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“The Padres Way–Risk & Reward”

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San Diego Padres history on baseball’s highway contains alot of road signs and off ramps.

Good years, bad years, great owners, awful scheisters.  Owners who saved the franchise, owners who nearly wrecked the team.

And here we are today.

It has been some off season for lead owner Peter Seidler, with the decision to approve the mega money (340M) deal for 14-years for SS-Fernando Tatis.

Seidler came from baseball royalty, part of the O’Malley aura-era, dating from Brooklyn Dodgers days to the Peter O’Malley tenure at Chavez Ravine.

He loves the game, its history, the record books, and loves the team he now runs.

Forbes Magazine says his worth 3.3B.  Enough to take over control of the team from Ron Fowler, after they jointly bought the team from the John Moores-Jeff Moorad syndicate.

The last 24-months have been special for San Diego baseball fans, a melting pot of people from everywhere.

Seidler knows full well, if you win, you draw.  It you put a World Series team on the field, 3M-fans per year would come, and that would mean huge profits for what was known as a small market team.

San Diego may be the most unique market in the major leagues.  Transplants from everywhere, plus those who have grown up here.  Imagine a World Series type franchise here.  Friar fans would flock to the yard, as would those transplant Giant-Dodgers-Red Sox-Pirates-Cubs fans who always flow into the yard when their favorite teams come to town.

The history book will show the original owner C-Arnholdt Smith, the financier, caught up in schemes and dragged into court, forced out in disgrace..

We almost lost the franchise to Washington, DC, but Ray Kroc, the hamburger magnate saved the team.  He spent tons of money on free agents, won some games, ripped his team on the PA mic, then passed.

Joan Kroc took over and honored the treasure she received.  Some good years but not a great long run.

We passed thru bad times with Chub Feeney, then Tom Werner and his Band of 15-Firesales and all that.

John Moores and Larry Lucchino joined together, Moores money, Lucchino’s brilliance, to fix the franchise and build Petco Park.  But times change, people change, their lives change, and the shelf life of philosophy changes too.

On came caretaker Jeff Moorad, the former super agent, who was there to make a short time profit.

Enter Fowler-Seidler, stabilizing the team, and trying hard to lay a foundation.  Exit Fowler, who may not have been all in on the blueprint Seidler and GM-AJ Preller tried to sell…spend-spend-spend..hope you win.

They burned thru alot of currency trying to fix years of cheap ownership.  The failed early on in the Preller years, now they are seeing positives from the investments.

Now it’s Seidler’s blueprint, and he is all in.

San Diego is a small market franchise, make no doubts about it, in terms of corporate business support.  You have 3.5M fans to draw from and what you might attract from across the border.  Nobody is coming from LA or even Orange County nor Arizona to see your team.

There are not many Fortune 500-companies here.  You won’t draw big sponsorships north of Camp Pendleton, where there is big money in Orange County and Los Angeles.

You can draw fans, maybe 3M per year, but what is the ceiling for what you can charge in ticket prices in this market.  It is not like Dodgers Stadium, Fenway Park or the House Ruth built-Yankee Stadium.

This is a poor media market.  Yes the Padres own a chunk of Fox Sports San Diego, but the advertising market is soft, and the concept of regional sports networks has changed.  Their profitability is limited.  Does FSSD put anything on you have to watch aside from the first pitch at game-time with Don Orsillo and Mark Grant.

Everyone of their radio partners have walked away, their P-L statements soaked in red ink.  Entercom thought about dumping games a year ago, the losses were so staggering.  I-Heart-Clear Channel-BCA before that choked on the financial losses.

San Diego might be the 8th largest market in the country, but in terms of baseball revenues, it is 17th out of 30 and not much chance to grow quickly.

Yes the Padres will be good this year, much better than they have been the last decade or so.  But the investments Seidler has signed off on are stunning.  Can you keep spending like this in the longterm?

Tatis, who has played just 143-games in his career, is due (340M).  Eric  Hosmer is in the middle of a (300M) deal as is Manny Machado’s (300M) deal.  Wil Myers has a high contract figure.  Paydays will be coming if some of these young players pan out.  The franchise spent 101M over a 3-year span to sign everyone-anyone to rebuild the farm system and is still awaiting a star to be born out of El Paso and San Antonio.

The investment is spectacular immediately.  The reward must happen immediately too.  I am concerned about the word ‘shelf life’ of the key veterans on the roster.  It appears the Tatis deal may carry bigger money on the backend of the deal, but dollars are dollars, and you pay them now, or you really pay later.  It will be interesting to see if there are any deferred dollars in the transaction.

Is this type of expenditure sustainable?  Alot of people don’t think so, not with this market’s limitations.

But we know a couple of things for sure in all this.  Franchises make money, regardless of market size, thankfully to revenue sharing and the multiples of TV contracts they have, topped off by ticket sales if you win.

Look around at the disgrace that Pittsburgh-Baltimore-Kansas City-Cincinnati-Cleveland have become.  For every small market success, Tampa Bay for example, we have to deal with the ownership decisions of the Pirates-Orioles-Royals-Reds-Indians and more.

For anyone to reach opening day with a payroll of (50M) or so is a stain on the game.   Markets that could become good regional franchises, but elect not to spend what it takes.  And MLB and the Union let it happen.

Granted we can’t all be like the Dodgers, where Guggenheim ownership is worth 511B.  We cannot be the Yankees or Mets, the Steinbrenner-Cohen families.

But the Padres planned alot of this out.  When they went on their first spending spree with all the Latin American and draft pick signings, they did it the year the big spenders, the Cubs-Red Sox-Yankees had to sit on the sidelines because of all past expenditures.  And now this year’s foray into free agency and the trade market, come the same year the Yankees-Cubs-Red Sox cut payroll, trying to get below the Luxury Tax once and for all to the penalties don’t crush them.

The Padres have been methodical with this game-plan.  Seidler is methodical too, in business and in baseball matters.  There is a trend here.

So the roadway takes us back to the Seidler ramp just off Tony Gwynn way.  His payroll opening day will be in the record 166M range, numbers never seen like this before.  If the Padres don’t win it all, they may not be able to put up that kind of payroll indefinitely.

Peter has beaten cancer twice.  It is his wealth he has stockpiled and now is spending.

I believe he wants his legacy to be he spent-invested to build a winner, get to sit in his stadium and host a World Series game, and hope this chapter of Padres history will allow him to be remembered fondly as an owner who gave the city a winner for years to come.

He saw it first hand with his involvement as a member of the O’Malley family.

Risk-Reward.  Sure, it’s everywhere.  Mike Ilitch was as benevolent a human entrepreneur as ever in Detroit, with the Tigers-Red Wings.  When he passed, look what they became in a now troubled market.

It’s Peter Seidler’s currency…let him spend it the way he wishes in his era.

It’s alot better than dealing with Smith-Feeney-Werner and their ilk.

Sit back…relax…and enjoy what is just ahead on the highway in San Diego.

Excitement-expectation.

This year, more than ever, the words “Pitchers-Catchers Report” carries a very different meaning in San Diego.

All that due to Peter Seidler…willing to take a risk…hoping for a reward..personally-professionally.

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