Nine questions with Tom Garfinkel

Tom Garfinkel joined the San Diego Padres at 39 years of age as president and chief operating officer in April 2009. Prior to that, he served as executive vice president and chief operating officer for the Arizona Diamondbacks.

His previous experience includes a five-year stint as executive vice president with Chip Ganassi Racing Teams, as well as stops at Texaco and Miller Brewing Company. Tom has a BA from the University of Colorado and an MBA from the Ross School of Business at the University of Michigan.

I recently had the opportunity to chat with Tom via e-mail about his career, the Padres, and where he sees the sport of baseball headed.

Geoff Young: Prior to embarking on a career in baseball, you worked in a variety of industries—auto racing, oil, beverage—and also consulted for several well-known companies. How did your experiences in those environments and the skills you acquired prepare you for what you’re doing now?

Tom Garfinkel: I’ve been very fortunate to be around some great leaders in my career in both large and small organizations. For example, I worked very closely with the executive team at Target for a period of about five years, including the CEO; president; CFO; and heads of marketing, IT, HR, real estate, and store operations. They all became good friends of mine and were generous mentors.

I learned about organizational structure, branding, creating a differentiated strategy from your competition and staying disciplined to it, building and leading great teams, developing meaningful partnerships, and evolving a culture that breeds performance, as well as more tactical elements like compensation structure, for example. These were invaluable lessons learned directly from leaders at one of the best-run companies in the world.

When I was at Texaco Inc. at 29 years old, my boss reported directly to the CEO and so I had a lot of exposure to him, and I remember asking him about the diversity crisis that they had gone through a couple of years earlier. He gave me some great advice on the topics of diversity, public relations, and crisis management.

Four years later, I was the executive vice president of a race team when I got a call that our driver had been killed in our car at Indianapolis Motor Speedway. That was a low point of my career, to be sure, but the experience gave me a whole new perspective on crisis management. A week earlier we had won the championship and then all of the sudden we were going to a funeral for a great young man with his whole life ahead of him.

Years later, when the Padres had a swarm of bees during a game here at Petco Park, several people were panicking because we had to stop the game for almost an hour. The experiences I had and the advice I received enabled me to very calmly react to the situation and quickly make decisions that hopefully prevented what could have been a real crisis if someone had been hurt.

In addition, the experiences at the Diamondbacks were relevant and helped create a more successful transition into my current role, and our CEO Jeff Moorad has been a great mentor to learn from as well. I’ve always been focused on learning and still am today, and this focus and the good fortune of having great people to learn from have contributed to my growth and have sharpened my judgment in decision making.

GY: What, exactly, are you doing now? Your title is president and chief operating officer, but in terms of day-to-day responsibilities and activities for the Padres, what does that entail?

TG: Every day is different, but I’m essentially responsible for running the business of the club. At the core we’re here to win games and championships, and to grow revenues at break-even cash flow so we have the resources to win more games and championships. Jeff [Moorad] is a visionary and a great leader, and together we spend a lot of time interacting with employees, fans, sponsors, and community members.

We have a responsibility to our fans and to the community to listen to them and to be good stewards of the Padres. I have a lot of ideas on how to do certain things differently, so I am constantly trying to raise the bar and foster creativity from everyone else. I’m proud of the leadership team we are building here—the most important thing I do is provide direction and resources for the great people we have here and then let them do their jobs.

GY: Your baseball experience has come with organizations that do not enjoy the luxury of existing in a major media market. What are some of the challenges incumbent in operating a small- or mid-market team, and how do you overcome those?

TG: It’s all in the eye of the beholder. While having the greater resources of a big-market team would be nice, being in a small- to mid-size market can be an advantage to some degree. It’s easier for bigger-market teams to lose discipline, take bigger risks, and respond emotionally or be reactionary to the media or public sentiment.

We have our challenges, to be sure, but those big-market teams have a whole different set of other challenges that we don’t have. I have a lot of respect for what they do.

Commissioner Selig and Major League Baseball have done a great job of creating an environment where smaller markets can compete, too, and that competitive parity drives the health of the whole sport. While many playoff teams have higher payrolls, Tampa Bay went to the World Series last year on a $50 million payroll and there are a couple of teams with $100+ million payrolls this year that finished with lower winning percentages than we had at $43 million—so we all have our challenges, they’re just different.

GY: With so many entertainment outlets competing for space in the ever-shrinking budgets of everyday people, how do you attract and retain fans?

