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You Own The Nationals. Now What Happens?

by Maury Brown
May 09, 2006

29 owners…

It just never sounded right.

On Feb. 15, 2002, the other 29 owners purchased the Expos for $120 million from Jeffrey Loria and his minority partners in a deal that had Loria purchasing the Marlins and shortly thereafter having John Henry purchase the Red Sox along with Tom Werner and Larry Lucchino. The latter of these transactions has some bearing on what we’re about to delve into.

And what we’re about to delve into is the sale of the Washington Nationals.

This past Wednesday, Commissioner Selig finally pulled the trigger and awarded the sale of the Nationals to a group led by Washington, D.C. real estate magnate, Theodore Lerner. The sale price: $450 million.

I’ve been following the Expos' relocation daily since 2001, but about 18 months ago, I started really contemplating what the new owners would be up against. That was when the discussion on the ownership selection started into high gear. It’s also when Stan Kasten came into the picture.

Kasten had signed up for updates on the SABR Business of Baseball committee website, Business of Baseball.com to receive updates. I was looking through the logs when I noticed his e-mail address; how many Stan Kastens are there in the world? I contacted him when it was announced that he was going to be one of the bidders for the Nationals and requested that when the time of the award occurred—no matter whether he was part of the winning bid or not, I wanted to interview him on the process of the selection. About a month ago, Kasten merged with the Lerner group, and well, he landed on the winning side of the ledger.

The interview with Kasten was published yesterday, less than a week since Selig announced the award to the Lerners.

Kasten is the former president of the Atlanta Braves, Hawks, and Thrashers. What’s amazing is he was president of the three franchises simultaneously. He also helped in the development of Turner Field, snagged John Schuerholz from the Royals, and bumped Bobby Cox into the manager's position. Few would deny that all of these moves have been successful.

So, for about a year I’ve been gearing up thinking of all that the new ownership will be faced with. I understood that not all questions would be answered, and therefore it would be pointless to ask. Some questions would be asked, but I had a suspicion that the answers would be “politically correct” in their response.

Here’s what has crossed my mind on what the owners are against, in no particular order. It shows that there is an unbelievable amount of work to undertake. As Kasten said in my interview with him, “My list of items that have to be done as my ‘first order of business' is now 12 pages long.”

Oversee and Influence the Construction of a $611 million Stadium Project

The new owners have new stadium construction to oversee, and not only do they need to get it built, they have to get it online by March 2008 based on the lease agreement negotiated prior to the ownership award. Yes, the onus is on the District. (Actually, it's on the construction companies that have signed on to build it for the District, but there are loopholes that place some level of risk on the District.) The facility design by HOK has yet to get in the hands of the new owners, who will want to add their touches to the design. Kasten made mention of reaching out to non-hardcore baseball fans in an attempt to keep attendance high. The ability to do that, he feels, may be though the addition of amenities the are outside of baseball, be that play areas for kids or in-stadium restaurants.

The fate of Tony Tavares, Jim Bowden, and Frank Robinson

Out of these three, only the fate of the first on the list is known. Tony Tavares, the current president of the Nationals will be stepping down. After that, it’s debatable, although some educated guesses can be made.

Jim Bowden is dealing with a DUI charge, and given the direction that Kasten and the Lerners are taking, it seems highly likely that Bowden’s time with the Nationals is at an end.

As for Frank Robinson, if the new owners wish to place their mark on the franchise from the get-go, then Robinson is likely out as manager as well. It may be possible, however, that Robinson could be retained in the front office in some fashion.

Getting Comcast to Show Nationals Games in the D.C. Area

A serious impediment to marketing the Nationals has been the fact that in the D.C. area, Comcast is currently not showing Nats games. Why? A dispute between the Orioles (Peter Angelos) and Comcast over the Orioles' contract with Comcast. You may ask how these are related. The answer is the newly created regional sports network (RSN), Mid-Atlantic Sports Network (MASN).

MASN was created as part of the deal when the Expos were relocated to D.C. in order to show both Orioles and Nationals games. The dispute with Comcast is based on the fact that the Orioles had an agreement with Comcast to show games prior to the creation of MASN, which Comcast feels it should have had the rights to bid on. The dispute has created considerable consternation with members of Congress and the D.C. Council. Both government entities have threatened to intervene.

The total number of subscribers that have been unable to watch Nationals games is reported to be 1.3 million.

Addressing issues while still at RFK

RFK is an interim facility. It’s physically old and is not considered to be a permanent location for the Nationals.

Beyond that, there are issues surrounding the fan experience that need to be addressed. There have been complaints surrounding the quality of food vendor offerings, from the level of customer service to the quality and quantity of food offerings. On top of this, there have been complaints regarding the ticket service, which many season ticket holders say has been sub-par— many fans have complained about the tardiness of tickets arriving via mail.

