If You Spend It, Will They Come?

Jerry Colangelo got a crash course in baseball economics. Time will tell what his grade will be.

"And so I took that into my discussions with the other free agents we were able to sign, and they were all willing to do it. And so it was kind of a collaborative effort to help us deal with the change we had to make under the circumstances."

The team agreed to pay Johnson $52.4 million over 4 years--but $22.4 million will be paid after the contract has run its course. Pitcher Todd Stottlemyre agreed to defer half of his $32 million deal, and outfielder Steve Finley half of his $21.5 million pact. The Diamondbacks also signed free-agent pitchers Armando Reynoso ($5.5 million) and Greg Swindell ($5.7 million) and utility player Greg Colbrunn ($1.8 million).

The deferments to Johnson, Stottlemyre and Finley are in addition to previous deferred commitments of $12.5 million for third baseman Matt Williams and $25 million for outfielder Bernard Gilkey.

The free-agent signings boosted the team's actual payroll to approximately $42 million for the upcoming season--up from $32.5 million last year. The payroll would be closer to $62 million without the deferments.

If one considers the Diamondbacks' payroll to be really $62 million this year, the team appears to be in an excellent position to make the playoffs.

Last season, of the 12 teams with payrolls exceeding $48 million, eight went to the playoffs, and all but one had a winning record. Only three teams--San Francisco (89-74), St. Louis (83-79) and Toronto (88-74)--had winning records with payrolls under $48 million. And the Giants ($47.9 million) and Cardinals ($47.6 million) were just under the $48 million mark.

Analysts guess it will take a payroll of at least $50 million this year for a team to make the playoffs. If that assumption is correct, more than half of the 30 major league teams already are out of the running.

Colangelo's spending spree has drawn fire from some owners and from baseball writers. A Denver Post sports columnist blistered Colangelo in a January story calling him "the crazy uncle of baseball owners."

The Post reported that one baseball executive who demanded anonymity called Colangelo "a time bomb." Others openly suggested it was only a matter of time before the Diamondbacks, already plagued with stadium-cost overruns, fell into financial straits.

Colangelo brushes off such criticism, saying he has the experience to negotiate rough seas.

"I would like to think that after 32 years in the industry, that [I have] a handle on how you do operate, and how you do operate successfully," he says.

But nearly all of that experience has come in professional basketball, which operates under far different rules than baseball, where a strong players' union has repelled attempts to impose a salary cap. As a result, player contracts have soared.

The growing disparity between rich and poor teams and the escalating salaries could lead to another stalemate between owners and players after the 2001 season. That spat could lead to another work stoppage, which would inevitably anger fans and reduce attendance.

"Baseball is a real challenge, let me tell you," Colangelo says.

Being competitive on the field is just a means to an end. Colangelo's top priorities are protecting the huge private investment in the Diamondbacks, turning a profit, and, ultimately, creating a fortune for himself.

Profits can be made without championships. But in baseball, it doesn't appear they can be made without spending to field at least a contending team. The alternative is to spend next to nothing, let the team get creamed, and pick up a few million dollars from the large market teams at the end of the year, an option pursued by some teams like Montreal ($8.3 million payroll last year), but one that Arizonans would never embrace.

It's up to Colangelo to plot the course. Although frequently referred to as the owner of the Diamondbacks, he isn't. In fact, Colangelo owns less than 1 percent of the team.

His power comes as the managing general partner of a limited partnership primarily made up of such Arizona powerhouses as Viad Corporation, Banc One Corporation, Wells Fargo Bank, BankAmerica, America West Airlines, Discount Tire, Swift Transportation, Tosco Corp. (which owns Circle K), El Dorado Investments (a subsidiary of Pinnacle West Capital Corporation), Kenilworth Investments (a company owned by Nike chairman Phil Knight), Pulitzer Publishing Company (owner of KTAR and KMVP radio), Finova Corp. and Central Newspapers Inc., publisher of the Arizona Republic.

The limited partners have put up 99 percent of the money for the team and the Diamondbacks' share of ballpark construction costs.

Colangelo, along with Phoenix shopping-mall developer Eddie Lynch (who leads an $8.5 million investment group in the team), are the key members of AZPB I Incorporated, which manages the funds invested by the limited partners. Colangelo has controlling interest in AZPB. Joining Colangelo and Lynch on the board of AZPB are accountants Richard Dozer and Thomas Harris.

Colangelo and Lynch have each contributed about $1 million to the partnership, according to Team Marketing Report, a Chicago sports-research company. Despite his relatively small investment, the limited partners have given complete control of the Diamondbacks to Colangelo.

Along with control comes a nice salary--at least $2 million a year, or 3 percent of gross revenue, whichever is greater.

But the salary is chump change compared to what Colangelo stands to make if the Diamondbacks are profitable over time.

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