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Speaker 1: Monuments are not built in a day. Ted Leonsis laid

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Speaker 1: the foundation for his sports empire in a different era.

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Speaker 2: When I first bought the Washington Capitals, no one had computers.

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Speaker 2: It was a facts generated just facts as would be

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Speaker 2: blow it all over the place.

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Speaker 1: As analog gave way to digital, Monumental Sports and Entertainment

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Speaker 1: took form. In twenty ten, Leonsis bought the Washington Wizards,

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Speaker 1: along with DC's Downtown Sports Arena. Since then, Monumental has

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Speaker 1: added teams, opened more venues, invested in new ventures, and

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Speaker 1: broadened its reach with media networks. Financially, it's a whole

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Speaker 1: new ballgame.

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Speaker 2: We need very sophisticated financial management to make sure we're

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Speaker 2: getting the right yield, make sure we're not too far

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Speaker 2: over our skis in terms of cash investment. The demands

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Speaker 2: on the CFO have heightened as the stakes have increased,

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Speaker 2: the valuations have increased, the revenues have increased, The demands

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Speaker 2: by the fans have increased.

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Speaker 1: The executive Lyons's trust to meet these demands is Peter Bische.

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Speaker 1: He's been Monumental CFO from the very beginning. The CFO

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Speaker 1: role is the only one you've had here. You essentially

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Speaker 1: defined created that position.

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Speaker 3: I suppose some might say it's a dead end job.

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Speaker 4: I've been CFO forever with absolutely no advancement or a

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Speaker 4: title change.

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Speaker 1: BChE serves as CFO of the Capitals, the Wizards, and

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Speaker 1: the entire group of teams, facilities, and networks. Monumental owns

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Speaker 1: and operates. He's instrumental to an enterprise currently valued at

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Speaker 1: over four billion dollars.

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Speaker 4: It's gotten larger, a lot more zeros on the numbers

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Speaker 4: I deal with and have. It may have been the

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Speaker 4: case in the past, and so the pressures financially are different.

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Speaker 2: Peter's like a partner and not only a thought leader

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Speaker 2: and help him with strategy, but he likes to spend

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Speaker 2: the money like it's his. I'm more, let's scale, let's grow,

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Speaker 2: let's go, go go, and Peter's more well, let's aim

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Speaker 2: and target and think that through and run the numbers

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Speaker 2: before we dive in.

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Speaker 1: Make no mistake, ted Leonsis has Monumental moving forward.

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Speaker 3: Ted is very much and has always been in his

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Speaker 3: prior life, and this one sort of growth more.

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Speaker 4: Let's see around the corners, what's coming. How do we

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Speaker 4: take this business into.

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Speaker 3: The next century or whatever.

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Speaker 4: Obviously we need we have our car business, and we

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Speaker 4: need to have games here and all that sort of thing.

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Speaker 3: But what else can we do? How do we grow

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Speaker 3: the platform?

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Speaker 1: So you've had to learn to see around corners as

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Speaker 1: well financially, at least.

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Speaker 4: It's part of what you have to do. It can't

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Speaker 4: be the same old, same old. It can't be the

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Speaker 4: same as yesterday.

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Speaker 2: And our mission, our goal is to build the world's

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Speaker 2: most valuable regional sports and entertainment company.

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Speaker 5: We've been growing double digit.

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Speaker 2: Most sports teams are growing six seven eight percent.

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Speaker 1: Monumental's two most valuable properties are the NHL's Washington Capitals

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Speaker 1: and the NBA's Washington Wizards. They're also the most expensive

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Speaker 1: to maintain. The biggest budget item player compensation, but at

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Speaker 1: least that number is predictable as each team operates under

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Speaker 1: a salary cap set by the league. Is the fact

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Speaker 1: that you have the salary cap structure and gms deal

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Speaker 1: with a lot of what that ultimate dollar figure should

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Speaker 1: look like for you up to focus on the other

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Speaker 1: areas of the business.

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Speaker 4: Yeah, you know, tag is lead is this and I'm

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Speaker 4: involved sort of set the big number for them. Spend

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Speaker 4: of the cap, spend more or less whatever than numbers,

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Speaker 4: how it gets spent as.

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Speaker 3: Really up to that, I don't get a vote.

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Speaker 4: I don't really think Ted gets a vote on who

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Speaker 4: they draft or trade for.

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Speaker 3: We leave that to the pros.

