On December 15, the Escondido, CA, city council voted 4-1 to approve a new stadium to be built to house a Triple-A franchise recently bought by Padres owner Jeff Moorad. While some of the details are being worked out, the city will finance the building of the stadium almost 100%, while Moorad, who recently bought the Portland Beavers, will move his team in there at the beginning of the 2013 season after a temporary stay in Tucson.
This is interesting on several levels. First, there is the economics of owning a minor league franchise and also of having one in your city. Can Escondido support a franchise if Portland couldn’t? Where does Tucson fit into all this?
Another thing that is interesting about this is the proximity of Escondido to San Diego. Escondido is a suburb of San Diego; it is about thirty miles from Petco Park, and in some ways borders Rancho Bernardo, which is a neighborhood inside the city limits. Other big league clubs have done similar moves and been successful, but will it be the same for the San Diego area?
The Adventures of Jeff Moorad
At the center of this is Moorad, who is no stranger to the bold and controversial. In the 1990s, he was one of the top baseball agents in the game. Among the players in his stable were Manny Ramirez—for whom he negotiated a $160 million contract with the Boston Red Sox—Will Clark, Raul Mondesi, Rafael Palmeiro and B.J. Surhoff, among others.
He became partners with Leigh Steinberg to build one of the biggest sports-representation firms in history, negotiating an estimated $3 billion worth of contracts, from which they earned the standard 4- or 5-percent commission. Wanting to go a different direction in his business and life, he and Steinberg sold the agency in 1999 for a reported $74 million and two spin-off sports ventures for another $38 million. He still represented athletes, but he put together a group of investors that began to quietly explore owning a pro sports franchise.
In 2004, he got a call from Arizona Diamondbacks minority owner Ken Kendrick. Kendrick and two other members of the ownership group had decided to split with Jerry Colangelo amid $200 million-plus of debt. They wanted someone to come in as a minority partner to run the club.
This situation immediately caused controversy among both the owners and the players union. The union feared Moorad would share proprietary information about contract negotiations with the other side‐a double agent, so to speak. MLB executives were still irked about his role in the 2000 free-agent derby for Ramirez that he allowed ESPN cameras to chronicle, including at least one conversation that New York Yankees General Manager Brian Cashman claims was supposed to be confidential.
Moorad also authored an op-ed piece in the The Sporting News during the 1994 baseball strike. “The fans care about the game,” he wrote. “The players care about the game. The owners don’t care about either. What they care about is grabbing more money and more power over the national pastime.”
“Different time, different perspective,” he laughed to signonsandiego.com when asked about it.
In 2009, Moorad agreed to become the lead partner in a group that would buy the Padres from John Moores. Moores was selling the team because he was going through a divorce. Moorad and his group of 12 investors agreed to own 30% of the team with Moorad serving as club CEO. Moorad’s group is expected to gain full control of the Padres from Moores incrementally over 5 years.
However, Moorad also still owns a 12% share of the Diamondbacks, whose principal owner, Kendrick, was reportedly not happy with the circumstances of Moorad’s departure. According to the Wall St. Journal, Kendrick refuses to buy out Moorad’s remaining Diamondback shares.
Moorad gradually had begun to put his stamp on the Padres. While Moores was in the process of divorce and selling the team, he left things in a sort of limbo. When Moorad took over, he replaced long-time GM Kevin Towers with Jed Hoyer, but seemed to keep the team on essentially the same path as Towers, not being reliant on free-agent signings, but building the team through the draft and the minor leagues.
It worked somewhat in 2010, when the Padres led the division most of the season with a tough, but essentially no-name pitching staff, two superstars in Adrian Gonzalez and Heath Bell, and a mostly journeyman group after that. They eventually fell to the Giants, but left no doubts how wide-open the NL West is and will continue to be.
Moorad’s biggest move so far has been trading Gonzalez, essentially the only feared bat in the lineup, to the Red Sox for four minor leaguers. One could say he’s ripping the heart out of his team, but looking at Moorad’s history, he’s in this to win and probably has a blueprint locked up somewhere as to how he will do it.
Part of this blueprint was getting their Triple-A minor league affiliate closer to home. The Padres’ Single-A team was in nearby Lake Elsinore, and the Double-A team was in San Antonio, while the Triple-A team had been in Portland since 2001.
The Portland Beavers owner, Merritt Paulson, had put the team up for sale. The club’s ballpark, PGE Park, was being turned into a soccer-only facility for an MLS team, and Paulson and the city of Portland could not find a suitable replacement they could agree on. Moorad jumped on the opportunity to both own the franchise and also move it to the San Diego area, with Carlsbad, San Marcos and Escondido as his top choices.
Moorad probably saw this work on two levels. On one hand, many clubs, including the Braves, Mariners, Phillies and Red Sox have their top-level affiliates close to home. In 2009, the Braves moved from their longtime affiliate in Richmond, where they had been since 1966, to Gwinnett County, basically an Atlanta suburb. The Mariners have been affiliated with nearby Tacoma since 1995. The Phillies, after eighteen years in Scranton Wilkes-Barre and a year in Ottawa, moved to nearby Allentown. And the Red Sox have been aligned with Pawtuckett, RI, since 1973.
This idea of moving a Triple-A club next to its parent club certainly has it proponents. “From my experience, there’s no shortage of baseball fans in this country,” said Aaron Artman, the president of the Tacoma Rainiers, the Seattle Mariners’ Triple-A affiliate.
To Artmin, it is a win-win for the city of Escondido and the Padres, even as some question how a minor league team would be able to sell enough seats to achieve returns on the multimillion-dollar investment when the Padres can’t even sell out Petco Park.
