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Ask the Owner: Ted Leonsis Answers Your Questions (Part I)

Last week, we gave you, our readers, the opportunity to help craft questions that we'd then pose to Caps' majority owner Ted Leonsis. You did your part, we did ours and now Leonsis has done his. The resulting expansive Q&A will run in two parts (with its Wizards-centric counterpart running over at our SB Nation partner Bullets Forever at the same time), and gives an insight into the thought process that goes into running the team. (Note: In the interest of full disclosure, Leonsis is a "small angel investor" in SB Nation, the network that is home to this blog.)

Anyway, what follows are the first five questions and answers, with the other five running in this space tomorrow morning.

Q1. As owner of a team that's both a competitive franchise in the best hockey league in the world as well as ultimately an entertainment product, how do you define success for the Washington Capitals? Is it different today than it was at the outset of the five-year rebuild plan or other points during your tenure as majority owner?

Leonsis: This is a question that is often asked in pro sports by fans and media and is a topic I address in many of my speaking engagements. This is as much a Capitals question as it is a Wizards question. So I do want to devote some significant time to this one to provide a clearer picture of our organizations. I also wrote a lengthy blog post about this subject last week: What Goes Into Our Thinking.

For the most part fans take an absolute point of view. For many, each season has one winner and 29 "losers." No ring equates to major failure in the minds of many. Fans want and expect a championship - that's a given, as it should be - and the organization has those same desires and expectations. We want to win a championship for our great fans - absolutely. That really is the only goal.

But most owners want to win a ring, hoist the trophy and host a parade for their fans and city. Let me assure you that owners are all uber competitive. We all have enjoyed a level of business success, and we are accustomed to "winning." We have a formula for that business success, and while portions of that formula may be transferable to professional sports, there are so many other variables that are out of our control.

We certainly make a significant personal equity investment, and much like fans, we also invest time, emotion and money into our teams. As a public figure we open ourselves to ridicule and scrutiny - it goes with the territory, but it isn't always pleasurable. We all know - or quickly learn - how difficult it is to win a championship. We have to judge our front offices across multiple dimensions. We just can't say ring or bust year after year - it isn't that simple. As I have said before, winning a championship is the toughest accomplishment in any industry or business.

Here is what I try to do:

I believe that personal working chemistry between ownership and front office is vital. For example:

* We need to see the world the same way.

* We have to agree on how best to develop a plan and the strategies for execution of that plan.

* We have to create analytics and a metrics dashboard to measure what we have defined as success.

* We have to agree upon the path to see a better day.

* We have to agree on a timeframe to see that better day. (Sometimes a timeframe is really important. Rebuilding takes patience; I have seen some rebuilds abandoned because the owners want to win right now. The pain of losing in the short term is too hard to take. Believe me, I know that pain, and we have resisted temptation to abandon our plans - for the Capitals as well as the Wizards. Some may ask: Is patience fool's gold or sound management? That is the beauty of sport - time will tell.)

* The front office has to stand up to you as an owner and have a commitment and a strong point of view because they are responsible for the day-to-day tactics and management of the team.

* Front office personnel have to work hard and show passion and commitment.

There are plenty of other variables, but those seem to be the reoccurring themes for me.

Each ownership group is different and each has its own method of defining and measuring success. I try to work diligently with our front offices on strategy, vision, culture, timeframe and budget. The actual tactics and implementation are left to the front office to handle - that is their area of expertise.

We want to build teams in the NBA, NHL and WNBA that are generationally great. And by great I mean teams that:

* Qualify for the playoffs year after year

* Are in contention for a championship

* Make the community and fan base proud

* Are popular and can sell out every game

* Ultimately win a ring

That isn't easy. If you make the playoffs year after year, you have the opportunity to win a ring. It is obviously difficult to have all three teams in synch, but I would love to see the Capitals, Wizards and Mystics all participating in the playoffs in the same year at Verizon Center!

We understand and are prepared to make continual investments in our teams, but we want to make smart investments that lead to meeting our goals. Front offices have three primary sets of measurements for how they are judged.

1. The play on the court or the ice. We have to ensure the team we are building is improving, the players are developing and the improvement and development are being translated into results. We have to be a playoff team and we must continue to show upside. We need to be flexible and open to change if it will lead to improvement and better results. No matter what the result, we can't be satisfied and need to continually find ways to improve.

