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October 16, 2012

Western Front

The Year Baseball Went Missing in San Diego

by Geoff Young

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The Padres had a strange 2012, even by their standards. The strangeness wasn't limited to on-field action. Ongoing ownership and television contract issues often overshadowed how the team performed in games.

It's all a bit convoluted, so we'll go over some background information before looking at the 2012 timeline and what effect the events of this year will have on the franchise and the city of San Diego in the short- and long-term.

Background
In February 2009, Jeff Moorad reached an agreement to buy the Padres from John Moores—who had owned the club since December 1994—for somewhere north of $500 million. Moorad was a former player agent who later became CEO of the Arizona Diamondbacks before resigning his post there to buy the Padres with “the blessings of Major League Baseball Commissioner Bud Selig and Bob DuPuy, Major League Baseball's president and chief operating officer.” The terms of that agreement gave Moorad's group—which included former NFL quarterback Troy Aikman, among others—“as long as five years to buy out Moores' controlling interest” of the Padres, while calling for Moores to remain as the club's representative at owners meetings until the transaction was completed.

In October 2009, Moorad fired Kevin Towers, who had served as Padres general manager since being hired to replace Randy Smith in November 1995. At the time of his dismissal, Towers was the longest-tenured general manager in baseball. Moorad indicated that although the decision to part ways with the popular and successful Towers was not easy, it was necessary to move forward with the new owner's vision for the franchise:

We're interested in approaching the business in all aspects with a strategic mindset, one that involves the idea of putting our thoughts and plans together, both short and long term.

Moorad hired former Red Sox assistant general manager Jed Hoyer three weeks later to help bring that vision to fruition. Hoyer was the Padres GM for two years and two days, before he left to join the Cubs in the same capacity under his former boss in Boston, Theo Epstein.

During his abbreviated tenure with the Padres, Hoyer made many positive moves. The most notable move was his December 2010 trade of hometown hero Adrian Gonzalez—whose contract would expire at the end of 2011 and whose price on the free market would be too steep for the financially-challenged Padres—to the Red Sox for Reymond Fuentes, Casey Kelly, Eric Patterson, and Anthony Rizzo.

When Hoyer left San Diego at the end of October 2011, Moorad replaced him with Josh Byrnes, who had served—and served well—as GM under Moorad in Arizona after previously working with Hoyer under Epstein in Boston. If the situation isn't feeling incestuous enough for you yet, consider that when the Diamondbacks fired Byrnes in July 2010, his successor was Towers.

Byrnes originally came to the Padres in December 2010 as senior vice president of baseball operations. Hoyer relished the thought of working with his former colleague again:

I'm excited to work with Josh again. He's one of the best baseball minds in the game and will be a terrific addition to our front office.

Terrific and, in light of Hoyer's departure, necessary. Byrnes promptly made several moves of his own:

Beyond the general turmoil the moves outlined thus far created within the organization, there is a fascinating dynamic at work:

  • Moorad had hired Byrnes to replace Jed Hoyer, who accepted the same position with the Cubs under his former boss in Boston, Theo Epstein.
  • Rizzo had come to San Diego in the deal that sent Adrian Gonzalez to the Red Sox.
  • Hoyer and Epstein had drafted Rizzo while they worked for the Red Sox.
  • Byrnes had traded Quentin away while serving as GM for the Diamondbacks under Moorad, later expressing regret at giving up on the young slugger too soon.

The Rizzo/Cashner deal culminated a month's worth of activity that saw Byrnes retool his newly inherited roster. It happened on a Friday. After the weekend, things got interesting.

2012 Timeline
Monday, January 9

Padres chairman John Moores announced that his sale of the franchise to CEO Jeff Moorad was nearly complete. Moorad would make “his final payment subject to the approval of three-quarters of Major League Baseball ownership” in a meeting to be held that Thursday. According to Moores:

It's 100 percent done. I couldn't be more pleased. Jeff's remaining payment of all cash went into escrow in mid-December. I remain impressed that Jeff has done everything he said he would do.

