April 1 (Bloomberg) -- Russell McBride has been a Miami Marlins fan since the Major League Baseball team’s first season in 1993.
For the past decade, he’s attended the home opener with about 20 friends. McBride was there last April when the Marlins played the first game in their new 37,000-seat, retractable roof stadium -- a gaudy gem of a facility that owner Jeffrey Loria filled with $191 million in free agent talent, including players signed away from big-time franchises in New York and Chicago.
Every baseball team is in first place on opening day; the 2012 Marlins appeared poised to be there in October, too. When Miami plays its first home game of 2013, on April 8 against the Atlanta Braves, McBride will be a conscientious objector.
“I’m not going to attend any more games until there is an ownership change,” he said.
This is as gentle an opinion about Loria as you’ll find. After a widely hated trade, he’s been called everything from a con artist and the biggest fraud in baseball by Yahoo, to a “wheezing toad goiter,” by ESPN. When the Miami Herald commissioned a poll of South Florida baseball fans in November, Loria’s favorability rating was 6 percent.
Baseball in Miami has always been a cycle of boom and gloom. The Marlins have won two World Series titles -- one in 1997 under Blockbuster video billionaire Wayne Huizenga, one under Loria, in 2003. The franchise’s other 18 seasons have mostly been exercises in anonymous futility.
Ownership said there was a lack of funds to get star talent because the Marlins were forced to play in the Miami Dolphins’ cavernous, soggy football stadium.
“I’m done losing money until there’s a commitment from others,” Loria told the New York Times in 2005.
By commitment, he meant a baseball-only stadium, and from others he meant the tax-paying public.
Over the next three years Loria did the ownership Hokey Pokey -- one foot in his home market, one in Portland, or San Antonio, or Las Vegas. Anywhere that might put pressure on the people of Miami to fork over the money.
“We let it bottom out,” Marlins President and Loria’s stepson David Samson told Miami business leaders at a breakfast meeting last year. “We pretended we were going to move.”
Like countless other owners, Loria’s tactics worked. In March 2009, Miami-Dade County commissioners approved a $650 million stadium project, with the city and county kicking in $490 million. Thanks to the balloon payment structure of the bonds sold to finance Marlins Park, the county is actually on the hook for $2.4 billion through 2049. Loria promised Miami about $160 million, plus rent on a 35-year lease.
For all that public money, fans like McBride expected a winner, and on opening day 2012 it looked like Loria had assembled one. But the Marlins lost that day and 92 more times in 2012, finishing in last place in the National League East.
Most team owners would ask their fan base to embrace baseball’s array of cliches about hope for next year and pledge to do whatever it takes to field a winner. Not Loria.
On Nov. 13, the Marlins traded five veteran players, including two signed the previous off-season, to the Toronto Blue Jays in exchange for three big-leaguers and four prospects.
The trade wasn’t about players, though. It was about money: The Marlins shed $146.5 million in future payroll. If the Marlins were going to lose, Loria decided they might as well lose cheap. Even if that meant becoming the most hated man in Miami.
It’s easy to forget that baseball teams are capitalist enterprises -- in part because they’re not entirely. Besides MLB’s antitrust exemption, franchises trade on the emotions of their home cities in ways the local manufacturing plant can not.
Like any retail company, the Marlins have customers. They buy tickets, beer, souvenirs, etc. Uniquely, though, the team also has supporters. These people may never set foot in the stadium or watch a game on TV, but their pride in the team spurs on the paying customers and imbues the franchise with a halo of civic value.
The most respected owners -- such as Charles Johnson of the San Francisco Giants and Stuart Sternberg of the Tampa Bay Rays -- run their teams for profit while keeping the halo bright. They aren’t just owners, they are fans-in-chief. Sometimes they’ll spend money to stay respectable even when a championship is unlikely, just to ensure the halo doesn’t dim. Unlike many of his fellow owners, Jeffrey Loria is unwilling to fake it.
“Loria’s a profit maximizing person and we shouldn’t presume that he is looking out for the city,” said Victor Matheson, an economist at the College of the Holy Cross who studies stadium financing. “He’s looking out for himself, and the way he does that is by extracting as many dollars as he can from fans, from taxpayers, and from the league in general.”
Loria declined to be interviewed for this story.
Loria, 72, bought his first baseball team in 1989, paying $4.2 million with a group of partners for the minor league Oklahoma City 89ers. Raised in Manhattan, Loria was a high school second baseman who went on to earn millions as an art dealer specializing in 20th century masters.
Baseball remained a passion, though, and the 89ers were hardly a vanity purchase. According to Jim Weigel, then the 89ers general manager, Loria had a phone line installed so he could call in and hear the radio feed of games from wherever his art business took him. He raised front office salaries and weighed in on everything from uniforms to ticket giveaways until he sold the team for $8 million in 1993.
After failed bids to buy into big league teams in Texas, Baltimore and Kansas City, Loria got lucky in Montreal. In 1999, the Expos’ local ownership group was short on cash and sold him a 24 percent stake for $12 million.
Three years later, they accused Loria of conspiring with the league to move the franchise.
In a racketeering suit filed in Miami, they claimed he had set out to destroy the viability of baseball in Montreal by sabotaging media rights deals and efforts to build a new stadium. Loria denied the allegations, and the other owners did not pursue the claims after an arbitration panel later found that Loria acted within his contractual rights.