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Speaker 1: Well, you get to sign the checks. What was it

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Speaker 1: like signing a.

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Speaker 3: Third signs checks anymore? It's all it's all by a wire.

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Speaker 1: So so that's okay sending a wire. Then thirty four

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Speaker 1: million dollar bonus check to Alex Ovechkin, what does that

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Speaker 1: feel like?

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Speaker 2: Now?

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Speaker 4: It makes for interesting cash planning when you have a

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Speaker 4: big number like that, and we have a number of

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Speaker 4: players who get their salaries and very lompy amounts, but

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Speaker 4: it just you plan your cash around it.

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Speaker 1: Paying out massive bonuses is the cost of competing in

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Speaker 1: pro sports. And when Alex Ovechkin and the Capitals hoisted

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Speaker 1: the Stanley Cup in twenty eighteen, the return on investment

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Speaker 1: was crystal clear. But when the cheering stops, it's back

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Speaker 1: to work. Beyond salaries, Ask CFO, what are your big

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Speaker 1: line items? What are you thinking about on a daily basis?

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Speaker 4: The other big spends for us where I spend a

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Speaker 4: lot of time thinking is really on some of our

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Speaker 4: capital projects as opposed to what day to day spend

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Speaker 4: on whites or whatever. And then, of course the corollary is,

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Speaker 4: if we're going to spend that money, where do we

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Speaker 4: get it, How do we fund it?

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Speaker 3: How do we finance it? Is it from operations? Is

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Speaker 3: it from borrowing?

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Speaker 4: What does our capital stack look like, what is the

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Speaker 4: appropriate amount of leverage?

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Speaker 3: And those sorts of things.

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Speaker 1: Monumental has put a lot of resources into its flagship venue,

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Speaker 1: Capital One Arena. In addition to capitals and Wizards home games,

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Speaker 1: it hosts college sports, concerts, and family shows over two

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Speaker 1: hundred and twenty events a year. Monumental fully owns and

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Speaker 1: operates the facility most of the time. That's an advantage.

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Speaker 2: Basically, during the pandemic art building was shut. That was

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Speaker 2: a very sobering feeling. It wasn't like the bank said, oh,

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Speaker 2: you don't have to pay us the mortgage.

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Speaker 4: Or pros and cons. It's a bit more expensive to

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Speaker 4: own it because often in more public private partnerships, the

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Speaker 4: public entity has some responsibility for maintaining.

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Speaker 3: Because we own it, because we control it, a.

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Speaker 4: Lot more nimble, as much as you could be nimble

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Speaker 4: with a million square foot building, we're much more nimble,

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Speaker 4: owning it and running it ourselves.

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Speaker 5: We've had our best year ever.

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Speaker 2: The concert businesses off the chart, the ben businesses off

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Speaker 2: the chart. We hosted a professional boxing match. It was

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Speaker 2: our best gate in our twenty five year history. We

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Speaker 2: put three million people through the building.

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Speaker 1: The resurgence of live sports and entertainment in the last

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Speaker 1: two years has been accompanied by high infleetion, putting a

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Speaker 1: spotlight on ticket pricing. That's another area that's changed for

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Speaker 1: the CFO, the.

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Speaker 3: Whole ticket pricing process.

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Speaker 4: It used to be very yellow sheet of paper, maybe

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Speaker 4: some numbers around. It was not a lot of science

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Speaker 4: behind it. We're now in the world and have been

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Speaker 4: for many years, as most other similar businesses are. The

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Speaker 4: dynamic pricing, so our pricing for a seat may change

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Speaker 4: hourly if we see demand for that. We will price

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Speaker 4: aisle seats different way that lead to price center seats.

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Speaker 4: We will price seats at the end where the hockey

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Speaker 4: team shoots twice differently than at the end where they

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Speaker 4: shoot once. So the level and the ability to change

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Speaker 4: pricing is dramatic, all driven to maximize revenues.

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Speaker 1: Few revenue streams and sports have as much growth potential

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Speaker 1: as media rights. In twenty twenty two, Monumental acquired full

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Speaker 1: equity ownership of NBC Sports Washington. It plans to rebrand

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Speaker 1: the Regional Sports Network and develop it into a versatile

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Speaker 1: platform for distributing games and other media products.

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Speaker 6: The RSN model, where they get full distribution in a

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Speaker 6: city or a state is.

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Speaker 3: A broken model.

