machine Never Breaks is not associated with the Washington Capitals; Monumental Sports, the NHL, or its properties. Not even a little bit.
All original content on russianmachineneverbreaks.com is licensed under Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported (CC BY-NC-SA 3.0)– unless otherwise stated or superseded by another license. You are free to share, copy, and remix this content so long as it is attributed, done for noncommercial purposes, and done so under a license similar to this one.