The meeting and approval seemed to be a formality.

Thursday, January 12
When the meeting happened, rather than voting on Moorad's purchase of the Padres, owners instead moved to delay approval. Moores, who later would benefit greatly from this delay, did not appreciate it at the time. Selig's decision to pull the sale from the agenda “upset Moores so much that he was the only one of the 30 owners to vote against Selig's two-year contract extension.”

What on Monday was supposed to be “100 percent done” on Thursday was in limbo. Selig cited a need “to get more clarity and technical information.”

Moorad didn't seem surprised and expressed a desire to work within the process to get matters resolved. According to Selig:

There's no hidden agenda here. There's nothing else. There were a lot of economic concerns. The most important thing that we do is bringing in new owners, so we have really become very, very fastidious about the economics of who can make it. And I'm not suggesting there were any negatives. There were just questions that we didn't have time to answer here.

How much of this sudden interest in due diligence was caused by the McCourt saga two hours to the north in Los Angeles and how much to the fact that there was “no hidden agenda” is anyone's guess. Whatever the case, Moores continued to own a franchise he did not wish to own.

Friday, March 9
The Padres announced that Moorad had withdrawn a request to complete acquisition of the franchise “in order to expedite the approval of the club's television broadcasting agreement.” Moorad, who still had two years in which to complete the purchase, attempted to cast this development in a positive light:

With Opening Day less than one month away, [chairman] John Moores and I believe our top priority is to ensure that Padres fans will be able to watch broadcasts of what we believe is an exciting baseball team.

The sentiment seems noble enough. After all, what team wouldn't want its fans to be able to watch broadcasts of games, regardless of how exciting they may or may not be?

Saturday, March 17
Meanwhile, a deal to broadcast Padres games into the homes of San Diegans wasn't reached until two weeks before Opening Day. Fox Sports San Diego (FSSD) launched to select cable providers that were able to reach an agreement with the new channel, broadcasting an exhibition game against the Royals on a “temporary channel.” The assumption was that other providers soon would cut their own deals with FSSD so that Padres fans could watch their team play on television.

This didn't happen in time for the season's first game, when an estimated 42 percent of housholds in San Diego County were denied television access. Fans were assured that deals would get done soon, but the number of households that couldn't watch Padres games at home never decreased.

In June, FSSD launched a campaign attacking one of San Diego's largest cable providers, Time Warner. The channel at one point parked a truck in front of a Time Warner office reminding San Diegans that “You've already missed 60 Padres games on Time Warner Cable.”

This annoyed fans who already were quite aware of the fact, but it didn't resolve anything. So while the two media giants remained in a stalemate, much of the city and county missed an entire season's worth of baseball.

And now I've wrecked our timeline. But you had to know this now. Because it gets better.

Full disclosure: I live nine miles from Petco Park and cannot watch FSSD without leaving my home. I saw 25 Padres games at the ballpark in 2012 and five innings of the Padres on TV at a sports bar (June 9, Cashner's first start). So I'm a little angry, although not as angry as I was earlier, before I'd had a chance to get used to the situation and become apathetic.

Thursday, March 22
Less than two weeks after withdrawing his request to complete acquisition of the Padres, Moorad resigned as CEO. Speculation was that Moorad, a former player agent, had rubbed a few important Jerry Reinsdorfs the wrong way and they rubbed back harder.

Friday, April 5
As the season opened with the Padres losing to the Dodgers at Petco Park and still not being broadcast into many San Diego homes, Moores announced “his agreement to sell the franchise to former chief executive Jeff Moorad has been terminated.” According to reports at the time, Moorad “no longer has an office at Petco Park and his tenure with the team is over.”

Talk about quick turnarounds.

Moores also expressed a belief that, on the heels of the Dodgers' new television deal, he could sell the team for significantly more than the $525 million (some sources say $530; the discrepancy is due to interest paid as part of the installment plan) Moorad had agreed to pay back in 2009. As Moores said, “Life is good, and I'll leave it at that.”