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Speaker 6: Most of these local teams want to control their own consumer,

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Speaker 6: build their own consumer, and control that information and the experience.

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Speaker 2: My background is in digital distribution of content. There's a

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Speaker 2: lot of on trend development happening direct to consumer, and

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Speaker 2: I felt that it was probably a wise thing for

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Speaker 2: us to do to reclaim our rights. We grow our market,

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Speaker 2: we'd have freedom to innovate.

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Speaker 6: What Ted has done in his Monumental team is created

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Speaker 6: this flywheel where you own the team and you own

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Speaker 6: the marks. You owned the logos, you own the building,

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Speaker 6: you own the the RSN, you own the social sites,

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Speaker 6: you own, you own all the content. And if you

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Speaker 6: do that, there's a tremendous flywheel for brands and sponsors

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Speaker 6: as well as the fan experience.

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Speaker 3: I think it will give us the opportunity to add

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Speaker 3: categories UH of product. It will offer us ways.

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Speaker 4: To slice UH the product differently than when we had

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Speaker 4: a single channel and a single way of distributing it.

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Speaker 3: We think having it in house is critical.

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Speaker 2: Peter worked with us and our investment bank at Lion Tree.

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Speaker 2: We said, let's finance it. Let's show that the cash

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Speaker 2: flow can pay down the debt.

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Speaker 5: It dramatically grew our revenues. We were able to do.

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Speaker 2: An additional equity financing and paid down the debt. And

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Speaker 2: so while it looks like a smart strategic move, it's

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Speaker 2: also turned into a very very good value creator top line,

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Speaker 2: bottom line and for overall valuation.

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Speaker 5: As an enterprise.

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Speaker 1: Monumental's valuation could take another leap higher if leonce'spuys the

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Speaker 1: Washington Nationals. The Washington Post reports that he's offered more

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Speaker 1: than two billion dollars for the Major League Baseball team,

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Speaker 1: which is not officially for sale. The purchase of another

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Speaker 1: DC sports franchise would certainly fit the Monumental model.

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Speaker 3: We are definitely in growth mode.

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Speaker 4: We view this as a platform onto which we can

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Speaker 4: add different things. So we see things all the time.

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Speaker 4: People show us things all the time. I am heavily involved,

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Speaker 4: particularly because of the strategy issues and funding issues and

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Speaker 4: ROI calculations.

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Speaker 3: And that sort of thing.

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Speaker 4: We'll never go into anything that's not pretty closely related

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Speaker 4: or most likely not in our region. I think we're

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Speaker 4: very legionally oriented. There are other sports collectives that have

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Speaker 4: properties in different locations. Our good friends at Fenwoy Sports

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Speaker 4: Group in Boston on the Red Sox and the Pittsburgh

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Speaker 4: Penguins and Liverpool tremendous properties with very high name recognition,

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Speaker 4: but don't have the same kind of business opportunity that

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Speaker 4: we have saying closer to home, so we're I think

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Speaker 4: it would be have to be something very special for

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Speaker 4: us to be outside of this region.

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Speaker 1: Have you ever run the numbers on something like that? Though,

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Speaker 1: like a European football soccer team.

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Speaker 4: We have been shown more teams, more EPL teams than

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Speaker 4: I might have imagined could be for sale, but we

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Speaker 4: just couldn't figure out where we would add value.

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Speaker 1: Monumental sports and entertainment has become a towering presence in

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Speaker 1: Washington sports, with the Capitals, the Wizards, and the cities

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Speaker 1: Downtown Sports Arena among the holdings. And while CEO ted

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Speaker 1: Leonsis and CFO Peter Bisha both have a long history

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Speaker 1: with DC as they both graduated from Georgetown University. Bishay

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Speaker 1: started his professional career on Wall Street.

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Speaker 4: Worked for one of the big old houses in New York,

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Speaker 4: the Old Original, not the two thousand and eight bankruptcy

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Speaker 4: Lehman Brothers. Ended up doing a lot of sports related

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Speaker 4: work while I was there, a lot of sports related

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Speaker 4: m and A work buying and selling, advising people on

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Speaker 4: buying and selling sports teams.

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Speaker 3: Did a lot of work with those same owners.

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Speaker 4: Developing financing building arenas, and so became an expert in

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Speaker 4: that area.

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Speaker 1: Bija left finance to work for a Poland's Washington Sports

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Speaker 1: and Entertainment Group in the mid nineteen nineties, joining Monumental

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Speaker 1: at its inception in twenty ten.

