Tuesday, July 15, 2008

Sabathia deal makes dollars and sense

from The Business Journal of Milwaukee:

The Milwaukee Brewers' acquisition of star pitcher CC Sabathia means the team won't make a profit this year. But the Major League Baseball team stands to reap a substantial financial gain long term in corporate sponsorships, ticket sales and more if the Brewers make the playoffs for the first time in 26 years.

That's the business reason behind the team's investment in the American League Cy Young winner, who won his first game pitching as a Brewer July 8. In acquiring Sabathia in a blockbuster trade with the Cleveland Indians this week, the team will have to pick up an estimated $5 million in salary he is owed for the remainder of the season. Principal owner Mark Attanasio said the additional salary, which increased the team's payroll to an all-time high of $90 million, will mean the Brewers will not make a profit this year as the team has for the first three seasons under Attanasio's ownership.

"In this case we'll probably lose money by doing what's right for the team," Attanasio said. "If you have that opportunity, you have to take it."

Team officials are expecting a jump in attendance over the remainder of the season, along with a corresponding increase in parking, concession and merchandise revenue. The team's goal of 3 million in attendance seems attainable with the buzz created by the Sabathia trade and the recent strong play on the field.

"There is great excitement in the community and that should translate into packed houses for the rest of the season," said Rick Schlesinger, Brewers' executive vice president of business operations.

The best example would be Sabathia's Milwaukee debut. The game drew more than 42,500 fans, a rare sellout on a Tuesday evening. Prior to the trade, Brewers officials expected about 34,000 fans.

In the past, Brewers officials have said fans spend an average of $28 per game on tickets, parking and concessions. For that Tuesday night game alone, that translates into an additional $238,000 in revenue.

A source close to the Brewers said the team already was expected to record a financial loss this season before the trade because of an estimated $2 million signing bonus paid to outfielder Ryan Braun as part of the eight-year, $45 million contract he signed in May, along with the $10 million being paid to reliever Eric Gagne, who was signed in the off season.

Schlesinger confirmed it is likely that adding in Sabathia's salary will make it difficult for the team to make enough to turn a profit. However, he said, the team is looking to the 2009 season for a big jump in revenue, especially if the Brewers finally make the playoffs this year.

For example, the team drew 1.9 million fans in 1982 when it made the playoffs and went to the World Series. In 1983, attendance jumped to almost 2.4 million, even though the team didn't make it to the post season.

"There is no doubt that if we make the playoffs, it would set us up extremely well for 2009," Schlesinger said. "It would have major implications for every aspect of our business."

Brewers officials already are talking with some existing corporate sponsors and potential new sponsors to capitalize on the higher level of excitement over the team. They also are developing ticket packages and other initiatives to pick up more revenue from an expected playoff push.

"It is really easy to get meetings right now and then walk in and spend the first 15 minutes talking about the success on the field," Schlesinger said. "We are working to elevate the brand and find partnerships that make sense for the team and the business." Payoff

Marty Greenberg, a Milwaukee sports attorney, said Attanasio made the right decision in taking a short-term financial hit for a long-term financial gain.

"This city is so starved for a winner on the baseball field," Greenberg said. "This will pay off for the team in more hot dogs being sold, more T-shirts and higher prices for their sponsorships. It will all trace back to the bottom line."

Greenberg said the key financial driver for the Brewers is attendance, which produces concession, parking and retail revenue.

Attanasio has taken a business approach to running the team, as opposed to other owners in all sports who view running the team as a hobby, Greenberg said.

"He quickly figured out that this city really wants a winner and will support a winner in record numbers," Greenberg said. "That support translates into money for his bottom line." Moving quickly

The team moved quickly to take advantage of the Sabathia trade from a business standpoint. Within a day of the trade being announced, the Brewers and its retail supplier, Majestic Athletic of Bangor, Pa., had 750 Sabathia T-shirts, priced at $35 each, and about 50 jerseys, priced at $210 each, in the team's retail stores at Miller Park. Most sold quickly.

Schlesinger said team officials did not contact Majestic until the trade was announced at about 8 a.m. July 7.