Local businessman Ron Fowler, who formerly owned the San Diego Sockers (a professional indoor soccer team), took over as “point man for the minority partners.” Remember the name Fowler; it will appear again later in our saga.

Tuesday, April 9
Moores announced that the Padres, three years after apparently being sold to Moorad, were on the market again. Addressing Frank McCourt's recent sale of the Dodgers for $2.15 billion, Moores said, “I noticed that for sure. Clearly the Dodgers sale and the current media market will have a lifting effect on the value of the club.” As if to prove his point, MLB earlier had approved a 20-year, $1.2 billion deal with Fox Sports to televise Padres games that included a $200 million up-front bonus.

Thursday, May 17
Five potential ownership groups were revealed to be suitors in a purchase expected to cost between $600 and $700 million. Reportedly among them were groups led by film producer Thomas Tull, the O'Malley family of Dodgers fame, former sports agent Dennis Gilbert, hedge fund owner Steve Cohen, and Houston developer David Wolff. The name Fowler also surfaced as a possibility.

Monday, May 21
Former Padres Hall of Fame outfielder and current San Diego State head baseball coach Tony Gwynn announced “he will join a group headed by Legendary Pictures CEO Thomas Tull in its attempt to purchase the Padres.” In addition to his credits as producer of The Hangover, The Dark Knight, and 42 (about Jackie Robinson), Tull also served as a minority owner of the Pittsburgh Steelers and a member of the board of directors for the San Diego Zoo.

Tuesday, June 12
The Tull/Gwynn group dropped out of the bidding for undisclosed reasons. Forbes had them offering “between $600 million to $650 million.”

Monday, June 25 (approximately)
Fowler and the O'Malley family reportedly “entered into an exclusive negotiating window” to buy the Padres from Moores. At this time, the expected sale price was estimated at $800 million (which would explain why the Tull/Gwynn group dropped out two weeks earlier). A week later, Selig expressed delight at the possibility of the Padres being owned by the O'Malleys:

San Diego fans and the club deserve a good ownership, great ownership, and assuming this deal goes through—and it hasn't yet—so we'll have to wait a little bit, but it's great. The O'Malley tradition is remarkable, going all the way back to Brooklyn and to Walter and on to Peter, and now you're getting the sons and the nephews involved. Plus the San Diego club's minority partners in the last deal were a very solid group and all San Diego people, which means a great deal to us, are all going to be involved.

Monday, August 6
The Fowler/O'Malley group finalized an agreement to purchase the Padres. As he had in January, when Moorad was the buyer, Moores expressed confidence that the sale would be approved by owners:

It's been a long time coming. It's on the agenda for the August meeting, and I'm optimistic that Commissioner (Bud) Selig and the other 29 owners will approve it.

Given Moores' track record in predicting such things, one can understand a certain skepticism among the fan base. This time, however, he was right.

Thursay, August 16
MLB owners approved the sale of the Padres to the Fowler/O'Malley group (which also includes PGA golfer and San Diego native Phil Mickelson) for “around $800 million.” The final closing was to take place “on or before August 31.” The new owners received a standing ovation from their fellow owners on being introduced, and Selig gushed:

I think Padres fans have a right to be very happy today. Very happy. This group knows what it takes to compete. They're very optimistic. I'm optimistic. I've gone over their projections, gone over everything. I think their projections are optimistic, but realistic. This is a good day for baseball.

The only thing that would have made Padres fans happier was if they had been able to watch their team play on television.

Wedesnday, August 29
The new ownership group announced that the deal had been closed. They held a press conference at Petco Park. It was broadcast by FSSD, which 42 percent of households in San Diego still didn't have. Fowler called the Padres “a civic treasure,” while also acknowledging the ongoing TV problem:

We understand it's a huge issue. We do want all home fans in San Diego to be able to see the Padres on TV. It's not a simple problem—if it was, it would have been solved some time ago. But we will be working on it with FOX and with the other party that is involved.

