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March 28, 2002

Prospectus Feature

.Baseball In Seattle

by Derek Zumsteg

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The Seattle Mariners are currently one of baseball's most successful franchises, playing in a beautiful, expensive stadium they didn't pay for, and fielding a well-funded team that won 116 games last season. According to Bud Selig's Guaranteed Accurate 2001 Financial Statement, they paid $18.8 million into the revenue sharing pool, a figure that matched the Florida Marlins' withdrawal from same. They still cleared a cool $14.8 million in profits that the best accountants baseball could hire couldn't cook off the books.

This is an astonishing turnaround for a franchise that as late as 1995 had owners who claimed they would have to move the team to Tampa Bay, a city with a smaller metro population than Seattle (and now, with a team that claimed $21 million in revenue-sharing money last year). For a decade, the Mariners suffered under one of the most deceitful poor-mouthing owners in all of baseball, George Argyros, who ran the team on a shoestring, alienated fans, and cried poor while swimming in money vaults that made Scrooge McDuck quack with envy.

Argyros bought into the Mariners in 1981, purchasing an 80% share for $10.5 million. As part of his takeover, he traded Ticketmaster (then a two-man company with $1 million in revenues) the exclusive contract to sell Mariners tickets in exchange for a 50% share in the Ticketmaster NW franchise. Argyros constantly bad-mouthed his own product, and refused to spend money on players or player development. After just two years, Peter Gammons came after him with a hatchet ("Blame the Owner for Mariners' Woes," The Sporting News, 1983). Argyros threatened to move the team, got a new, even more advantageous lease negotiated, and all the while he booked profits on the team most years.

When he sold the team in 1989 to Jeff Smulyan, his original 80% share of the team made him $50 million, approximately a 20% annual increase in value. Ticketmaster had grown into a dominant company with $600 million in revenue, and even without being able to untangle Ticketmaster's corporate history, I think it's safe to say that Argyros made a huge sum of money there, too.

From 1990 to the middle 1992 season, Smulyan did the same whining about the team that Argyros had done, and made a more serious attempt to move it out of town. At the same time, manager Jim Lefebvre had started to bring the team out of the cellar, a welcome change after years of the worst managers in the game, from the insane Maury Wills to utterly apathetic Dick WilliamsKen Griffey Jr. came up and became the team's best player, and they fielded one of the league's best pitching staffs. In 1991, the Mariners had the first .500 season in their 14-year history.

Even weirder, fans started to turn out. After 14 years pioneering the kind of anti-marketing baseball pushes today, the team won and fans came to one of ugliest multi-purpose stadiums in the league to watch games and cheer their team.

Jim Lefebvre was promptly fired for his success, the team hired the cheapest guy they could find in coach Bill Plummer, and immediately slipped 19 games to finish 64-98. Fans stayed home. At midseason, Smulyan sold the team for an appraised value of $100 million (his annual return on investment: about 20%) to a group of local owners. The Baseball Club of Seattle was led by John Ellis, a local power company's former head, and largely composed of Nintendo money (some of it non-voting, in order to satisfy xenophobes). They bought the Mariners and held an elaborate second Opening Day when they took possession.

As part of their bid to buy the team, they also ponied up $25 million in money to be spent on the team. They hired a name manager, one recently disgraced for getting into a fistfight with one of his own pitchers, spent to hire free agents like pitcher Chris Bosio, and went 82-80. Fans came back, but then--stop me if this is getting old--stayed away the next year when they went 49-63 in the strike-shortened season.

It was 1995 that changed everything. The Mariners won the AL West in dramatic fashion, as they ran down a dying Angels team, coming back from 13 games back to tie for the division and then thrash the Angels in a one-game playoff. They lost two games to the hated Yankees and then won three straight at home in front of rabid sellout crowds to advance to the ALCS. During this run, the ballot measure for the new stadium went to the polls and was defeated by a hairline margin. Absentee ballots ran strongly negative, and polls showed that had they been cast closer to the election, the stadium would likely have passed. Under great pressure, a new measure with a slightly different funding mechanism was passed.

The Mariners have caused some trouble since then, initially whining about costs like police to direct traffic, paying their upfront $45 million almost entirely by selling naming rights, bitterly disputing the responsibility and nature of the way-over-$100 million cost overruns on Safeco Field--the key dispute being whether they were "unanticipated capital costs" or "cost overruns," one of which the owners had promised to cover. In 1999, they hired Pat Gillick to replace long-time bad GM Woody Woodard, a fine choice for where the Mariners were on the success cycle, and he finally found free agents and made the trades to put winning teams on the field. Safeco Field has been packed ever since.

There are two important lessons to be learned from the history of the Mariners. First, from the Argyros years: owners lie and make tons and tons of money doing so. During those years, revenue sharing such as we saw in the last CBA would have made millions of extra dollars a year as a reward for stifling ticket sales and local revenue streams. Would it have been right for Argyros to have been taken that money from their expansion brothers the Blue Jays, who invested wisely and put a successful and profitable team on the field?

Second, the distinction between large and small market is pretty much irrelevant. The Mariners were for much of their history regarded as a small-market team that couldn't survive, much like the Indians. Once they invested in their on-field product, their new owners found their investment returned many times over, as fans filled a crappy stadium to see a good team, and the Mariners became a fearsome high-revenue franchise. Wise investment made for winning, which made for new revenue streams.

The cure for hopeless franchises is not to reward them for driving themselves into the ground. It's to encourage them, as the Mariners have done, to right their ship and set a better course. It's helpful to view all of Bud Selig's deceitful proposals in this light: would they have helped the Mariners become competitive earlier, or would they have allowed a lamprey owner like Argyros to make even more money?

Related Content:  Mariners,  Managers Of The Year,  Hatchet,  Money,  Team

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