Whatever his intentions in Montreal, Loria poured $18 million into the Expos. He boosted payroll, triggering cash calls the other owners failed to answer. By 2002, he owned 94 percent of the club.
That year, MLB Commissioner Bud Selig executed a double switch. The league’s other 29 owners took over the Expos, paying Loria and his partners $120 million. (The league eventually moved the team to Washington). Florida Marlins owner John Henry then sold his team to Loria for $158.5 million, with a $38.5 million interest-free loan from the league. Henry then led a group that bought the Boston Red Sox for $660 million.
In his second season in Miami, the Marlins won the World Series, albeit with a roster that was largely in place when Loria arrived.
“You can say a lot of things about him, but the guy wants to win,” said former Marlins catcher Paul Lo Duca. “Probably too much.”
When the 2004 Marlins were in the playoff hunt, Lo Duca recalled Loria showing up in the clubhouse with a highlight reel from the previous year’s World Series team to pump up the players.
“As corny as it sounds, that’s Jeffrey,” he said.
There is a downside to all that competitive passion, though.
“He probably does have knee-jerk reactions,” said Lo Duca.
Careening between competitive instincts and impetuous decision-making has been a hallmark of Loria’s ownership. In 2005, as he was cutting payroll and pressing for a new stadium deal -- losing now so he could win long-term -- Fox Sports Florida offered a quick cash infusion in return for the team’s regional TV rights. Former MLB Commissioner Fay Vincent, who along with other sports executives anticipated a spike in rights fees, tried to talk Loria out of the 15-year deal.
Vincent asked if there were any early-out clauses in the contract; Loria said no, and that he planned to make the deal anyway.
“It was take the money now, pay off debt, be comfortable,” said Vincent. That deal, which the South Florida Sun Sentinel reported pays $16 million to $18 million per year, now stands as one of the worst in baseball. In February, Loria invoked it as one of the reasons he had to cut payroll.
MLB doesn’t reveal the finances of individual teams, but for a while, Loria’s penury didn’t appear to hurt the Marlins. Financial documents leaked to the website Deadspin in 2010 showed that, thanks to subsidies from wealthier clubs and a share of league-wide media and royalty deals, the Marlins had net income of $29 million in 2008 despite their paltry attendance.
The arrival of the new stadium changed things. There was the $191 million off-season free agent binge; a Showtime reality show about the team; and an attempt to reposition Loria as a civic figure.
The stadium plan included a $7.5 million “Art in Public Places” budget to install works by artists such as Joan Miro and Roy Lichtenstein in the concourses. Loria sent the message that he had evolved into a more traditional kind of owner, one who would at least make a grateful gesture or two to the city.
Marlins President David Samson conceded that the team’s turbulence has been hard on fans. The way he sees it, the mistake wasn’t slashing payroll after a losing season, but in ever raising it.
“Being higher in payroll than we should have been last year, it didn’t work,” he said.
All fans see now is the drop.
“Last year we had $100 million and this year it’s $40 million payroll. If we were 70 last year and 70 this year, you’re probably not even calling me.”
In a sign that the franchise is returning to form, Samson said that the new stadium is now part of the reason the team had to dump salaries.
“Let’s not forget the investment (Loria) made in the ballpark,” he said. “That money is significant. Does it come instead of payroll? Yeah. Dollars are dollars wherever they go.”
In any given season most sports teams are in some stage of rebuilding. Only one wins a title. A handful contend. The rest can disguise where they are or try to explain where they’re going. Disguise involves keeping or signing a couple of aging players with names the fans know and pretending your team has a chance. Explaining requires putting trust in your fans’ ability to see the long view.
“You have to communicate, be transparent and be honest,” Mark Cuban, owner of the National Basketball Association’s Dallas Mavericks, said in an e-mail. “Then expect to get criticized heavily in the media.”
As general manager of the Cleveland Indians in 1992, John Hart, now an analyst for MLB Network, stripped his team “down to bare bones,” a $6 million payroll. Three years and one new stadium later, the team went on a five-year playoff run. When they lost to Huizenga’s Marlins in the 1997 World Series, the payroll was $54 million.
“You’ve got to articulate your vision, to explain what it is you’re doing, and keep your fans updated,” said Hart. “You’re selling the future.”
For all of the rancor inspired by the Marlins’ off-season, executives on other teams tend to agree that the team is setting itself up well for the future.
Baseball Prospectus, one of the most trusted guides in the game, called the November trade “a shrewd baseball move” that “infused talented players into an already impressive pipeline.” In a full-page ad in three South Florida papers, Loria made an attempt to explain the team’s strategy.
“We needed to start from scratch quickly to build this team from the ground up,” he wrote.
Ticket sales have dipped more than expected since the November trade. Season ticket holders, Samson told the local media, are down from 12,000 last season to fewer than 5,000. And it’s possible that no amount of explanation or outreach can keep the Marlins’ from an attendance apocalypse in 2013.
“My job is -- one fan at a time -- just to try to get people to engage with the Marlins and enjoy the fact that there is baseball here,” said Samson. “To have even one person not want to watch or go to a game because of me or because of Jeffrey makes me disappointed and sad.”
If those jilted fans see progress in the next two or three years, history says they will begin to forget their dashed hopes.
“If they start to play well and they add some free agents back into the mix, fans will come back,” said Hart. “They will.”
At least until Loria tears it down again.
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