Sports Business: BASEBALL
JERRY COLANGELO: THE MAN WHO'S BRINGING BASEBALL TO THE DESERT
His Arizona Diamondbacks will likely finish last--but could be profitable
Ah, spring training in Arizona. It's a time when baseball fans settle into cozy stadiums close enough to the field to banter with their favorite heroes or grab an autograph. But on this day in Hohokam Stadium, just east of Phoenix in Mesa, the fans stream past slugger Matt Williams for the star of the moment. Decked out in black silk pants and a white polo shirt, Jerry Colangelo sits in a first-row seat behind the plate. One by one, the fans shove programs, baseballs, even a water bottle at the man who brought Major League Baseball to the desert. Says Colangelo: "The moment they stop asking, it means you're in trouble."
Colangelo sure isn't in trouble just now. The 58-year-old onetime college basketball star is spending big-league dollars to give a sports-crazed state a baseball team. By all accounts, his Arizona Diamondbacks probably will finish dead last in the National League's five-team Western Div. But so what? With season-ticket buyers holding nearly three-quarters of the 48,569 seats in a $350 million new stadium in Phoenix--even before the team takes the field on Mar. 31--the Diamondbacks are all but assured of placing among the leaders in attendance and operating profits.
That would only add to Colangelo's winning streak, which started not long after he came to Phoenix in 1968 with a wife, three young kids, and "a couple hundred bucks in my pocket." The Phoenix Suns basketball team that he controls and owns 36% of has sold out 369 straight games--second only to the Chicago Bulls' 519. He has made money as well with the year-old Phoenix Mercury, which led the Women's National Basketball Assn. in attendance, and the Arizona Rattlers, last year's Arena Football League champs.
But nowhere are the stakes higher than with the Diamondbacks, which have cost Colangelo and his cadre of 15 mostly corporate investors more than $325 million to put on the field. That sum includes a record $130 million expansion fee the Diamondbacks paid and $100 million that they paid toward construction of a $350 million state-of-the-art stadium. And that's not counting the $100 million-plus that the Diamondbacks spent to field a team. Colangelo committed a total of $79 million to two players alone, Williams and shortstop Jay Bell.
MARLINS REDUX? Baseball historians don't have to go back far to find teams that spent their way into woe. Two years back, the Florida Marlins paid $89 million to free agents. They won the World Series last year, but owner H. Wayne Huizenga was forced to put the money-losing team up for sale and deal off its stars. Colangelo "still hasn't proven that people are going to watch baseball in those hot desert summers," says Colorado Rockies owner Jerry McMorris, whose franchise, the most profitable in baseball, is Colangelo's model.
Sitting behind the screen watching his team on its way toward beating the Chicago Cubs 9-8, Colangelo fairly bristles at charges by New York Yankees owner George Steinbrenner and others that he is overspending. His player payroll, he says, is a little more than $30 million for the year. "And I'm getting criticized by folks that have $70 million payrolls," he says. He predicts the team will draw 3.5 million fans this year, up there with leaders like the Rockies and the Los Angeles Dodgers. And what about largesse such as the $45 million he's paying 32-year-old Williams over five years? "These are hardly irresponsible deals," he says. "We are signing players that will be role models for the team and solid citizens for their community, as well as play the game well."
Just as Williams can hit a fastball, Colangelo knows how to market to fans and partners alike. "When Jerry looked for investors in his sports team, we all wanted in," says John Teets, former chairman of Dial Corp., which bought into the Suns and the Diamondbacks. The team ownership group Colangelo has this time includes the state's two major dailies, its three largest banks, its biggest mining company, and America West Airlines Inc. Many of them also kicked in to help the team raise an impressive $500 million in marketing revenue, including $140 million that team investor Bank One paid to slap its name on the stadium.
The formula of high-priced talent and corporate sponsorship has driven the Suns since 1987, when Colangelo put together a corporate group to buy the then struggling team for $44.5 million. Many Diamondbacks employees, including President Richard H. Dozer, come from the Suns. The two teams also share an ad agency, SRO, which just happens to be controlled by Colangelo's management group. Few teams, however, can match the Diamondbacks' new stadium. Sitting under a retractable dome, it boasts 69 luxury boxes, six party suites, and a microbrewery and restaurant. And let's not forget the swimming pool overlooking right field, which already has brought in $600,000 in ads from a pool chemical company.
HUSTLING. Such business acumen has made Colangelo a five-time winner of the Arizona Business Gazette's Executive of the Year award. That's a long way from the gritty Hungry Heights neighborhood of Chicago Heights, where Colangelo grew up with dreams of being a big-league baseball player. A sore arm turned him to basketball, and he became an All Big Ten selection at the University of Illinois. Although he played semi-pro after college, it was selling that really fired him up. "He was a hustler all his life," says Frank Narcisi, a friend from Chicago who ran a tuxedo-rental business with Colangelo in the late '50s and early '60s.
Colangelo's training to run a professional sports operation came when he worked with Dick Klein, a Chicago consumer marketer. When Klein proposed applying for what became the National Basketball Assn. franchise to own the Chicago Bulls, Colangelo lined up investors to raise the $1.25 million franchise fee. In 1966, when the Bulls took the court, Colangelo was its head scout and merchandising director. Two years later, at 28, he went to Phoenix to put together the Phoenix franchise.
Colangelo and the laid-back Arizona lifestyle are among the reasons that All-Stars such as Danny Manning ignored better offers and joined the Suns. But not everyone is enamored of Colangelo. Two years after he helped them relocate from Winnipeg, the Phoenix Coyotes hockey team is losing money--in part, claims owner Richard T. Burke, because Colangelo misled him about the revenue the team could generate from the Colangelo-run arena. "It's our own fault, I guess," Burke recently told the Arizona Republic. "We chose to believe people meant what they said."
Colangelo argues that the Coyotes have a better lease than the Suns--and notes that the Coyotes still have three years on a five-year lease, so things could change. Then he turns back to his latest project, the Diamondbacks, who are rallying for four runs against the Cubs. A week of celebrations, including a black-tie symphony concert, is planned for the opening of the stadium. The megaprofitable Rockies come to town for the first official game on Mar. 31. That's one team Jerry Colangelo intends to beat--both on and off the field.By Ronald Grover in Mesa, Ariz.Return to top