Working on the problem is good, although once money has exchanged hands and leverage removed, solving it may prove to be tricky. Meanwhile, Fowler's choice of the word “treasure” to describe a valuable object so well-hidden from public view was interesting.

Wednesday, October 3
The Padres season ended as it began, with the game—along with 160 others between Opening Day and this one in Milwaukee—not being televised to much of San Diego. Ask a random Padres fan about Chase Headley's breakout season and there's a good chance he or she didn't see any of it. Or anything else the team did in 2012, for that matter.

Future
The ownership situation is settled. For real, this time. Such stability should lead to increased spending, which if done wisely should improve an already-promising on-field product (the Padres went 42-33 after the All-Star break and boast what Kevin Goldstein identified as baseball's strongest farm system entering the 2012 campaign).

The television situation is more complicated. With 42 percent of county households having learned how to live without Padres baseball for an entire season and with no apparent progress in negotiations, the incentives in getting something done are not obvious.

The Padres would benefit from having their games broadcast to fans, but they are not the ones cutting the deals. FSSD would benefit as well, by presumably being able to draw better advertisers as a result of increased coverage, but they need a willing partner.

Time Warner doesn't seem interested in carrying FSSD, focusing instead on other issues. Time Warner recently launched a new channel to broadcast games of the NBA Los Angeles Lakers. It isn't available “in the majority of Los Angeles households.” However, it is available in San Diego, which doesn't have an NBA team.

Snark aside, it is difficult to build and sustain a fan base when the would-be members of that fan base are denied access to the product. They will find other things to do with their time and money. If enough of them do that, eventually there will be so little demand for the product that the other 58 percent might not notice when it disappears for good.

* * *

I am indebted to Corey Brock, Dan Hayes, and Tom Krasovic for their outstanding efforts in covering this story throughout 2012 as it unfolded. This article would not have been possible without their work.

10 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

Drakos

It's sad how much easier it is for me to watch Padres games on TV as a fan in Texas than it is for so many people in San Diego. And between Reinsdorf's involvement and the relocation of Hoyer, Rizzo, and Dan Hayes to Chicago I no longer like that city.

There is one thing I don't get about the $800 million price and I've been too dissappointed about everything to look into. Isn't $200 million of that from the TV contract? And if so doesn't that mean that the Tull group (and all others) would have had an extra $200 million. Or did the $600 to $650 million figure include the $200 million from the TV contract.

Oh well, at least the Chargers aren't disappointing everyone again.

Oct 16, 2012 10:33 AM
rating: 1
 
LynchMob

See what happens without Ducksnorts!!!

Here's my question ... it sounds like you use Time Warner for your cable TV ... can you not switch to Cox Communications or DirecTV if you wanted to?

Oct 16, 2012 11:44 AM
rating: 0
 
BP staff member Geoff Young
BP staff

Cox is not an option in many areas, including mine. DirecTV is an option for me, but not for everyone.

Oct 16, 2012 12:19 PM
 
LynchMob

So ...

What is the % of households that can not choose Cox or DirecTV?

Any figures for how many Padres fans switched from Time Warner to either Cos or DirecTV? (not enough to worry TW, obviously)

Why did you choose to not switch to DirecTV and watch Padre games at home?

Oct 16, 2012 12:24 PM
rating: 0
 
BP staff member Geoff Young
BP staff

I don't know the answer to your first two questions, but my answer to your third is twofold:

1) I have bundled cable, internet, and phone, and didn't wish to disrupt all of those services for the sake of one channel, especially since it would have meant losing other channels that I wanted to keep.

2) The version of the channel offered on DirecTV was inferior to the version offered on Cox, with the former providing games only and no other Padres programming.

Also, MLB.tv was a game changer. Once I subscribed, I could watch any team except the Padres and their opponent on any given night. That worked for me.

