Winning at any Cost

How the Diamondbacks used huge debts to level the playing field of pro baseball.

It happened in Seattle.

And it happened in Houston.

But it didn't happen in Phoenix.

The eagerly anticipated Randy Johnson Effect never materialized at Bank One Ballpark.

Yes, Johnson racked up the third most strikeouts in single-season history this year en route to winning 21 games in the regular season and three so far in the postseason, including his stellar shutout of the New York Yankees in Game 2 of the World Series.

But strikeouts and wins were expected.

The phenomenon Diamondbacks managing partner Jerry Colangelo hoped to see when he signed Johnson to a $52.4 million contract in late 1998 was a sharp increase in attendance every time the legendary lefthander took the mound.

That's what happened when Johnson pitched for the Seattle Mariners and the Houston Astros. And that's what Colangelo expected would occur in Phoenix.

Colangelo was wrong.

"The Randy Johnson phenomena in Seattle and Houston never happened. It just didn't translate here," Colangelo says.

"So, here I am learning on the job, so to speak."

Colangelo's miscalculation of the financial impact of Randy Johnson wouldn't be so bad if the mistake was simply isolated to one player.

Unfortunately for the Diamondbacks, Arizona fans have proved to be a far tougher sell than anticipated. World Series ticket fever aside, interest in the Diamondbacks has steadily declined during the team's first four years. Attendance this year fell to 2.7 million, down from 3.6 million in 1998 when the team lost 97 games.

Arizona's anemic fan support stunned the Diamondbacks' top brass, which counted heavily on huge crowds packing the house to feed the bulging salaries of stars such as Johnson, Curt Schilling, Matt Williams, Steve Finley, Reggie Sanders, Jay Bell and Luis Gonzalez.

The Diamondbacks' management, however, badly misread the Phoenix market. They equated fielding a high-paid, winning team with generating a fat bankroll.

Their financial plan backfired long ago. And there is little Colangelo can do about it now.

Even if the Diamondbacks win the World Series, the team is in such a deep hole it will take years to dig out.

Already, Colangelo is working on yet another business plan -- it will be at least the third since the team's inception.

The first was a go-slow approach focusing on young, lower-paid players, and it actually turned a profit. But tellingly, the conservative approach was dumped after one year for a win now, pay later game plan. The team won. But losses soared. And attendance lagged.

The 61-year-old Colangelo won't say what his new strategy entails, other than it spans 10 years and it must solve a huge problem.

"I don't think there is ever going to be a cash-flow solution that we are going to draw so many people and average such a high ticket price that it is going to allow you to reduce all your debt, pay all your bills and have a competitive team and live lovingly ever after," he says.

"That will never happen."

Then what is the ultimate solution?

"There needs to be an adjustment in the economic structure of baseball first," Colangelo says. "Obviously, if there were salary caps and there was an even playing field, I like my chances against anyone."

Imposing salary caps won't be easy. The powerful Major League Baseball Players Association is steadfast against salary caps, setting the stage for a possible long and very bitter lockout when the players' agreement with owners expires at the conclusion of the World Series.

Going head-to-head with the players over salary caps is a high-risk strategy for owners.

Fans will likely have little patience for another prolonged baseball work stoppage such as the one that led to the cancellation of the 1994 World Series. Yet without some sort of rein on runaway salaries, big-market teams like the New York Yankees will continue to have a huge economic advantage over small-market expansion teams like Arizona.

The Yankees were purchased by a partnership headed by George Steinbrenner for $10 million in 1973. The team owes no money on Yankee Stadium, which was built in 1923 and renovated in 1975. The Yankees' payroll this season topped $114 million.

Conversely, the Diamondbacks paid a $130 million expansion fee to Major League Baseball and were forced to forgo $25 million in national television revenue during their first five years. The team also is saddled with a $127 million debt stemming from cost overruns to build the ballpark, which the team operates at a cost of $10 million a year. Diamondbacks salaries this season totaled $71.5 million, although players deferred $30 million for future years.

"Look at the disparity between these two World Series teams," Colangelo says. "Twenty million people versus 3.3 million in market size. A team that gets close to $100 million a year in local television and cable versus our $18 million. Ticket pricing that is enormously disparate. It's apples and oranges."

Colangelo concluded there was only one option that would allow his team a shot at an elusive World Series ring, while still protecting a $350 million investment in the team.

Debt. Lots and lots of debt.

At some point the Diamondbacks will face a day of reckoning.

It could get ugly.

"They are going to have an absolute disaster," says Clark Griffith, a former baseball executive with the Minnesota Twins who is now a business attorney. "They are going to have to shed salaries."

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