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Speaker 3: I'm a sports fan like many people are.

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Speaker 4: So to be the CFO for a couple franchises to

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Speaker 4: be built new arena was a tremendous opportunity from psychic income.

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Speaker 4: In addition to come to work in an arena every day.

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Speaker 1: The arena that Peter Bische comes to work in today

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Speaker 1: has gone through many changes since it's opened in nineteen

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Speaker 1: ninety seven. In the last five years alone, Monumental has

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Speaker 1: invested nearly seventy million dollars in renovations and upgrades.

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Speaker 4: That had aged z not because the building had gotten old,

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Speaker 4: but because the way people consume sports, the way our

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Speaker 4: fans at ten games, what they expect when they come

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Speaker 4: to events has changed pretty dramatically. It used to be

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Speaker 4: you know, fixed seating, sit in a line, buy a beer.

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Speaker 4: And we have found, particularly with our younger fans, they

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Speaker 4: expect a lot more than that. They want something more experiential,

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Speaker 4: they want something more targeted towards them.

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Speaker 1: It wasn't about making it shiny and new. It was

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Speaker 1: about utility.

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Speaker 3: It was about operational and revenue.

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Speaker 1: Of course, some of the enhancements are shiny and new,

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Speaker 1: like the huge center hung.

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Speaker 3: Scoreboard sort of has two purposes.

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Speaker 4: One is information to fans, scores, stats, and that's the

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Speaker 4: middle and video in the upper middle. The other big

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Speaker 4: part of it you can see elsewhere, is advertising sponsorship

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Speaker 4: for us, my sponsors obviously love it.

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Speaker 3: It's bright, it's high depth.

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Speaker 1: Now that you have all of this, how much has

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Speaker 1: your revenue per game in terms of advertising gone up

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Speaker 1: because of all of this.

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Speaker 4: So whenever we do a major spend like this, and

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Speaker 4: this is about ten million dollars for the center hung

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Speaker 4: and all the signage. We of course run an uri,

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Speaker 4: not any typical thing to do, and I think our

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Speaker 4: return on this in terms of incremental dollars, not just

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Speaker 4: existing but incremental.

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Speaker 3: Was about two years.

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Speaker 4: So we added about five million dollars of revenue to

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Speaker 4: get a two year payback.

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Speaker 3: So it's it's a no brainer for us to do.

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Speaker 1: Investing in the fan experience inside the arena qualifies as

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Speaker 1: a no brainer, but Monumental has made other bets with

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Speaker 1: longer odds.

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Speaker 2: I just had a firm belief that the sports industry

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Speaker 2: would continue to grow the value of the teams would

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Speaker 2: continue to grow, and we should invest while everyone else

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Speaker 2: was trying to hoard.

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Speaker 7: We first made an investment in a company called sport

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Speaker 7: Radar back in twenty fifteen, prior to when sports betting

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Speaker 7: was legal in the United States. As we learn more

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Speaker 7: and more about the European markets, how they were regulated,

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Speaker 7: in the success that they've driven, we really became an

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Speaker 7: evangelist in the United States for the legalization of sports betting. Generally,

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Speaker 7: we held hearings on Capitol Hill with sports Radar to

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Speaker 7: advocate for it.

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Speaker 1: A Supreme Court decision in twenty eighteen struck down the

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Speaker 1: federal ban on sports betting, the District of Columbia made

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Speaker 1: it legal in twenty nineteen, and in twenty twenty, Capital

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Speaker 1: One Arena became the first US sports venue to officially

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Speaker 1: open a sports book.

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Speaker 3: It's driven by fan engagement.

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Speaker 4: How do we engage with our fans in ways beyond

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Speaker 4: just sitting at a seat and watching our game.

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Speaker 2: Since we've opened it, there's been almost three hundred million

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Speaker 2: dollars that's been bet downstairs. And it feels like an

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Speaker 2: Apple Genius bar or something. It's very all Bloomberg. It's

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Speaker 2: got terminals everywhere, it's got TV screens everyek, and so

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Speaker 2: I'm very proud of making those kinds of investments when

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Speaker 2: it seemed very dark and dire, and now it's paying off.

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Speaker 6: I think sports betting is going to be dominant here

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Speaker 6: in the US because it's fun and so if Ted,

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Speaker 6: which very smartly put a sports book in his arena,

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Speaker 6: that's another way to connect with your consumer.

