Wednesday, August 15, 2012

Safety net

We're going to read and hear a lot of happy talk about new Padres ownership in coming weeks, assuming that major league owners approve the O'Malley/Fowler/Mickelson group, which I'm told also includes other significant investors not yet mentioned in the maintstream press. It's my hope that all of the happy talk is justified. Take this to the bank: If Ron Fowler's Padres teams are 80 percent as entertaining as his San Diego Sockers teams, we're headed for a fun ride.

No doubt the new owners will talk about "building within," about  the need for a "strong farm system," about "wanting to win," and about being "willing to spend if it makes sense."

Bulletin: All owners say this stuff.

New owners grab headlines by spending money on ballplayers, too. Think back, and it happened here. Yes, boys and girls, there was a time when John Moores was a sainted figure in San Diego and not only because he gave millions of dollars to hospitals, San Diego Diego State and local charities.

Padres fans loved the guy, never more so, as it turned out, than when he doubled the player payroll within two years of buying the team in late 1994 and by October 1996 the Padres were in the playoffs for the first time since 1984. The spike in spending extended to marketing and community relations. True, Moores had extra incentive to excite San Diego's taxpayers about their local baseball club. He wanted a downtown ballpark built as part of a gigantic real-estate play. To get the ballpark built, he needed voters' support. In the end he got $300 million in public money.

If there's a real-estate play tied to this purchase of the Padres, it's been kept quiet. Does that mean there's less incentive now than in the mid-1990s for new ownership to invest ahead of the club's revenues? I don't know. But in one big aspect, the baseball industry isn't the same as it was in 1994. The revenue pie chart for teams like the Padres has changed for the better, thanks in part to Moores, who admired the NFL's business model and tirelessly pushed for more revenue-sharing within MLB. (Moores also sought a larger postseason, a wish that was granted this year with the addition of one wild-card berth per league.)

This remains an under-appreciated fact: The Padres are getting far more financial aid from within the industry than they did in Moores's first 10 years as owner. From what I'm told, the total annual assistance is $60-75 million, which includes not only revenue sharing from other teams but monies from MLB's wildly successful advanced media ventures. No one will confuse me with Warren Buffett. But if I wanted to buy a small-market baseball team, I'd probably be more interested if I knew that regardless of whether the team succeeded on the field, I'd still get scores of millions of dollars in revenue from outside sources. The Padres, in that sense, have a safety net underneath them that they didn't have when Moores bought the team.

6 comments:

  1. According to a recent interview i heard on the radio Phil Mickelson (the interview was not with Phil but with somebody who sat down with Phil at a recent golf event)says he thinks the payroll could get close to 100 million. That sounded like a lofty goal until i saw your 60 to 75 million dollar number.

    This team is not that far away from being competitive if we have anything close to that kind of payroll in the next few years.

    Get our pitchers healthy and add 1 more bat in the middle of the line-up and we are right there.

    This is the line up i would like to see in September

    Forsythe ss
    Gyrko 2b
    Headley 3b
    Quentin lf
    Grandahl c
    Alonso 1b
    Maybin cf
    Amarista rf

    With the flexibility of Amarista and Forsythe positions would vary of course but hopefully they bring Gyrko up, plant him at 2nd base and play him every day.

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    1. The great thing about the list you have above is that it doesn't require any significant increase in payroll! And that list could happen, except maybe adding a dependable hitter in right fielder. Or not, and spending money--wisely--on more pitching.

      I too heard Tod Leonard on the radio talking about Michelson saying the payroll could get to $100MM fairly easily.

      Exciting times are ahead.

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  2. Ipro: The NL West isn't intimidating. Teams can make big jumps fast. Different from the AL East in that regard. One caveat: It's one thing to spend money. It's another thing to spend it to good effect. (Not trying to be a downer. I see why you're excited.)

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  3. I get what you are saying. I am a realist and I like the direction the Padres are heading with their younger players.

    I'm not saying we should go out and sign Jason Werth to 7 year 126 million dollar contract. i also understand that we still wont be contenders for the tier one free agents aka Josh Hamilton.

    It is nice to know however that if we do decide that both Headley and Gyrko can exist in the same line-up, we may have the payroll flexibility to buy out Headley's two remaining arbitration years and offer him a 3 or 4 year deal.

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  4. Anyone that comes in saying "we're not rebuilding, we're building" (Mickelson) gets me excited.
    I really don't think we're that far away. We probably need some type of rotation anchor for next year (Dempster, maybe?). And there's always the hope that we can get someone to stabilize SS.

    Nick Swisher's a free agent. He would look great in blue & white . . . or brown & yellow (whatever it's going to be).

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  5. A bit off-topic, but just barely.

    Tom, on twitter, when talking about the $200 of TV money that went into the deal, I asked "didn't he [Moores] get half of that, as a 50.something% owner?" Meaning, the 49% owners would get 49% of that, or $98MM, with Moores getting $102MM.

    You replied "I'm pretty sure he gets all of that and pro-rated on the payments from new ownership."

    The "he gets all of that" means he gets all $200MM. But how does that make sense for the other owners? If true, the $800MM sale price ($600MM for the team and $200MM for the Fox deal) wasn't divided according to how much each member owned, which seems odd in the extreme.

    I'm interested because, in the case of Fowler and any other Moorad group guys who are also part of this new deal, they take their earnings for selling the team and plow it right back into buying their shares--either by simply not selling (thereby lowering the cash outlay for the incoming group), or by buying new shares from the new group. In any case, some potentially significant amount of money essentially stays inside the organization, where it can be used for good things.

    The "pro-rated on the payments from new ownership" part lost me. Pro-rated based on what?

    Thanks, always appreciate your insights and inside scoop.

    @lonndoggie

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