“There’s such a bond at that minor league level because of the intimate stadiums. You’re close to the action, you meet players…creating a wave of fans for the Padres that I think ends up being a win-win for both them and the minor league affiliate. I know we’ve seen that up here,” Artmin said.
Moorad sees some of the same things.
The location, less than an hour’s drive from the Padres’ home at Petco Park, “would give North (San Diego) County a chance to get to know our players at a younger age, when they’re just a step away from the big leagues,” he said.
“This project helps a municipality redefine itself, and put itself on a larger, more significant stage,” he said. “And I hope that our ultimate partner is Escondido.”
On another level, minor league baseball, especially when played in a newer ballpark, seems to have taken off in Southern California, with successful Single-A clubs in Rancho Cucamonga, Lake Elsinore and Lancaster, among others. This is despite the fact that there are three major league clubs within about 100 miles of each other. This will, however, be the first in San Diego County since the Padres were created.
It isn’t Escondido’s first attempt to rub elbows with the thought of a pro sports franchise in the city. As late as 2009, the San Diego Chargers had some discussions about building a stadium in the same site Moorad has in mind. According to North County Times reporter David Garrick, three minor league baseball teams were looking to set up shop in the city.
Two were independent teams (one the San Diego Surf Dawgs), and the most high profile was an entrepreneur who was looking to lure the Lancaster Jet Hawks down south. Ultimately nothing happened, but between Moorad’s ambition and a generally sympathetic city council and population, not to mention a minor league team that needs a new home fast, it looks like it is going to happen.
The city council is divided up among those definitely in favor, those in favor but with reservations, and a lone member against. The approval of the council was actually quite tentative. While they did approve the building of the stadium 4-1, they left quite a bit of wiggle room. Originally, Moorad wanted the city to completely fund the stadium (about $50 million, estimated), but did make some concessions for the “memorandum of understanding” that was voted on Dec. 15. It will be a 30-year lease between the Padres and the city.
The memorandum states, among other things, that ground will be broken on the new stadium (located near the intersection of Interstate 15 and California 78) in Jan., 2012, and the ballpark ready for Opening Day in April, 2013. Moorad’s group will pay $150,000 to cover repairs and possible renovations, and will cover any cost overruns on ballpark construction. The investment group will also aid the city in land acquisition, adding infrastructure, pollution eradication and bond financing costs.
In return for providing that $5 million, Moorad’s group received the first opportunity to buy 10 acres of city land just west of the ballpark. The lease will not only be binding to Moorad’s group, but will also be binding to the Padres, in case Moorad sells. The only immediate money the city will receive is a split of the parking revenue and an annual $200,000 lease payment that would be increased every five years based on inflation. All revenue from ticket sales, naming rights, concessions and non-baseball events would go to the Padres.
It is the hope of the city that building the ballpark will spur development of the area and bring in tax dollars for the city. Their hope is that restaurants, shops and office buildings will open near the ballpark.
“A ballpark would be a cool anchor that changes the way people feel about that area,” said former Mayor Lori Holt Pfeiler, predicting the ballpark would attract many millions of dollars in private development to the industrial zone south of Highway 78 and east of Interstate 15. “This is the quickest way to get what we want to happen there.” Pfeiler was instrumental in the early negotiating with Moorad.
Others were more skeptical, especially about Moorad’s original insistence that the city basically cover all the costs of the ballpark. Recently-elected mayor Sam Abed pushed for Moorad’s group to cover the cost overruns, while council member Olga Diaz was pushing for the city to receive a portion of the revenues from the ballpark. The plan is to iron these things out when a more formal agreement is arrived at in February.
The requested changes were so significant that the council decided not to approve the actual agreement presented to them, but instead voted to direct City Manager Clay Phillips to use the agreement as a “template” for a more formal deal that the council is scheduled to consider Feb. 16.
Moorad said he was OK with that approach, but emphasized that he didn’t want to revisit all the issues that had already been resolved.
“I don’t know that the deal can withstand a complete re-opening,” Moorad said.
But Moorad adviser Steve Peace indicated there was some wiggle room.
“We’re not agreeing to anything here, but we haven’t got up and run out of the room,” Peace said.
The public, at least the ones that showed up to the meetings, seemed generally in favor of the ballpark, and were excited at the opportunities to attend games and the potential economic development. Those against the proposal, a sizable minority, thought it was too expensive and that Moorad was “fleecing” Escondido.
One proponent, Patrick Coony, wrote to the North County Times and put it in an economic perspective. “There are risks and potential rewards to any business venture. If the risks associated with Triple-A baseball in Escondido were enormous, I don’t think that the investors would be betting such substantial sums of money on developing the proposal.”
The local media seem enthusiastic. In an editorial published on December 12, The North County Times pressed for the ballpark as a means to liven up the local economy, saying the city has “drifted toward harder times and a poorer population” and other economic development measures haven’t worked.
While taking into account the reservations of some residents and council members, it was unequivocal where it stood. “There are a lot of cities with redevelopment money and land to offer, but few with this kind of great location. Also, Triple-A ballclubs looking for a home are pretty scarce. The potential is obvious. The city could use a base hit about now, and we think this could be a home run.”
So, while there are still some things up in the air, and Moorad insists that he will have no problem turning Tucson into the team’s permanent Triple-A home, it looks like the eventual move to Escondido will happen. The ever-ambitious Moorad has given the city considerable concessions and still stands to be a big winner. Despite reservations of some members of the city council, there is a huge potential upside for having a ballpark in that area.
The pro-ballpark website ballparkforescondido.org summed up the situation best. “The game is hardly over, we have only reached the seventh inning stretch with a tight lead.”
OTHER READING MATERIAL
Memorandum of Understanding
References & Resources
David Garrick (North County Times)
North County Times