Change is delicate. I actually worry sometimes that we make too many changes. Continuity is a hallmark of several successful franchises. But sometimes a change in coaching, team make up, systems, culture and front office staffing is demanded. Those decisions are not made lightly and we have to determine if the front office is capable of making the desired changes as well as forecast the results for those changes.

We also have to review how well we have drafted and how well the draftees are developing. We need to analyze if we made astute trades, made prudent free-agent signings and how effectively we have we utilized the waiver wire and our development leagues.

I also take into consideration if our players respect our coaches and front office, and if they genuinely want to play for our team, our fans and our city. I also want to see innovation - on the court and ice, in the locker room and throughout our front office staff.

The Capitals and the Wizards currently are in different stages of their development. The Caps have made the playoffs five years in a row. We haven't progressed past the second round in any of those years; it has been a huge hurdle despite some Game 7 opportunities. So we keep tweaking and making changes to get to the next step. It is tedious, sometimes frustrating, but it is necessary.

The Wizards are just entering the third year of a rebuilding project (more on that during our Wizards Q & A), but we probably have made the most amount of change in the shortest amount of time in the NBA of late. We have eight players on their rookie contract, and John Wall is our most tenured player. Now that is change!

The Mystics altered course from a team built around youth to a more veteran team. The plan is not working as we thought. So we will have to work together and implement a plan that gets us back to being a playoff participant.

Eventually performance across multiple dimensions is used in terms of on-court and on-ice results. Yes we want to win a ring, but there are many dimensions to measure in the mix. I understand that fans want just one criterion - championship or bust. But you did ask, so here is my take.

2. There is much more to consider too. We need to constantly evaluate the Wizards and Capitals from a salary-cap perspective. We have to meet our budget, assure contract salary and term are both appropriate and maintain flexibility to preserve our options. We can't be pigeonholed and need to be in a position to make trades at the trading deadline as well as retain our key players. The CBA is a complex document. We have to understand it and utilize all of the tools available to us. I also get a sense from other owners if teams respect us and want to do business with us.

3. And then is the team popular with our fan base. The fans need to believe in the players and the team. It is crucial that we are able to sell season tickets and that our season tickets are being renewed at or above the league average. We want to see continued improvement in TV ratings, radio listenership, web metrics and merchandise sales. We want to have quantifiable engagement with our fans via plan-holder activities, fan events, youth basketball and hockey initiatives and community and charitable outreach programs. We want the community to be proud of our teams.

I believe the best teams win, sell out games and make their fans and community proud. This is a positive cycle we all try to create. It is a complex mix of decisions, actions and reactions. We all want to win a championship, and we are in it together. But the relationship, as they say on Facebook, is "it's complicated."

Q2. Perhaps related, we've seen the 98-percent season ticket renewal rate noted as justification for resisting a front-office overhaul at this point, but is that sort of fan-empowerment the only driver when it comes to such high-level decisions? What would you say to those season-ticket holders who strongly considered not renewing and aren't satisfied with simply making the playoffs, but want to be convinced that the team is making strides towards winning a Stanley Cup? If attendance remains consistently high but the team cannot reach new post-season milestones, does change at some point become inevitable?

Leonsis: At this point I don't really understand media or fan questions regarding season-ticket holder dissatisfaction. Yes, I understand and appreciate the heartbreak of losing in Game 7 and our inability to advance to the next round. It is frustrating and it hurts - it impacts all of us. But I don't get this supposed threat of dissatisfaction - frankly I don't see or hear it.

Of course our fans want us to win, and they believe in our team. They have helped transform this city into a great hockey town in a short period of time. Our season-ticket renewals have been in the high 90th percentile in recent years - that is phenomenal. We have great relationships with those fans, and we have thousands of people on a waiting list for season tickets. We make it a priority to know our plan holders, and we want them to know us. We hear directly from them through many channels, and I find that to be the most productive feedback we receive.

As some are fond of saying: The only constant is change. We have made many changes - personnel on the ice and behind the bench. Sometimes I worry about too much change, but we are tweaking our approach in an effort to get the formula right. So we have changed, but the goal of change is to improve, not simply to make a change. At the end of the day, the buck stops with me; I know when we are off plan, and I will make personnel decisions at that time.