TG: First, by asking them what they want and listening. Secondly, by building a brand over time that is consistent and genuine. We’re very fortunate in that we’ve inherited the results of a lot of hard work before we got here. The fans here in San Diego are passionate about the Padres. John Moores and a lot of other people deserve a lot of credit for that and for this amazing ballpark we have.

GY: In terms of building a sustainable franchise, how do you view the various methods for procuring on-field talent, i.e., through the draft, through trades, via free agency, etc.?

TG: Ultimately the talent procurement is up to the general manager, but strategically we’ll place more emphasis on investing in the amateur draft, and in scouting and player development in general. We’ll also look at how we determine the intrinsic value of a player and stay disciplined to that while other teams hopefully undervalue or overvalue a player because of emotion or conventional wisdom or media pressure, etc.

Trades and free agency are more about understanding the market dynamics at any given time and how we value those assets relative to the market. They can be very useful methods at times depending on the market conditions, but the core foundation will be built through our farm system.

GY: Statistical analysis has gained a great deal of mainstream attention in recent years thanks to the popularity of books such as Michael Lewis’ Moneyball, but baseball decision makers have been using it for much longer than that—going back at least to Branch Rickey. How do you balance the use of sophisticated analytical techniques with traditional visual scouting methods in a manner that optimizes value to the organization while at the same time keeping both “sides” on the same page?

TG: First of all, I think the dangerous thing is living on either extreme. Balancing institutional knowledge with innovative analytics is a difficult task but an important one for a team to be successful.

I think it starts with the team the general manager builds in the front office and making sure that there is diversity of thought and experience, and a culture where people are encouraged to respectfully debate and challenge each other with reason and logic. Having the right processes in place is important, too.

Great staffs can have large differences in background, but all of their input should be valued, and while they can come from different schools of thought they all should have two things in common—their knowledge of and passion for the game of baseball and their desire to build a winning team. So it starts with the general manager building the right team, providing leadership in guiding that team, and instituting the right processes for good decision making.

GY: Baseball has taken a bit of a beating in the public eye over the past several years with the PED scandals. To what degree are you satisfied that this issue has been addressed, and what impact do you think it has had on fans in terms of trusting the product?

TG: Commissioner Selig has gone above and beyond with trying to eradicate this issue. MLB now has the toughest drug testing policies of any sport. I think people are more cynical in general because of things that have happened in our society—from CEO scandals, to a president lying about an affair he had with an intern, to the sensationalized nature of the media today.

Our society is pretty forgiving when you make a mistake and tell the truth, but they are pretty tough when you lie. I think it’s harder for people to forgive Pete Rose than it is for them to forgive steroids.

The commissioner and Major League Baseball haven’t hidden from the steroids issue; if anything, they’ve been the first to stand up and admit the problem and work to solve it. I think fans see that and see that there are stiff rules in place and consequences now for players who break those rules.

GY: What is the most crucial issue you see confronting baseball over the next five to 10 years that could potentially keep the sport from maximizing its reach, and how can it be solved?

TG: All sports should be focused on attending to the fundamental economic model that drives them and on making sure they stay relevant. Baseball has a healthy model and is certainly relevant today, but how to navigate an evolving economic model and maintain and even grow that relevance is the core challenge.

The economic model has changed a lot in the past decade or two and will change further moving forward—especially with the advent of different technologies and the changing landscape of how people receive and experience content. Maintaining competitive parity will be paramount to the economic health of the sport, and maintaining relevance is tied to it as well.

Baseball is uniquely woven into our society, and is emotional and visceral for people who grew to love it at an early age. We need to make sure we are continuing to spark that interest with our youth if our future will be as bright as our past and present.

GY: What is one aspect of the way a baseball organization is run that might surprise people who aren’t “on the inside?” What surprised you when you first entered the industry?

TG: I think it might surprise people that teams are essentially small- to mid-size businesses—but they are so high profile (in the paper and on TV every day) that they feel much bigger than they actually are. When I first came into baseball, I was pleasantly surprised by the collegial nature of the industry. It’s a wonderful community of passionate people, and a game with tremendous historical and societal significance that it’s a privilege to be a part of.

References & Resources
Big thanks to Tom Garfinkel for taking the time to share his insights with our readers.

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Comments

  1. Rob said...

    GY: In terms of building a sustainable franchise, how do you view the various methods for procuring on-field talent, i.e., through the draft, through trades, via free agency, etc.?

    TG: …..We’ll also look at how we determine the intrinsic value of a player and stay disciplined to that while other teams [the Cubs] hopefully undervalue [yep] or overvalue a player [Milton Bradley] because of emotion [yep] or conventional wisdom or media pressure [definitely], etc [Cub’s fans].

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