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Speaker 3: And I believe that's going to be a very good

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Speaker 3: business to be.

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Speaker 1: Under NBA and NHL rules, the company can't receive revenue

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Speaker 1: directly from betting that's entirely handled by its partner, Caesar's

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Speaker 1: Monumental's profit comes from food and beverage sales, and the

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Speaker 1: venue brings customers to the facility year round.

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Speaker 4: You can come here whether we have an event or not,

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Speaker 4: a game or not eat Wager.

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Speaker 1: In early twenty twenty three, Monumental opened District Eat, a

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Speaker 1: live event theater focused on esports. Is another avenue for

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Speaker 1: fan engagement and another indicator of Monumental's appetite for innovation.

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Speaker 4: We made an investment in that just because we knew

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Speaker 4: that was the that it was not as big in

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Speaker 4: the US as it has been in Asia, but it

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Speaker 4: was common and in a big way.

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Speaker 8: People are really starting to understand that gaming as a

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Speaker 8: platform is looking more like traditional sports entertainment postht pandemic.

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Speaker 7: People want to get back to in person gathering and

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Speaker 7: being more digitally focused, tech savvy, even more aggressive. Doubling

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Speaker 7: down on a lot of our already existing commitments made

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Speaker 7: a lot of sense to us, and I think District

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Speaker 7: fits that mold.

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Speaker 8: Monumental in particular exceptionally brilliant at ensuring they own kind

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Speaker 8: of the vertical revenue streams that can exist with having

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Speaker 8: both facility those in person events, their teams that can

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Speaker 8: compete in that facility as well as other events and

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Speaker 8: opportunities to monetize not just with their team and their competitions.

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Speaker 1: You have any sports NBA team and coffee team, they

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Speaker 1: require their own infrastructure and support. I would imagine what

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Speaker 1: are those inflows and outflows like.

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Speaker 4: So it's not quite on the scale of an NBA team's,

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Speaker 4: at least in this market.

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Speaker 9: But we have players, We draft players, we trade for players,

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Speaker 9: we signed players, and then there's a whole business process

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Speaker 9: around it as well. You have the team side, but

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Speaker 9: they're sponsorship. You look around, you'll see a lot of

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Speaker 9: the same sponsors that have signage.

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Speaker 7: In the building.

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Speaker 3: So it fits in really well with what we're trying to.

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Speaker 1: Do with a Washington Capital Stanley Cup in twenty eighteen

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Speaker 1: and a Washington Mystics WNBA title in twenty nineteen. The

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Speaker 1: Monumental sports and Entertainment family of teams has delivered great

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Speaker 1: moments on the ice and on the court, and as

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Speaker 1: an investment, it's returned solid value.

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Speaker 2: I paid eighty five million dollars for the Capitals. You know,

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Speaker 2: maybe it's a billion and a half plus.

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Speaker 5: I paid three.

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Speaker 2: Hundred and fifty million, four hundred million for the Wizards.

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Speaker 2: Maybe it's four billion. So now these have become growth stocks,

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Speaker 2: if you will.

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Speaker 1: With the exception of corporate giants like Madison Square Garden,

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Speaker 1: it's been rare for US sports organizations to go public,

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Speaker 1: but that might be changing. Do you see a future

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Speaker 1: for Monumental as a public company?

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Speaker 3: Yeah, I think so.

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Speaker 4: I think what we found is the leagues have opened

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Speaker 4: up to new pools of capital. Over the last year

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Speaker 4: or two, both the NBA and NHL have allowed professional

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Speaker 4: investors to come in, not as individual owners, but as

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Speaker 4: fund So that's a whole new pool of capital it

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Speaker 4: didn't exist before. Sort of shows a whole new asset

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Speaker 4: class opening up for professional sports, not just caves, but

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Speaker 4: professional sports enterprises.

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Speaker 2: I think the sophisticated analysts will be looking at this

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Speaker 2: industry and as our revenue start to get in the

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Speaker 2: billions of dollars, yeah, I think that you'll see a

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Speaker 2: wave of companies go public, whether we will or not.

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Speaker 2: There's a big responsibility when you're a public company, and

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Speaker 2: I tell people where a public company already. The scrutiny

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Speaker 2: that you're under and running a sports team is I

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Speaker 2: think much higher than a public company. CEO has to

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Speaker 2: live with we'd be prepared to do it.

