From Sportsmen to Investment Bankers: The Evolution of Baseball’s Owners

More and more principal investment groups that buy baseball teams are coming from the banking industry. (via Garrett Craig)

There isn’t really such a person as a baseball owner any more. Sure, there are people who own baseball teams, but the baseball owner as an identity died decades ago. The last owner to make his primary income through baseball, Calvin Griffith, sold the Minnesota Twins to billionaire Carl Pohlad in 1984. Since then, baseball teams have become investments for absurdly rich men like Pohlad or Bruce Sherman, the co-founder of Private Capital Management who recently bought the Miami Marlins, or for faceless investment teams like Los Angeles’s Guggenheim Group.

Phil Wrigley said in the early 1950s, “Baseball is too much of a business to be a sport and too much of a sport to be a business.” Not so much these days; if anything, baseball teams are assets. The steady influx of money from lucrative stadium deals and television contracts has made sports teams one of the easiest bets for growth in American business. This is particularly true in baseball, where the anti-trust exemption makes monopoly control perfectly legal.

The investment groups buying teams these days have often included sports figures–Magic Johnson in Los Angeles, Derek Jeter and Michael Jordan in Miami–to disguise the cynical nature of these acquisitions and to put a recognizable face on what are otherwise enigmatic organizations. As a labor war begins to brew, it has become impossible to ignore that more and more owners have ties to hedge funds. Some of these owners have little to no prior connection to baseball, and some have shown little indication that winning will ever eclipse the balance sheet on their list of priorities.

This evolution of the ownership class from sportsmen to asset manager necessarily changes the dynamic of this labor dispute compared to those of previous eras. By my count, no fewer than 10 major league owners (John Henry, Boston; Thomas Ricketts, Chicago Cubs; Mark Walter, Los Angeles Dodgers; Bruce Sherman, Miami; Mark Attanasio, Milwaukee; Jim Pohlad, Minnesota; Charles Johnson, San Francisco; William DeWitt Jr., St. Louis; Stuart Sternberg, Tampa Bay; Ray Davis, Texas) have ties to the financial services industry. Many of the remainder are owned by media or telecom CEOs or have become assets of large media companies.

The net worths of some of the men who have recently bought into Major League Baseball are staggering: Mark Walter, $2.9 billion; John Malone (Atlanta Braves), $7.9 billion; Joe Ricketts, $2.4 billion; Arturo Moreno ($2.5 billion). But even more staggering is the return on investment realized by the previous owners of these teams. Jeffrey Loria bought the Expos for $18 million and eventually sold the Marlins for $1.2 billion. Bud Selig paid $10.8 million for the bankrupt Seattle Pilots in 1970 and wound up selling the Milwaukee Brewers to Attanasio for $223 million in 2004. Drayton McLane bought the Astros for $117 million in 1993 and sold them to Crane for $680 million in 2011. Good luck finding that kind of profit margin in any other industry.

The very framing–players versus owners–changes when the owners are no longer people rooted to a city but are instead amorphous representatives of capital. What binds this new kind of owner to a city? What compels them (or sometimes it) to try to win? Why should they care about the product on the field, particularly when profitability will hardly differ whether a team wins 62, 72 or 82 games?

Baseball owners have always been in conflict with labor, of course. The reserve clause was an invention of the early National League as it started to gain its foothold in America. Complaints about salaries began as early as 1881, when National League president and reserve clause pioneer A.G. Spalding declared, “Salaries must come down or the interest of the public must be increased in some way. If one or the other does not happen, bankruptcy stares every team in the face.”

In ownership’s eyes, there could be no such thing as a battle between capital and labor because there was no such thing as labor. Baseball’s early owners barely recognized baseball as a business, much less the playing of baseball as work, an idea that was laughed out of eventual commissioner Kenesaw Mountain Landis’s courtroom as he adjudicated the 1915 Federal League challenge to the National Commission’s hegemony.

The early National League owners were hardly lower class, but they did not, by and large, possess the kind of wealth that now is required to join the fraternity of owners. William Hulbert, Chicago White Stockings president, had rich relatives, but the financial status of his father Eri was tumultuous at best throughout his early life. Spalding entered the baseball world as a player; his fortune came from his dealing in sporting goods and the creation of the Spalding brand, which still exists today. Ban Johnson, the first president of the American League, was the son of a school administrator and was himself an eventual law school dropout-turned-journalist before rising to lead the upstart junior circuit.

