I had the opportunity Monday to spend some time talking with San Diego Padres President and Chief Operating Officer Tom Garfinkel. I’ll have more on the interview later, but Tom said some interesting things I thought were worth sharing.
When I asked Garfinkel what the organization planned to do, from a marketing standpoint, to attract fans during a rebuilding year, his response was quite refreshing:
We actually cut our marketing budget this year. Instead, we’re really reaching out to the fans and trying to focus on what’s most important to them.
All the dollars we earn will be (reinvested) back into the team. There are no owner distributions or anything like that. So to the extent that we grow revenues back, money is going to be poured back into the team. Those investments will be in scouting and player development, baseball operations, and other things to help position us on the field for success in the future.
At the same time, we’ve made other investments in ticket sales and service. We feel that’s important to keep our fans happy and help grow our fan base.
Wow, what a novel idea! Imagine reinvesting in your organization to try to improve your team under small market conditions!
Now only if we can get ownership in places like Florida and Minnesota to take notice.
And here I thought that you took all the profits from your team and then went and invested in OTHER teams in other leagues. That's what they taught me at the Tom Hicks school of sports business management. (before it went bankrupt)
Joe: Maybe the interview snippet is out of context. But I read the first quote, about cutting the marketing budget AND reaching out to fans, as corporate doublespeak. Isn't marketing how you reach out to fans? Can you clarify in the larger piece?
Oira61: Good point. I'll clarify now but spell out more in the full interview as well.
What Garfinkel is trying to say is that the team is physically reaching out to season ticket holders and fans. Instead of running large billboard or TV campaigns telling the public to come see the Padres, they're trying to focus on low cost, big bang initiatives that the fans who ARE coming to the park will appreciate. My guess is they're hoping that an exceptional experience will become viral and spread via word of mouth.
How much additional word of mouth can be generated by a major league franchise that has had no competitors in its region? Are there people in San Diego who don't know who the Padres are?
I'm assuming that people in San Diego know who the Padres are and don't care. The goal here is for them to know what PetCo park is, and want to go there.
Personally, as I said before, I think it's all small potatoes. The best way to build a juggernaut revenue machine in pro sports is to win and gain local (as well as national) exposure.
Just get Ron Burgandy to talk about what Adrian Gonzalez is going to do in the NLCS vs. the hated LA Dodgers, and they will come.
Padres get a softball puff piece and the Twins get cheap shots over 200k difference?
Give me a break.
The real difference is who owns the teams. The BP (militantly pro- MLBPA) template says the Twins are "bad" simply because of Pohlad and the Pads are "good" because of Moorad (former agent).
Rather than worry about how much profit (horrors!!!) a team makes, how about comparing Wins and Titles- Padres fall waaay short of the Twins.
According to this link, http://www.forbes.com/lists/2009/33/baseball-values-09_The-Business-Of-Baseball_Income.html, the $26.8 million I cited for the Twins in 2008 is correct. If somehow that's been updated, I apologize.
The whole point of this piece is to show that new ownership plans to reinvest its earnings into the team, unlike the team's previous ownership who, yes, did earn $22.9 million in 2008 (again, according to the Forbes article above).
And to your point about the Twins...sure, they've won division titles. But maybe they would have won even more and gone even further had they reinvested their earnings to keep players like Johan Santana in Minnesota.
The difference being that the Twins were on the verge of world series contention but were letting players like Santana go for pennies. The Padres weren't even close to the playoffs when they turned their one chip (Peavy) into something that could help down the road.
That said, I do like the Twins baseball management and will reserve judgment until we see what they do when they move into their new stadium.
It's not about knowing who the Padres are Richard. It's about creating a fan friendly experience that will catch on and get people to come to PETCO instead of attending some other form of entertainment...even when the Padres aren't winning division titles.
Exactly. Many people in San Diego know who the Padres are but don't care. Competitors in the region include the beaches, the mountains, the zoo, the theater...
Fun preview, Joe; I look forward to the full interview.
Didn't they build some of the fan friendly experience into the publicly funded ballpark they got five years ago?
Heck, I can sympathize with Padres fans. They've seen the Dodgers, Giants and Rockies all leapfrog them in recent years. They saw their ace starter (Peavy) get traded away and their Hall of Fame closer (Hoffman) shunted out the door.
And they probably still overpay for tickets and for parking.
Here's the thing... I can understand spending less on billboards and the like, but with how fuzzy baseball accounting can be and how troubled the Padres finances have been in the past, it's one thing to talk about reinvesting money and its another thing to actually do it.
In the end, it's all small potatoes compared to the effect of having a playoff team. Investing in the product on the field is far more effective in the long run than any marketing campaign or fan experience initiatives.
From what Garfinkel is saying, they are trying to do both. They want to cater to the fans AND put a championship caliber club on the field. Now obviously that's all just talk right now. They still have to back it up.
Advertising is only one subset of marketing activities. Marketing alsoincludes customer relations, market research, cross-promotion, fan experience.
Garfinkel was using imprecise language when he eauted advertising with marketing. The Pads may advertise less, but they are definately marketing (albeit in a considerably different way).
As for reinveting in the team- I'll believe it when I see it.
To be precise, Garfinkel said they we're cutting the marketing "budget," not specific marketing activities. I'm pretty sure they'll continue to use all marketing tools available to them, but the focus will be on customer relations and the direct fan experience.
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And here I thought that you took all the profits from your team and then went and invested in OTHER teams in other leagues. That's what they taught me at the Tom Hicks school of sports business management. (before it went bankrupt)