If You Spend It, Will They Come?

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The original bond documents obtained by New Times contained a provision requiring the team to submit quarterly audited financial statements to the IDA board. Those statements would have been accessible to the public.

But IDA records show that the team and the IDA board agreed to remove this stipulation in December. The reason, according to minutes of the December IDA board meeting: "The Ballpark and the Authority do not want unnecessary information on file because of the possibility of public records request."

IDA board president Victor Flores says the board didn't need to see the team's financial reports because the city was well-shielded from potential liability in the event of a default.

"Our only concern was to make sure the authority was protected," he says. "Whether somebody is making a ton of money or a little bit is really not my concern."

Making a ton of money is certainly a concern of Colangelo's. After lengthy discussions with his staff, Colangelo says he decided his only option to protect the massive investment in the Diamondbacks was to "go out and compete, and compete now."

But how?
"The game plan was very simply this: If we went out to sign some free agents what would you do? It would be pitching. Because pitching would be the shortcut to becoming competitive as fast as we could. That speeds up the process considerably.

"Pitching and defense win in baseball. That can carry you even if you are short offensively. So in my first meeting with Randy Johnson, who was the first free agent we spoke to, one of his first questions was, 'Well, if I did decide to sign with you, how are we going to get competitive?'

"And my reaction was, 'You could help make it happen a lot sooner.'"
Colangelo's "creative financing" plan emerged.
"Let's assume we negotiated a deal that was a four-year deal, and you were willing to take a payout over eight years. I said if I got three or four or five other players to do the same thing, we could get other players, and we could get competitive a lot sooner," Colangelo explains.

"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.

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John Dougherty
Contact: John Dougherty