This isn’t to say there wasn’t generational wealth among baseball’s founding fathers. Morgan Bulkeley, owner of the National League’s Hartford squad, came from a wealthy family with lineage dating back to the Mayflower and eventually would leverage that lineage to become Connecticut’s governor. But these early owners came from multiple walks of life, old and new money alike.

As far as I can tell, two major things separate the old generation of owners from the new generation. First, even if the owners were strictly better off than the players, they were hardly pulling in gigantic profits from their clubs. Cubs business manager E.R. Saltwell said of his boss, “Mr. Wrigley never took a penny out of the ball club, never took a dividend. He didn’t care much about profits; he just didn’t care to subsidize losses.”

The baseball industry was, as late as the 1960s, comparable in size to the canned beans industry. Before the explosion of media profits, getting into baseball for the money was a silly proposition. For many owners, it was their way of remaining in the rough-and-tumble competitive world of young men, more a hobby than a business.

And perhaps more importantly, these owners were bound to their cities. The lack of national media contracts or any other sort of pooled income among the leagues’ teams meant each individual club had to ensure it was drawing at the gate to survive. “The old-line guys didn’t want anything they didn’t understand,” said Clark Griffith, descendant of the Clark Griffith who owned the Senators and Calvin Griffith, the owner who brought the Senators to Minneapolis. Griffith was referring to such newfangled developments of the 1960s as advertising and television. “The law was, you had to win, and if you did you’d get people to come out.” It may have been a simplistic view of how the business of baseball works, but it at least compelled owners to put the best possible squad on the field.

Even as baseball grew in the mid-20th century, there was still room for real people—rich people, yes, but still people with motives reaching beyond simple profit. There was Roy Hofheinz, the Houston renaissance man who brought the world the Astrodome and domed stadiums in general. Hofheinz revolutionized the baseball park experience. There was Bill Veeck, who was ever an innovator, someone who was against the reserve clause from early on in his major league tenure. Veeck even wrote a letter to Landis expressing his distaste for the reserve clause, which Veeck correctly called “morally and legally indefensible.” Landis, in response, told Veeck, “Somebody once said a little knowledge is a dangerous thing, and your letter proves him to be a wizard.”

A Hardball Times Update
Goodbye for now.

And then there was Charles Finley, a boisterous and charismatic owner who had great ideas but often couldn’t avoid stepping on his own feet. Finley was a brilliant promoter, somebody who, like Veeck and Hofheinz, understood that people wanted to have fun when they came to the ballpark. Finley’s explosive fireworks displays were infamous in Kansas City, and his $300 inducement for his Oakland Athletics to grow out their mustaches helped them become a fan favorite of the 1970s.

But he also was a cheapskate beyond reason. As free agency made owners like him obsolete, Finley engaged in massive sell-offs, some voided by the commissioner’s office for their obvious cynicism, like the attempted “trade” of Vida Blue and his $1.75 million contract for no-name minor leaguer Dave Revering. Even in the days before free agency, Finley was prone to rash decisions, like when he released first baseman Ken “Hawk” Harrelson (yes, that Hawk Harrelson) for talking back in the wake of the firing of Athletics manager Alvin Dark. Harrelson, naturally, would have the last laugh—he was cut in the midst of a pennant race, and the fierce bidding for his services earned him a whopping $75,000 for the season’s final months, six times what he was making in Kansas City.

The hardscrabble individual capitalist, the family owner and the baseball hobbyist alike were all pushed out as revenues—and expenses—exploded following the institution of free agency in the 1970s. By 1981, three years before Calvin Griffith, “the last of the baseball men,” made his exit, more than one third of baseball team owners had been in the game for five years or fewer.

Those owners had multiple motives. Some, as one prospective buyer told Expos boss Charles Bronfman, were looking to make their wealth more visible; “I’m rich, but nobody knows it,” the would-be owner lamented. But most relevant to today’s new ownership class is The Tribune Company, which bought the Cubs from the Wrigley family in 1981. The Tribune Company bought the Cubs specifically to add their games to the programming of the WGN superstation. Atlanta’s Ted Turner, similarly, understood he was not just buying a baseball team but acquiring the keystone of a media empire.

