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John Moores sinks Padres pay to number 29 of 30 teams

Clearing the bases

Back in 1998, then–Padres majority owner John Moores promised that if taxpayers would pour more than $300 million into a ballpark, he would produce teams that were competitive. Maybe he meant that he could produce teams whose juicy profits would be competitive with those of comparable teams rolling in publicly subsidized moola. Now the Padres are slashing payroll and drawing crowds that are smaller than in the 2001–2003 years, when fumbling, stumbling, penny-payroll teams played at Qualcomm Stadium, which, Moores assured gullible San Diegans, was a facility that the team “physically cannot survive” in for economic reasons.

A little context is in order. San Diego County is the 17th-largest market in the United States. After Moores bought the team in late 1994, the payroll was generally between 16th- and 19th-highest in Major League Baseball — about right for a market this size. But in some years, such as this year and several previous ones, the payroll has been among the lowest in baseball. Entering this season, the Padres’ payroll at $43.7 million was the second-lowest, number 29 of 30 teams. Now, with the continued dumping of top talent, it’s probably the lowest, and it will probably be the lowest in the next three years because by trading star pitcher Jake Peavy alone, the team should be shedding $48 million in payroll.

Moores played a clever — if ethically dubious — game. In 1997, the payroll was $34.7 million, 18th in the majors. The next year, when the team was enticing voters to give it a fat subsidy, the payroll jumped to $45.4 million, 14th in baseball — the one time that the team spent significantly more than could be expected for a market of San Diego’s size. Once the City anted up for his ballpark, he slashed the payroll, and the team sank in the standings. Between 2001 and 2003, the average payroll was $41.8 million, 26th in Major League Baseball. The team lost 277 games in those years, winning only 209. But the attendance at Qualcomm averaged 27,400 a game — about 3000 more than the Padres are attracting now, even though the team slashed average ticket prices 27% before this season began.

Once the Padres occupied Petco Park in 2004, Moores stepped up spending. Between 2004 and last year, the payroll averaged $64.1 million a year, around 18th highest of the 30 teams. The team’s performance improved greatly. Then Moores slashed the payroll by $30 million this year. The team is back in the cellar.

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There is not a symmetrical relationship between a team’s payroll and its on-field performance, but there is a definite correlation. With a payroll of $40 million or under, the Padres are last in their division. The first-place team, the Los Angeles Dodgers, have a payroll of $100.4 million. The two teams battling for second place in the standings, the San Francisco Giants and Colorado Rockies, have payrolls of $82.6 million and $75.2 million, respectively. The fourth-place Arizona Diamondbacks have one of $73.5 million.

Moores bought control of the Padres in late 1994. Since then, according to data from Forbes, USA Today, and the former Financial World magazine, the team has done very well financially. Between 1994 and this year, the value of the team shot up 372% to $401 million. That percentage jump compares favorably with other teams in the National League West division: Colorado, 239% to $373 million; San Francisco, 406% to $471 million; and Los Angeles, 423% to $722 million. Arizona joined the league later, and its figures aren’t comparable.

Look at the 1994–2009 percentage increase in the Padres’ value compared with those of teams in similar cities: Atlanta, 365% to $446 million; Minnesota, 329% to $356 million; Oakland, 180% to $319 million; Toronto, 135% to $353 million; and Seattle, 433% to $426 million.

Historically, the Padres have spent little. Between 1995 (Moores’s first year) and this year, here are the percentage payroll increases of the comparable teams: Atlanta, 113.9% to $96.7 million; Colorado, 140.5% to $75 million; Minnesota, 166.5% to $65.3 million; San Francisco, 136.6% to $82.6 million; Los Angeles, 227.8% to $100 million; Seattle, 189.2% to $98.9 million; Oakland, 73.0% to $62.3 million; Padres, 68.7% to $43.7 million; and Toronto, 61.6% to $80.5 million.

Two teams in the West Division of the National League are located in large population areas: the Los Angeles Dodgers and San Francisco Giants. Last year, the Dodgers had $224 million in revenue and the Giants $197 million. The Rockies, Diamondbacks, and Padres have similar-sized markets: each had about $167 million in revenues last year. What about last year’s all-important operating income, or earnings before interest, taxes, depreciation, and amortization? According to Forbes, only the Rockies at $24.5 million topped the Padres at $22.9 million in the National League West. The Giants were at $22.4 million, the Dodgers at $16.5 million, and the Diamondbacks at $3.9 million.