"We had to be very careful because I did not want any of our conversations to leak out before the trade," he said. "But we were able to move very quickly after the trade to get product here. There is an expectation from the fans that product will be here and we had to meet that."

Ticket sales skyrocketed in the days after the trade. In the first 48 hours, the team sold 40,000 tickets for the rest of the season. On an average day, about 3,000 tickets are sold.

Schlesinger said it was not group sales, but people buying two or four tickets.

"We're really seeing a spike," he said. "If we keep playing well, it is going to be hard to get tickets come August and September."

Brewers' owner tops list of non-playing heroes from first half

Here's an article about owner Mark Attanasio by John Heyman of Sports Illustrated:

When Brewers owner Mark Attanasio's car got stuck in traffic on I-94 on the way to a game the other day (yes, there is heavy traffic in Milwaukee on game days now), he hopped out of his vehicle and scaled a four-foot fence in hopes of seeing every last pitch. Luckily, a security guard recognized the Los Angeles interloper who's done everything he can to become beloved in down-to-Earth Milwaukee. So the guard approved Attanasio's illegal fence-hopping and ushered him in to see his team, the best Brewers team in decades.

Of course, it doesn't hurt Attanasio's local profile that within four years of taking over ownership, the Bronx native and Brentwood, Calif., resident who frequently sits and mingles among the masses at Miller Park has authorized eye-catching expenditures for the small-market club. The latest example is the recent blockbuster trade for pitching ace CC Sabathia, which established the Brewers as a potential National League playoff force and took their payroll from a baseball-low $28 million four years ago all the way into the $90-million range now.

Attanasio credits accomplished, risk-taking general manager Doug Melvin, the team's savant of a scouting director Jack Zduriencik and many other club employees for the turnaround that has the pennant-starved city dreaming of its first playoff appearance since 1982. That was the year Stormin' Gorman and the rest took the Brewers to Game 7 of the World Series before losing to the Cardinals (the Brewers didn't join the National League until the 1998 season). But Attanasio is the one bankrolling that dream that he says will all but guarantee red ink.

"If we win the World Series,'' Attanasio says, "we may break even.'' And Attanasio, who bought the Brewers in 2004 from the family of baseball commissioner Bud Selig for an estimated $220 million, says that with glee. Tricky bookkeeping may allow some owners to claim bottom-line losses, but considering Milwaukee ranks 30th out of 30 franchises as a media market, Attanasio's claim is more than believable.

You can take this investment banker's promise to the bank, too. "If there's something to do, we'll do it,'' Attanasio says. "We're going for it.''

Attanasio can hardly contain his joy at having made beer town a baseball town again. On Sunday, the Brewers' 3-2 victory over the Reds was seen by their fourth straight sellout, and 20th of the season. The Brewers set a club record with 2.86 million fans last year and are expected to hit the 3-million mark for the first time this year. Meantime, Attanasio will be doing whatever he can to get to the games. He estimates that he sees 40 a year, 20 at Miller Park and 20 on the road. "I am a baseball fan,'' he says. "I feel like one of them. I am one of them.''

Now, he isn't viewed as any sort of California carpetbagger. In fact, he's imbedded in the community. He and star Brewers pitcher Ben Sheets, who's been selected to start the All-Star Game, are part-owners of the Milwaukee Admirals hockey team. His son Dan played at Milwaukee's Summerfest celebration with his band Pan Am.

At one point in our conversation, Attanasio excused himself so he could witness the clubhouse beer dousing (apropos for the Brewers) to celebrate the latest Brewers All-Star, Corey Hart, who had just won the final roster spot on a fan vote. That vote tally where Hart beat New York Mets icon David Wright was the latest affirmation of Milwaukee's love affair with baseball, and Attanasio sounded as excited as if he were celebrating the achievement of one of his own children. For his unadulterated glee, and his unlimited bankroll, Attanasio is my No. 1 behind-the-scenes hero of the first half (more heroes are listed below).