I don’t lament the death of this kind of baseball owner. They were often terrible people, engaging in draconian labor practices and playing literal games with people’s livelihoods. Kevin Kerrane’s Dollar Sign on the Muscle describes in detail the underhanded practices old-school owners and executives would use, which ranged from surreptitiously backdating contracts to flat out stranding kids in some far-flung minor league outpost like Montana with barely the bus fare to get back home. Minor league baseball was, as ever, a meat grinder.

And these were the men who enforced an unwritten color barrier for over half a century. Calvin Griffith, the last scion of that generation of owners, delivered one of baseball’s all-time racist remarks at a team event in small town Waseca, Minnesota. Griffith lowered his voice, asked if any blacks were around, surveyed the room and finally said, “I’ll tell you why we came to Minnesota. It was when I found out you only had 15,000 blacks here. Black people don’t go to ball games, but they’ll fill up a rassling ring and put up such a chant it’ll scare you to death. It’s unbelievable. We came here because you’ve got good, hardworking, white people here.” This racism certainly didn’t end with the color barrier, with examples abounding, from Al Campanis, Marge Schott, and many others.

Make no mistake, there should be no sympathy for the men like Finley and Griffith, driven out of the game because they were no longer rich enough to satisfy its needs. They were never a necessary ingredient to baseball’s magic; people put their butts in the seats for the players. But at least they were capable of shame. At least when these teams lost, there was a single person upon whom the brunt of that embarrassment could be thrown, and if he got to own the team, at least he had to own that shame as well.

I am unsure if a Guggenheim Group or a Private Capital Management has that same capacity for shame. I am unsure what, if anything, holds them to any sort of promise to the fans or people of a city when their monopoly is guaranteed by the government, the underpayment of their work force is law, and revenue sharing ensures everyone makes a profit regardless of record or attendance.

I bring this up because, inevitably, fans will side with the owners in the coming labor war. They always have. To a certain degree, I can understand it from the perspective of a early- or mid-20th century fan. The players on the field are being paid to play a kids game, and MLB’s mouthpieces were always great at selling the idea the game was one pay raise away from collapsing. It was much easier to identify with the man in the stands whose emotions rose and fell with yours on a day-to-day basis.

I want those fans to think about whom they are really teaming up with. The early baseball owners had a sense of civic pride about their clubs. They also made legitimate personal investments in those clubs’ competitiveness; when Connie Mack’s A’s lost, he lost too. That, combined with the American individualist titan of industry fantasy, made owners natural heroes in the game’s early days.

But those are not today’s owners. Today’s owners have all the flaws of the game’s forefathers with none of the connection to either city or citizen. The combination of national TV money and revenue sharing ensures everyone makes a profit before the season even begins. They are beholden only to profit, and unfortunately, in today’s baseball, the individual fan barely registers on the bottom line.

References and Resources

Jack Moore's work can be seen at VICE Sports and anywhere else you're willing to pay him to write. Buy his e-book.
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Las Vegas Wildcards
6 years ago

It’s difficult to identify with either side in MLB today. The cost of these franchises has just exploded, so that has affected the type of owner able to buy these teams. But we also have a situation of players getting guaranteed money and not delivering the results, and players today complain about having to play a doubleheader in an air-conditioned stadium.

Marc Schneider
6 years ago

I certainly don’t sympathize with owners against the players, but I don’t why it’s more “cynical” for hedge fund managers to own teams than for people who couldn’t afford it to try to keep salaries down with the various tactics that Moore described. Why is it better for A’s under Connie Mack to have lost for decades (after selling off his great teams twice) because he couldn’t afford to build better teams? Of for the Phillies to be terrible during the 30s and 40s? I’m no great fan of hedge funds (except when they make money for me), but I don’t see why they have less loyalty to cities than, say Walter O’Malley or the Braves owners who moved twice. Frankly, I think Moore is rather naïve to look at baseball as some eleemosynary institution in the past when those owners were just as willing or even more to screw players for a couple of bucks.