3. Looking back to 2010, there was a sense coming out of the Montreal series that the Caps didn't play "the right way" to win in the playoffs and had to get more defensive. That defensive emphasis was implemented in Bruce Boudreau's last year or so and went even further under Dale Hunter. In retrospect, did the pendulum swing too far after that Montreal loss? Are you closer to winning a Cup now than you were then? Are you a more entertaining team now than you were then?

Leonsis: I guess if you don't win the Stanley Cup then you didn't "play the right way." We had high-scoring teams and lost in a Game 7. We had a defensive-minded team that played one-goal games and lost in a Game 7. Which style was more entertaining to fans or to media? I'm not sure. I wonder if they are split on a style they prefer. Defining "entertainment" isn't always easy, but I know that winning is entertaining to me.

I don't think we can put percentages on winning the Stanley Cup - that's for others to do. But I love our team and our chances. Our window of opportunity is wide open - we have a mix of young players, players entering their prime and veterans. We continue to have a pipeline of prospects. We are also mentioned as being a playoff team and in contention to win a Stanley Cup.

We just want to win and will continue to tweak until we break through.

4. In your interview with Mike Wise, you talked about advanced statistics and their applications to the Wizards. Have you explored similar (or dissimilar) possibilities in hockey, and if so, how have you gone about that? (And is there any potential hockey application of the new camera imaging system that the Wizards have had installed at Verizon Center?)

Leonsis: Yes, we are using analytics in hockey and, more importantly, we are constantly exploring new ways to use analytics. The field is evolving as we speak. Our use expands across all parts of our hockey operations department. On the amateur scouting side, one must remember that it is a worldwide 18-year-old draft. We use analytics to efficiently and effectively compare players who play in various leagues on different continents, from U.S. high school and college hockey players to players like our own 2012 first-round picks, Filip Forsberg playing in Sweden or Tom Wilson playing in the Ontario Hockey League. On the coaching side, we have used analytics and charting of games, shots on goal and scoring opportunities to measure our team and our players. We have a new coach in Adam Oates, so we'll see how he wants to use analytics.

On the contract analysis and salary cap management side, our assistant general manager Don Fishman uses analytics to try to effectively measure player values so we can use our cap space well. Don spoke on the hockey panel at the 2011 MIT Sloan School Sports Analytics Conference, and Don and a couple other members of the hockey operations group attended the MIT conference again this year. I know Don loves that conference. Use of analytics in hockey is growing every month, so it will be an exciting trend to watch.

5. You've also talked about how the Wizards aren't a ‘have team' when it comes to free agency, while in the past, you've pointed out that D.C. is an attractive destintation for hockey's free agents. That said, it's been a long time since the Caps made a big splash in free agency, though you've certainly locked up a lot of your own players (guys like Ovechkin, Backstrom, Laich, Green, etc.). We know the hockey free agent market this summer was weak, but is Washington still the draw that it was even a year or two ago, and is the lack of "big name" free agent signings more of an organizational philosophy, a lack of opportunity, or something else?

Leonsis: Our goal always has been to draft, develop and retain our own players. While Brooks Laich was obtained via trade, he had played only one NHL game prior to his arrival. As you noted Alex Ovechkin, Nicklas Backstrom and Mike Green were all Capitals draft selections. Those also are players who wanted to stay in D.C. - players who have helped build this team, all part of our leadership group. So in that respect I would say D.C. is an attractive destination.

We also have a number of other current NHL players we have drafted (e.g., Karl Alzner, John Carlson, Braden Holtby, Marcus Johansson, Michal Neuvirth, Dmitry Orlov, Mathieu Perreault and Jeff Schultz).

We are pleased with the free agents we have signed, such as Jay Beagle, John Erskine, Roman Hamrlik, Matt Hendricks and Joel Ward. And we have made astute trades to obtain players like Troy Brouwer, Jason Chimera and Mike Ribeiro. We'll have to see how some of the other players we obtained turned out. In talking with these players, they love D.C. and our fan base. So that does reaffirm that our organization and our city is an attractive place to live and play.

You must remember, we never have made a "big splash" in free agency. We have explored and pursued any number of "big name" players, but we felt the asking price - either salary or term or both - were not within our salary-cap management plan. This off-season was quite unique with the two named free agents both wanting to play together and long term for their one chosen team - the Minnesota Wild.

Be sure to check back tomorrow for the second half of the interview.

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