For Attanasio to be truly gleeful, the Brewers will have to still be playing on October. Melvin, the GM, actually started the ball rolling several weeks before he eventually landed Sabathia for top slugging prospect Matt LaPorta and three more minor leaguers. Sometime back around June 1, Melvin told Attanasio he thought they'd have a shot at the 2007 American League Cy Young winner if the Indians didn't turn it around. About a month later, Melvin made it happen with a bold approach that included offering LaPorta right away. "He didn't play games,'' Attanasio says. "He got right to the heart of the matter.''

Attanasio is a similarly straight shooter. His early pledge to do what he can to bring a winner to Milwaukee turns out to be anything but idle chatter. While many other owners remain cost-conscious, including the Dodgers' Frank McCourt of Attanasio's adopted hometown team who is reported to have nixed a trade proposal for Sabathia, Attanasio pledges to allow his GM to do what he can to improve their team and pennant hopes.

The 52-43 Brewers are among the more talented teams in the National League. But not every move has worked. The Brewers have $16 million tied up in three floundering relief pitchers (Eric Gagne, Guillermo Mota and Derrick Turnbow, who's in the minors).

Attanasio is a professional money man who puts wins ahead of bucks. If there's a relief pitcher who can aid the cause, Attanasio pledges to approve the deal. If there's a lefthanded hitter who can help, Attanasio pledges to add one of those, as well. He says, "Barring injury, we think we have a shot. And you don't know when you'll have a shot again.''

Thanks to some hellacious drafts, the Brewers may actually have more shots than a local neighborhood South Side bar. Melvin wisely kept Zduriencik, a holdover from the previous regime, and the result is 10 All-Stars at Double-A Huntsville in addition to maybe the best young nucleus in the bigs (All Stars Ryan Braun and Corey Hart, plus Prince Fielder, J.J. Hardy and Yovani Gallardo were all Zduriencik draft picks). Those drafts have positioned the Brewers to have a chance to become a perennial power, which was actually pledge No. 1 on Attanasio's list when he arrived in 2004. At the time, it seemed like a long shot. Now, not necessarily.

The Brewers actually signaled their arrival last year when they took the NL Central race into the last week but succumbed to the archrival Cubs, who probably benefited by having the more experienced Lou Piniella managing them. The bad finish made some folks forget it was still Milwaukee's first winning season in 15 years. But now, with the arrival of Sabathia, the expectations are through the Miller Park roof. Regarding a possible World Series appearance, which shouldn't be out of range, Attanasio says, "I think it would be presumptuous to say we have to get to the World Series. We have to make the playoffs first.''

But Attanasio well understands that Sabathia has put them in the mix. "A lot of people think we have a very strong 1-2 [pitching tandem, with Sheets], and that could get us deep into the playoffs,'' Attanasio says. "But we don't want to take anything for granted. We have to get there first.''

And if Attanasio has to scale fences to get there to see his team, so be it. His Brewers are scaling their own heights.

Sunday, July 13, 2008

All Star Break

Thoughts on where the Crew is currently at entering the All Star Break in New York City. These are the things that I see as a positive:

1. Nine games over .500 at the break, and only a half game from the Wild Card-leading Cardinals.

2. Front office brass willing to trade away vital parts of the future in an all out attempt to not only make the playoffs, but in my mind, make a push for the World Series with the addition of CC Sabathia and whatever else might be added in the next couple weeks.

3. The team defense appears to the naked eye to be much improved from last year thanks to Braun showing he can handle LF and just as importantly, Kendall behind the plate. Both have more than lived up to defensive expectations. In fact, they've surpassed them.

4. Bench play has proven to be very resourceful. When I say resourceful, I really mean gritty. Nobody expected Kapler to contribute as he has so far considering he was coaching a year ago. All he does is come up with the big play when he's called upon. Counsell has served well as a defensive replacement and made clutch & gritty AB's. Even the little used Mike Rivera has performed well at the plate in his limited duty.

5. Even Ned Yost seems to have made less head-scratching decisions than at this point last year. Granted, it's easy to second guess him when a move backfires, but I feel as if he's been able to really get a better handle on this year's pitching staff.