6 years ago

Aren’t the Steinbrenners still kind of throwback owners? I would guess the Yankees and all that goes with them are by far their biggest asset. Do they really run any other businesses?

Maybe Mike Ilitch spoiled us in Detroit but he seemed to put winning ahead of profits and I’m sure some other owners do also. And even for those who don’t, well, people will do what is in their own personal interest, that is just human nature. If baseball does not treat its fans well then they will lose customers, same as any other business. I’m skeptical that the current price and profit trends in baseball are sustainable anyway. Maybe it’ll come full circle in a generation or two, who knows. Financially, this whole thing is propped up by an aging fan base and cable TV deals that look like a bubble to me.

6 years ago
Reply to  LMOTFOTE

It seems like 50/50 or so as far as teams that predominantly have an interest in winning in addition to profit; its very easy to disguise going solely for profit though; particularly in the tanking era.

The A’s, for example, are unlikely to ever be competitive except at random now since they have no edge on the GM front and also have no willingness to spend money. But they aren’t nearly as despised as some of the other consistently terrible teams.

6 years ago

Let’s hear it for Jeffrey Loria and his exceptional investment sense; even won two world series for his team in the process of engaging in virtuous capitalist conduct. Truly the most beloved owner in the history of sports.

Jetsy Extrano
6 years ago

Fun article! The canned beans line is great, where’s that stat from? It’s fascinating to think how small baseball was financially with how big it’s been culturally.

It would be interesting to graph the whole history of baseball in ticket revenue by year, merchandising, TV revenue, other kinds… and also team value as assets.

6 years ago
Reply to  Jetsy Extrano

I’d be interested in that graph also. But I do remember that CBS (TV) bought the Yankees for about $12 or $13 million in 1964 ( the Yankees were coming off the best 20 or 30 years stretch in sports history), and then sold out to Steinbrenner about 9 or 10 years later at a LOSS (!) (Steinbrenner paid about $10 million, but he also got other throw-ins, like parking fees, etc.)

6 years ago
Reply to  herbsmith

By the way, that was an extreme instance. It doesn’t negate the fact that buying a sports team is probably the most guaranteed way that exists to make gargantuan amounts of money. And it’s truly absurd for the casual fan to support owners in any kind of bargaining issue.

6 years ago

Moore seems fully aware that owners in the old days were skinflints, liars, scoundrels, and racists and yet he expects us to believe that today’s new breed of professional owners are somehow worse? Plus what’s up with “more and more owners have ties to hedge funds”? Working for or with a hedge fun is somehow worse than being a Comiskey or a Finley or a Loria? (Loria now being part of baseball history, thank God.) Should I shun my nephew because he now works for a hedge fund? (Nonsense. He’s the same honest kid I helped to raise.) Being a baseball team owner, or being associated with a hedge fund, doesn’t make anyone any worse or better a person than if they were a professional baseball player. There are good and bad people in all walks of life, from the poor to the rich. No group, class, or color has a monopoly on virtue or vice. I didn’t read about a retired hedge fund manager or team owner being arrested last week for exposing himself to little children, now did I? I’m pretty sure that was a retired player I met once. Meanwhile, Deion Sanders is buying new catching gear with his own money for a talented one-armed middle school catcher. There’s good and bad in every group. Even owners.

The majority of today’s owners are smart, dignified and business-savvy (okay, let’s leave the morons who run the Mets, Marlins, and a few other teams out of this). They don’t strand players in Idaho, they’re not racists, and they make money. That last part one is really important, because a team or a league that doesn’t make money doesn’t survive. I like the fact that the game is now mainly in the hands of people who understand money (again, let’s leave the Mets out of this). It means the game has a future.

It’s fashionable in certain political circles to always hate owners for no reason and to always love employees for no reason. (Having been both of them in things other than baseball, I can attest that neither of the two classes is any more virtuous, noble, or deserving than the other; they are all just people, with the virtues and flaws that people have.) And I refuse to get even faintly concerned about the poor, poor employee players when the AVERAGE salary for a major league baseball player is now north of $4 million a year. Poor? Victims? Get out of town. They are exceedingly well-paid (if not overpaid) employees, but they are not owners. And in America, it’s the OWNERS who make the profits, not the employees. We’re not Cuba or Venezuela. Yet.