Some claim that the Padres’ debt burden is onerous. Not comparatively. According to Forbes, the ratio of Padres debt to the value of the team is 60%; the Dodgers’ ratio is 58%, and Arizona’s is 51%. The San Francisco Giants are at 28% and the Colorado Rockies at 21%.

While they have been jettisoning payroll, the Padres have been collecting $10 million to $14 million a year in revenue sharing, according to Rodney Fort, sports economist at the University of Michigan. The big-market teams like the New York Yankees, which enjoy fatter revenues, distribute money to lower-revenue teams such as the Padres. The recipients are supposed to spend the money on improving the product on the field. Some say the owners pocket the money. “The teams always say that they are spending it on the product, but nobody ever shares any data with us, and it’s clear they won’t,” says Fort. (Major League Baseball keeps its figures secret.)

With near unanimity, journalists attribute the severe slashes in the Padres’ payroll to the bitter divorce battle between John and Becky Moores, who together owned more than 80% of the team. The team has now been sold to Jeff Moorad and a group of investors in a deal that will take more than five years to consummate. Moorad is chief executive and theoretically calling the shots, but the payroll slashing continues. Moores remains chairman. Some wonder if the divorce is an alibi, not the reason for the cuts. For one thing, “It would seem to be in the best interests of both of them [John and Becky Moores] to keep the team as valuable as they can,” says Fort.

Sports economist Mark Rosentraub, also at the University of Michigan, helped the Padres set up the deal for the ballpark and adjoining real estate. “I have been so depressed. I like both of them,” says the economist. He thinks the Padres may be on a youth movement, or trying to build a team with young, low-priced talent. “Perhaps they want to go very young very fast to ride the economy out and be ready when the economy comes back in two or three years.”

Or there could be another explanation. Moores is said to have accumulated $700 million to $1 billion on the real estate deals in the ballpark district — a suggestion he denies. We know that he amassed $650 million selling off Peregrine Systems stock before the fraud-plagued collapse and paid very little for those shares. He put some of the profits into the ballpark and will be paying a comparatively tiny sum back to aggrieved investors. It certainly looks as though he has made a good bundle on the team and the real estate bonanza given to him by the city council. He now spends his time in Texas. If this is what happened, it won’t be the first time in the history of the West that someone rode into town, raked in big bucks, and rode out.

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Back in 1998, then–Padres majority owner John Moores promised that if taxpayers would pour more than $300 million into a ballpark, he would produce teams that were competitive. Maybe he meant that he could produce teams whose juicy profits would be competitive with those of comparable teams rolling in publicly subsidized moola. Now the Padres are slashing payroll and drawing crowds that are smaller than in the 2001–2003 years, when fumbling, stumbling, penny-payroll teams played at Qualcomm Stadium, which, Moores assured gullible San Diegans, was a facility that the team “physically cannot survive” in for economic reasons.

A little context is in order. San Diego County is the 17th-largest market in the United States. After Moores bought the team in late 1994, the payroll was generally between 16th- and 19th-highest in Major League Baseball — about right for a market this size. But in some years, such as this year and several previous ones, the payroll has been among the lowest in baseball. Entering this season, the Padres’ payroll at $43.7 million was the second-lowest, number 29 of 30 teams. Now, with the continued dumping of top talent, it’s probably the lowest, and it will probably be the lowest in the next three years because by trading star pitcher Jake Peavy alone, the team should be shedding $48 million in payroll.

Moores played a clever — if ethically dubious — game. In 1997, the payroll was $34.7 million, 18th in the majors. The next year, when the team was enticing voters to give it a fat subsidy, the payroll jumped to $45.4 million, 14th in baseball — the one time that the team spent significantly more than could be expected for a market of San Diego’s size. Once the City anted up for his ballpark, he slashed the payroll, and the team sank in the standings. Between 2001 and 2003, the average payroll was $41.8 million, 26th in Major League Baseball. The team lost 277 games in those years, winning only 209. But the attendance at Qualcomm averaged 27,400 a game — about 3000 more than the Padres are attracting now, even though the team slashed average ticket prices 27% before this season began.

Once the Padres occupied Petco Park in 2004, Moores stepped up spending. Between 2004 and last year, the payroll averaged $64.1 million a year, around 18th highest of the 30 teams. The team’s performance improved greatly. Then Moores slashed the payroll by $30 million this year. The team is back in the cellar.