Ownership will want to wade into these and other issues that revolve around staffing. They will want to address these issues and prevent the slide of attendance, which is already occurring in the second year of the franchise being in D.C.

Since the new ballpark will not be ready until March 2008 at the earliest, ownership will need to make RFK as enjoyable and appealing as possible in the interim.

Redeveloping the On-the-Field Product

Maybe the biggest challenge will be turning a club that has been wards of MLB into a contender.

The Nationals were a .500 ballclub last year, going 81-81. And, for the most part, they’ve been just that—average. They have finished as follows in the NL East over the last 10 years: 5, 5, 4, 2, 5, 4, 4, 4, 4, 2 (avg. over the decade: 3.9).

New ownership will be addressing this, although some fans may not like the fact that immediate gratification is not the overriding factor. As Kasten told me in his interview:

It's not a secret formula. It's something that has been proven many, many times in different contexts. You have to build from the ground up in baseball, it's very much a development sport, unlike basketball. In baseball you really need to focus on scouting, player development and minor leagues.

All those things require time and money, and we're absolutely determined and dedicated to do it that way. Those that would provide not just money, but the time. And time is even more important than money, in many cases. These owners want to build long-term success; they understand that it will take a little while longer to build it that way, but when we finally turn the corner, the success we have will be much longer lasting.

Turning the Nationals from a Revenue Payee into a Revenue Payor

One thing that baseball is pretty much banking on is the ability to turn the Expos/Nationals from a taker in the revenue sharing system into a payer into the system. With the move from a smaller market in Montreal to a top market in DC, the club should be able to do so. It’s the “how” that is key.

Kasten helped develop Turner Field, and he believes that a large part of that success is due to the ability to reach the fringe fanbase: those who come to the game not just for baseball, but for entertainment. This, of course, makes many die-hard baseball fans' stomachs turn. The logic is that over a long stretch of time, winning seasons cannot always be banked upon. Is it crucial? Absolutely, but what Kasten envisions is the ability to sustain over 2 million a year in attendance. That, he feels, comes with entertainment options for kids, seniors, and women. In the case of Turner Field, that has been through the implementation of Tooner Field, the Chop House restaurant, concerts, etc.

Playing Nice with Congress, the D.C. Council, and Mayor

Much was made of the fact that the Lerner and Kasten bids were "quiet." That is, when other groups were lobbying through the press or with members of the D.C. Council, the Lerners were virtually non-existent. In the numerous e-mails that I exchanged with Kasten, it was always a case of pretty much not saying anything about the Nationals. At one point when I mentioned the Nationals, he responded by saying, "Nice try getting me to comment on something regarding the Nationals … which I'm still not doing. But, I do appreciate the thought."

There was never an edict from MLB to stay quiet on the Nationals' process. But how the Lerners and Kasten acted has a significant bearing on where the Nationals reside: the nation's capital.

Think about it: the new owners need to be able to not create any undo controversy in the place where steroid hearings and antitrust are always omnipresent. In some senses it may make more sense for ownership to be heads down and focused on the tasks at hand, while not possibly setting off any landmines in the process. These owners will also have to deal with an oversight committee that the D.C. Council plans to implement to make sure that the construction of the new stadium stays on budget. Being politically savvy will be highly important.

Conclusion

Yes, Ted Lerner, you now own an MLB team after working to land a professional sports franchise for over 30 years. Yes, Stan Kasten, you're back in the sports executive game after being "retired" from the front office since 2003. You have your work cut out for you. It's one part real estate project (the construction of the stadium), one part redevelopment project (the rebuilding of player personnel), one part restabilization of the front office and marketing (creating a better experience at RFK and getting the Comcast/MASN dispute ironed out, one part "place your stamp" on the franchise with the dealings of Tavares, Bowden, and Robinson, and finally, one part don't blow-up MLB by doing something stupid where Congress and the D.C. Council need to be dealt with.

Yes, it's just the sort of ownership that a driven, egocentric type would love. Good thing that's what it takes to own an MLB franchise.

References and Resources
Business of Baseball.com: An interview with Stan Kasten

Maury Brown is the editor of BusinessOfBaseball.com, co-chair of SABR's Business of Baseball committee, and covers the business of baseball at his blog, The Baseball Journals. His analysis and commentary has been published in the Boston Globe, CNN/Money, Toronto Globe and Mail, Los Angeles Times, Pittsburgh Post Gazette, San Jose Mercury News, and Oregonian. The opinions expressed here are solely those of the author and do not represent the opinion of the Society for American Baseball Research or its Business of Baseball committee. Maury can be contacted through the miracle of e-mail.

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