In short, I found this article to be simplistic and seriously biased against both capitalism and baseball ownership.

Yehoshua Friedman
6 years ago
Reply to  Johnston

See my comment about the minor leagues. The vast majority of players who enter affiliated ball never get to the Big Show. The guys who work hard for several years and never make it are entitled to get paid a living wage for the work they do. They are needed for depth and for practice. Nobody ever knows exactly who will make it and who won’t. Even some of those who never make the majors as players do so in some other capacity. An intelligent view of player development requires realistic salary and working conditions for minor league players. Otherwise baseball will be strictly a rich man’s game for owners, players and all personnel.

Michael Schieve
6 years ago

Tom Ricketts picture was used but not mentioned. However I feel he might be a hybrid where at the end of the day he wants profits but also wants to win. No so much that the team is ran without thought or care. But it seems that he leaves all the baseball operations decisions to Theo and Jed and others. I can’t say with any certainty but everything I’ve read seems to elude to the team every year has a budget and Theo works with it.

6 years ago

I’d argue that owners being more business minded now is a plus, not a negative. Baseball is sounder and better off now than it’s ever been financially. That said, culturally it shrinks by the year. Why? Reasons are plenty, but kids grew up playing the game and envisioned doing so for dreaming about a career in it. That doesn’t happen to the same level % wise I’d say now. Blame short attention spans if you want — I do, but I also know that’s not going to improve in the online world we’re in today — but kids have harder time being interested if the pace of it isnt engaging to them.

I LOVE baseball and will till I kick off. My kids like baseball and both play. But there are thousands of other things to do that they can pass the time with that we couldn’t and simply were not around back then. And Im a young Gen X’er by the way. Their passion lies in things other than sports, even though they do like those things. I don’t think they are different than a whole lotta other kids.

Life gets more and more personalized and fragmented by the day. I dont view that negatively, but it will make it harder for “the Big four” sports to grow their pies at a certain point. There’s just more stuff to interest folks now.

Yehoshua Friedman
6 years ago

Now that MLB players have protection and free agency opportunities, who is going to go to bat for the minor league players who make it possible to develop the product that ends up on the MLB field? African-American players are unable to commit to the years needed to get up the ladder to the Big Show because they don’t have the money to fill the holes the way others do. But in general, an exemption of minor league players from minimum wage is a moral abomination.

6 years ago

“an exemption of minor league players from minimum wage is a moral abomination.”

No. The minor leaguers suing MLB for more money was a moral abomination, and that is what led to the exemption. Apprentices and interns don’t get paid overtime. That’s not how it works.

How many of you people have ever run a business and met a payroll? It reads like almost none of you have, and that you all belong to unions and voted for Bernie.

Yehoshua Friedman
6 years ago

I suppose it is hopeless idealism which cannot be realized, but it seems to me that the shining ideal of pro sports franchise ownership is the NFL’s Green Bay Packers with its community ownership. A not-for-profit community-based ownership is the best way to go, insuring that the franchise will stay put and not become a floating crap game. Community ownership, with a large number of small shareholders, insures that two vital fan interests will be protected: priority of the competitive product on the field and moderate ticket pricing appropriate to the average Joe Fan and his family. The ordinary fan is willing to sit in a modest facility without opulent and sometimes gross food in concessions in return for seeing the best possible team on the field year in and year out. The Packers have delivered despite the smallest of small markets. Billionaire owners don’t do any good for the cities where the franchise is located. They only put money in their corporate treasuries.

Yehoshua Friedman
6 years ago

I have said it before, but it bears repeating. It is high time that someone stood up for the abysmal working and salary conditions in the minor leagues. Minor league baseball has received an exemption from minimum wage. Should a player, even if he is just providing depth and practice for the top prospects, get paid less than a person working at Walmart or slinging burgers somewhere? The minor league clubs are marginal operations which sometimes go under, but all players signed to minor league contracts affiliated with major league teams should have a year-round minimum wage underwritten by the parent club. Considering the incredible profits the MLB teams are making with broadcasting and merchandising rights, the wise owner ought to look out for the quality of his talent development. The alternative would be that not only will the owners be plutocrats, but prospects will have to be almost all either rich men’s sons or their proteges. Think about that next Jackie Robinson Day.