Oct 16, 2012 13:52 PM
 
LynchMob

MLB.tv was going to be my next question ... I would think that if the Padres "really cared", they would negotiate with MLB to remove the restriction ... ex. if you're a TW subscriber, then you can pay MLB.tv for Padre games. Is that unrealistic?

My bottom line is trying to figure out why the market forces do not appear to be working ... or are they? Is somebody leaving money on the table? Or is that being misjudged?

Oct 16, 2012 15:00 PM
rating: 0
 
lonndoggie

MLB.tv lifting restrictions for cable clients who don't have access could be done, but I think FSSD might balk, as it would probably mean TWC would NEVER sign up, and any revenue they'd get in return from MLB.tv would likely pale in comparison. I assume this would affect Padres TV revenue as well.

The carriers are looking at having to spend another $5 or so per subscriber, without raising rates, and trying to see if they can justify it. For TWC it's more complicated, due to the war they're waging with Fox Sports' RSNs and their own RSNs that they are trying to get going (see the reference to their channel with the Lakers--none of the other carriers in LA will carry it, yet). So the Padres/FSSD are just a pawn in that larger game.

Also, as to what FSSD programming actually appears on DIRECTV--yes, at first it was just games, but eventually the offered the Padres Weekly and Padres POV shows. More non-baseball content is showing up, and it's thought that they'll be on full-time come 2013.

I used to be a TWC guy. Still have them for internet, but have DIRECTV for TV. I watched A LOT of Padre games this year, and look forward to doing so next season.

Oct 16, 2012 17:35 PM
rating: 1
 
tbwhite
(361)

I've lived in San Diego for 10 years now, and have only been able to see Padres games on TV for about half a season. Started out with DirecTV which didn't carry the old cable channel the Pads were broadcast on. Switched to Time Warner early this year, only to have them not carry FSSD, then switched back to DirecTV(for reasons not related to the Padres, just the fact that TWC sucks). I have no idea what channel FSSD is on and don't really care. Petco is a great stadium and I go down there on occasion, but it's just as easy to go up to Anaheim, and over my 10 years in San Diego I've seen more Angels games on TV than Padres. I think the O'Malley group paid way too much, and when was the last time anyone made money off of something they bought from John Moores ?

Oct 16, 2012 12:45 PM
rating: 1
 
lonndoggie

Thanks Geoff for compiling that. It's an epic tale, still being written: What'll happen to the fences? Will the team spend (wisely, or not) on talent this off-season? Will Ron Fowler bring in some of the craft beers his company distributes?

And, of course, the TV saga. That's an epic epic.

Remember that while Geoff was happily watching the Padres in years prior on Time-Warner, folks using DIRECTV, Dish or AT&T U-Verse couldn't.

This year, the DIRECTV subscribers changed places with the TWC folks.

In glass-half-full mode, 58% were able to see the games this year. Don't know what the percentage was in prior years, as it's beyond my Google skills to find the by-carrier subscriber breakdowns.

As of the last day of the season, the U-Verse people had access as well, so the percentage of those who can view has gone up, and will rise more if Dish signs up, which seems at least plausible. TWC? Not counting on it. Then again, they're losing cable customers across the country: http://www.engadget.com/2012/08/02/twc-q2-2012/

I was able to pull in a few Dodger games off-the-air this season, from KCAL 9 (I prefer to think of it as The Vin Scully Show). Too bad there's no such hope for San Diego antenna users; that's another, unreported number who haven't seen a local Padre broadcast in, like, forever.

So, sadly, it's nothing new for Padre fans to not be able to watch their team at home.

Tune in tomorrow...if you can.

Oct 16, 2012 17:21 PM
rating: 1
 
BP staff member Geoff Young
BP staff

Thanks for mentioning the AT&T U-verse deal, which another reader reminded me of as well. To complete our timeline, according to the North County Times, that deal was announced on Thursday, October 4.

Oct 17, 2012 05:31 AM
 
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