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Speaker 5: Just the mark would have to be right.

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Speaker 2: We'd have to emotionally be ready to do something like that.

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Speaker 2: But I think Monumental will be one of the three

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Speaker 2: four five best in class organizations that if the time

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Speaker 2: was there, sure we could go public.

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Speaker 1: For now, Monumental is focused on reaching a milestone one

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Speaker 1: billion dollars in annual revenue. The CFO has confidence his

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Speaker 1: team will get there, but he sees work to do

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Speaker 1: beyond the numbers, to.

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Speaker 4: Do the things that we taught acquisition going public. CANi Lee,

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Speaker 4: we need up our game a little bit. We've we've

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Speaker 4: the business has changed a lot in the last twenty years,

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Speaker 4: but I won't say, at least in my area, we're

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Speaker 4: the most cutting or cutting edge organization from a financial

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Speaker 4: planning and analysis part of it. We need to up

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Speaker 4: our game there. We've uped it in certain areas. I

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Speaker 4: think we can up in my area as well.

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Speaker 3: So I'll put it on me. I won't point fingers

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Speaker 3: in anyone else.

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Speaker 1: Peter bishe has his eyes on the big picture, not

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Speaker 1: just charging forward, but seeing around corners. I asked him

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Speaker 1: what that future looks like. What is the opportunity for

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Speaker 1: Monumental in the next five years that most excites.

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Speaker 4: You an acquisition to be personally CFO of an NBA team,

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Speaker 4: CFO of an nhlteam, CFO of a wnbaight, CFO of

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Speaker 4: another major league team, that would be that would be

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Speaker 4: pretty exciting. So personally, I think also taking advantage of

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Speaker 4: the platform, proving the case that we could plug something

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Speaker 4: in and have it create value beyond just whatever.

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Speaker 3: We paid for it.

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Speaker 4: I think that would be exciting as well, sort of

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Speaker 4: proof of concept that the platform has value and can

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Speaker 4: create value.

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Speaker 3: I think that would be exciting as well.

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Speaker 1: About what worries you? What are challenges that the organization

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Speaker 1: faces in the next five years that keep you up

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Speaker 1: at night?

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Speaker 3: I suppose the corollary to what I said earlier was.

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Speaker 4: What if we're wrong, what if an acquisition is not

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Speaker 4: value creating as we hoped. I don't worry a lot

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Speaker 4: about that because I really do believe and what we're

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Speaker 4: trying to accomplish.

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Speaker 1: What is the skill set or area of knowledge that

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Speaker 1: you think is going to be most useful in your

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Speaker 1: role as CFO in the next five years.

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Speaker 4: I think for me it will be understanding our consumer

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Speaker 4: that's changed so dramatically over the last decade, how they

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Speaker 4: consume us, how they want to consume us, how.

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Speaker 3: We get to them and reach them.

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Speaker 4: It's the demand on that is much greater than it's

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Speaker 4: ever banned because they have so many other distractions. So

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Speaker 4: even for the CFO, understanding what our consumer wants, what

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Speaker 4: our customer wants, it's changed. How we deliver its changed

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Speaker 4: will change. I think I need to be up to

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Speaker 4: speed on that.

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Speaker 1: If someone got promoted to CFO today, what would your advice.

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Speaker 2: Be for them?

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Speaker 3: I think this is probably typical. Know the whole business.

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Speaker 4: It's easy that it can be easy to sit in

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Speaker 4: your office, look at your spreadsheets, look at your data,

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Speaker 4: and sort of live in that world.

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Speaker 3: If you're going to be a good CFO, a.

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Speaker 4: Good advisor, and the senior team a good advisor to

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Speaker 4: the chairman, you need to know a lot of stuff

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Speaker 4: beyond just the numbers coming out and seeing how things work,

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Speaker 4: seeing how the fans are moving around, seeing how their

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Speaker 4: experience in the building, going into our studios and seeing

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Speaker 4: how that's working going into the district e. I think

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Speaker 4: appreciating that back of house kind of stuff, the real

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Speaker 4: nuts and bolts of the operation. I think is really

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Speaker 4: really important, and I suspect that's true, and almost any

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Speaker 4: business that the CFO needs.

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Speaker 3: To have a very broad understanding.

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Speaker 4: It's not just about debit's and credits and digits and

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Speaker 4: dollar signs.

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Speaker 1: I'm Keiley Liones. This is Bloomberg sp