Ted Leonsis was purchasing a cup of soup at Legal Seafood across from the Verizon Center when he was told it wouldn't cost him a penny. The general manager of the restaurant was so grateful for the amount of business Leonsis' sports franchises generated that it just didn't seem right to charge the owner of the Washington Capitals and the NBA's Wizards for lunch.
Leonsis asked if the restaurant advertised with the Capitals or owned a suite at the Verizon Center. The answer was no on both accounts.
"I don't need to," the manager said. "I just bought right across the street from you."
Leonsis tells this story during a recent phone conversation to prove a point. There are a lot of people making money off the Capitals. The bars and restaurants around the arena. Big chains with deep pockets like Fuddruckers, Starbucks and McDonalds. The landlords charging them rent.
"They don't pay us rent," he said "They don't need to advertise with us."
And then there's Washington, D.C. collecting taxes on these successful businesses. They're all making money off the Capitals.
Right now, Leonsis says he is not. A giant mortgage on the Verizon Center makes turning a profit challenging, even with the Capitals' popularity in recent years. The traditional revenue streams have a ceiling -- you can't add more seats. You can only raise ticket prices so much without a Stanley Cup before fans will object. There are only so many places to cram advertising.
"That leaves everyone trying to find new revenue streams," Leonsis said.
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