Sponsored
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There is not a symmetrical relationship between a team’s payroll and its on-field performance, but there is a definite correlation. With a payroll of $40 million or under, the Padres are last in their division. The first-place team, the Los Angeles Dodgers, have a payroll of $100.4 million. The two teams battling for second place in the standings, the San Francisco Giants and Colorado Rockies, have payrolls of $82.6 million and $75.2 million, respectively. The fourth-place Arizona Diamondbacks have one of $73.5 million.

Moores bought control of the Padres in late 1994. Since then, according to data from Forbes, USA Today, and the former Financial World magazine, the team has done very well financially. Between 1994 and this year, the value of the team shot up 372% to $401 million. That percentage jump compares favorably with other teams in the National League West division: Colorado, 239% to $373 million; San Francisco, 406% to $471 million; and Los Angeles, 423% to $722 million. Arizona joined the league later, and its figures aren’t comparable.

Look at the 1994–2009 percentage increase in the Padres’ value compared with those of teams in similar cities: Atlanta, 365% to $446 million; Minnesota, 329% to $356 million; Oakland, 180% to $319 million; Toronto, 135% to $353 million; and Seattle, 433% to $426 million.

Historically, the Padres have spent little. Between 1995 (Moores’s first year) and this year, here are the percentage payroll increases of the comparable teams: Atlanta, 113.9% to $96.7 million; Colorado, 140.5% to $75 million; Minnesota, 166.5% to $65.3 million; San Francisco, 136.6% to $82.6 million; Los Angeles, 227.8% to $100 million; Seattle, 189.2% to $98.9 million; Oakland, 73.0% to $62.3 million; Padres, 68.7% to $43.7 million; and Toronto, 61.6% to $80.5 million.

Two teams in the West Division of the National League are located in large population areas: the Los Angeles Dodgers and San Francisco Giants. Last year, the Dodgers had $224 million in revenue and the Giants $197 million. The Rockies, Diamondbacks, and Padres have similar-sized markets: each had about $167 million in revenues last year. What about last year’s all-important operating income, or earnings before interest, taxes, depreciation, and amortization? According to Forbes, only the Rockies at $24.5 million topped the Padres at $22.9 million in the National League West. The Giants were at $22.4 million, the Dodgers at $16.5 million, and the Diamondbacks at $3.9 million.

Some claim that the Padres’ debt burden is onerous. Not comparatively. According to Forbes, the ratio of Padres debt to the value of the team is 60%; the Dodgers’ ratio is 58%, and Arizona’s is 51%. The San Francisco Giants are at 28% and the Colorado Rockies at 21%.

While they have been jettisoning payroll, the Padres have been collecting $10 million to $14 million a year in revenue sharing, according to Rodney Fort, sports economist at the University of Michigan. The big-market teams like the New York Yankees, which enjoy fatter revenues, distribute money to lower-revenue teams such as the Padres. The recipients are supposed to spend the money on improving the product on the field. Some say the owners pocket the money. “The teams always say that they are spending it on the product, but nobody ever shares any data with us, and it’s clear they won’t,” says Fort. (Major League Baseball keeps its figures secret.)

With near unanimity, journalists attribute the severe slashes in the Padres’ payroll to the bitter divorce battle between John and Becky Moores, who together owned more than 80% of the team. The team has now been sold to Jeff Moorad and a group of investors in a deal that will take more than five years to consummate. Moorad is chief executive and theoretically calling the shots, but the payroll slashing continues. Moores remains chairman. Some wonder if the divorce is an alibi, not the reason for the cuts. For one thing, “It would seem to be in the best interests of both of them [John and Becky Moores] to keep the team as valuable as they can,” says Fort.

Sports economist Mark Rosentraub, also at the University of Michigan, helped the Padres set up the deal for the ballpark and adjoining real estate. “I have been so depressed. I like both of them,” says the economist. He thinks the Padres may be on a youth movement, or trying to build a team with young, low-priced talent. “Perhaps they want to go very young very fast to ride the economy out and be ready when the economy comes back in two or three years.”

Or there could be another explanation. Moores is said to have accumulated $700 million to $1 billion on the real estate deals in the ballpark district — a suggestion he denies. We know that he amassed $650 million selling off Peregrine Systems stock before the fraud-plagued collapse and paid very little for those shares. He put some of the profits into the ballpark and will be paying a comparatively tiny sum back to aggrieved investors. It certainly looks as though he has made a good bundle on the team and the real estate bonanza given to him by the city council. He now spends his time in Texas. If this is what happened, it won’t be the first time in the history of the West that someone rode into town, raked in big bucks, and rode out.

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