We covered the rumblings on the third natural question for the New York Islanders sale. Now how about the first one: Who are these guys?
The early reports were basically, "a former Caps part-owner and a businessman guy." So that's a start.
Newsday has the quickest summation:
Ledecky was chairman of Lincoln Holdings from 1999-2001, which held interests in the Caps and the NBA's Washington Wizards. Malkin is chairman of UK-based Value Retail, a syndicator of high-end European retail outlets.
Upon some delicious Googling, they are old college buddies who have each found success as business owner/investors.
One was a partner in the Capitals with Ted Leonsis, who still owns the team after they parted amicably. The other is based in London and runs shopping centers that offer goods 98 percent of you don't, or at least really shouldn't be, spending your paycheck on.
Jonathan Ledecky, Conglomerizer
Ledecky's previous foray into sports ownership began with a successful partnership known as Lincoln Holdings with Capitals majority owner Leonsis. It ended when he sold that stake to Leonsis so that he could pursue other sports interests:
Ledecky, who founded a number of businesses including U.S. Office Products, reportedly paid $60 million for his initial stake in Lincoln.
"I have decided to purchase Jon's stake in Lincoln Holdings because it gives the partnership continuity," Leonsis says. "He has a desire to pursue other business and sports opportunities and this transaction will provide him with the capital in which to do so."
Alas, it appears Ledecky wasn't able to successfully win bids on a few teams in a few different sports, including by various reports the Montreal Canadiens, Oakland A's and Los Angeles Dodgers. These ownership clubs, you know, they are hard to get into. Just ask Andrew Barroway.
A 2013 profile of Ledecky by Teri Buhl, who bills her site as "smashmouth investigative journalism" (we just don't have enough smashmouth these days, amirite?), shows Ledecky involved in all sorts of business pursuits:
A 90′s investment manager who made a killing buying small independent companies in the same business line and stuffing them into a public company is back. Harvard alumni Jonathan Ledecky has just sealed a deal creating the first SPAC in the mobile advertising space.
Last year Ledecky started buying video gaming companies but quickly branched out from trying to score off a Zynga like play. Then he found this ad executive Robert Regular and wooed him into allowing his private advertising exchange company, Kitara Media, to be part of the SPAC. Regular got a nice salary contract and ten million in the SPAC’s stock in return for agreeing to be Ledecky’s CEO.
This is good news for budding start-up guys in mobile advertising because it means there are deep pockets out their looking to buy your company if you fit with the SPAC’s strategy.
BUT WHAT KIND OF NEWS IS IT FOR BUDDING ISLANDERS FAN GUYS, EH?!
Ledecky has liked to try things, and trying those things have enabled his dabbling in sports:
Based on the innovative philosophy of consolidating related small businesses to capitalize on economies of scale, the "rollup" company was netting $4 billion within three years and became the fastest company ever to hit the Fortune 500.
Ledecky has made headlines in national newspapers and magazines and spawned a spate of business school case studies, some documenting his successes, others his failures.
These successes have afforded Ledecky the opportunity to indulge his life-long love of sports. He has owned a minority share in the professional hockey and basketball franchises of Washington, D.C. and made plays for a few other professional sports teams, attempting to lure a baseball team to the nation’s capital.
In any case, as Eric Hornick pointed out, Ledecky and Malkin go way back. To college. And with a sense of philanthropy noted in this 2004 story:
In his 25th reunion class report, Ledecky relates how he first became interested in philanthropy. The grandfather of Scott D. Malkin ’80, Ledecky’s upperclass roommate, told Ledecky as a first-year that he wished he had given away his money earlier, so he could see the fruits of his philanthropy. Ledecky writes that he has taken that advice to heart.
Giving away his money, Ledecky says, "is God’s work in a way for me. I think I went through a lot of good stuff, a lot of bad stuff. This last time through I really kind of found myself."
Scott Malkin, Fine Goods Outlet Maker
And what about Malkin, who has reportedly lived most of his post-Harvard life in London?
Malkin is seen, and sees himself, as a serious entrepreneur continuing a family tradition:
I feel like I’m doing what my father does and my brother does and what my grandfather and great-grandfather did [as real estate mavens]. … I saw my father embrace change successfully [first as a lawyer, then in properties]. … I remember my grandfather on his deathbed talking about the family business [but] describing a life that had nothing to do with the life he had led. I thought, I’m going to follow the example of his actions, rather than his words. … For me the entrepreneurial existence is largely built around recognizing that you have to create value every day or you don’t have a reason to exist.
Malkin's key endeavor is director and chairman of Value Retail, a European based company that owns luxury outlet shopping centers in Europe and Asia -- or as he puts it:
"a hybrid of real estate and retail [...but] with no real estate income. [There’s] a marketing fee, some service charges, [and] maintenance charges. Essentially, the structure is: we have licensing arrangements with brands who take the space and pay a royalty."
Yes, there are evidently "luxury" outlets with Prada and what-not. It's true! See:
Malkin gave the example of a fashion journalist as their ideal costumer as this person knows what is fashion forward and knows the different high end and low end, but does not have the financial income to afford luxury clothing, so they shop at outlets.
Additionally, 70 percent of shoppers at Value Retail outlets come from outside the European Union. Surprisingly, Malkin said, "when these tourist shoppers are in their home country, they are full priced shopper."
In a sense, this particular business of Malkin's preys on suckers, which makes him the perfect candidate to own a sports team.
His business also confuses reluctant old European bureaucrats, which is fun (and also appropriate for sports owners):
The problem is also one of definition. Government planning authorities, not generally known for their love of shopping centres, can't seem to get their head around a retail concept where brand manufacturers run the shops and which, superficially, resembles a shopping centre, but in reality is more like a quality department store.
Anyway, given their history, both come from money and know how to seize on profitable business opportunities, while Ledecky in particular has a clear thirst for owning sports teams. Here's to hoping both continue, successfully.