Mr. San Diego

I’ve had a lot of time to think this offseason, a byproduct of major league baseball’s owners and GMs refusal to sign many of the best players on the free agent market this winter. Unburdened by the distraction of talking about where and how these players fit into their new homes, my hours of quiet contemplation have led me to a careful consideration of baseball’s owners.

Much has been made this offseason of the decoupling of on-field performance and profit, and the lack of urgency such a development has lent to the need to win. This has been positioned as a new development, a new condition the game finds itself in, a change in the way owners view themselves in relation to the game.

But there always has been a cynical edge to ownership’s view of the sport, one that extends back to the invention of the reserve clause, which necessarily turned owners into the antagonists of players. Indeed, it extends back much further than that. The game’s history is littered with unscrupulous characters who seemingly prioritized many other things over the possibility of a World Series ring; some have even turned to criminality.

Case in point: “Mr. San Diego,” C. Arnholt Smith.

Conrad Arnholt Smith, born in 1899, hailed from Walla Walla, Washington, but was forced to flee with his family at the age of seven when his father decided not to turn himself in after being convicted of perjury and lit out with his family for southern California. Smith later recalled that his dad “had signed some affidavits saying that people had been in office there for a certain period of time and in effect committed perjury and was facing a prison sentence. It was all a political campaign against him.” His father stopped running in San Diego, where he became a contractor, bought a house, and sent for his family.

At the time, San Diego was booming. In 1900, the population was shy of 18,000 residents, but within 10 years, it had more than doubled in size. And while it had not yet become an important hub for the U.S. Navy in the Pacific Ocean, it was an important fishing town, billing itself as the “tuna capital of the world,” with “canneries strung out along the bay, starting at the foot fo Fifth Street and going south.” The population continued to grow steadily throughout Smith’s childhood, both putting a strain on the city’s services and providing an opportunity for an ambitious kid.

From an early age, Smith was hustling, working for his dad after school, as well as bagging groceries and gardening. As World War I approached, he worried he’d have to enlist, so he dropped out of high school to work full-time. After working a series of jobs–as a shoe shiner, a roustabout, and a baker’s assistant–he wound up getting a promotion at the grocery store to cashier before he was finally drafted and sent to Texas.

But the war ended before Smith could be deployed, and he returned to San Diego, eventually becoming a teller at a local bank. When that institution was bought up by the Bank of Italy (now Bank of America), Smith impressed his new bosses and quickly rose through the new organization, eventually being relocated to Los Angeles. That’s where he met Richard Nixon. “Nixon and I personally hit it off together…You know, Dick was a funny guy. When he was in public, he was an actor, just standing around like Napoleon. Yet when he was with only a few people, he was just as jovial and as easygoing as an average, everyday guy. He’d loosen up.” Yes, famous for his looseness, that Richard Nixon.

When the Great Depression hit, and his wife tired of L.A., Smith had the hare-brained idea to try to buy a bank for himself and solicited money from friends and relatives to purchase a small, insolvent institution called the U.S. National Bank of San Diego in 1933. And it’s from there that he began to build his empire.

That empire eventually controlled more than a billion dollars in bank deposits, a steel and shipbuilding company, a hotel, the Yellow Cab Company in California, an airline, a tuna fleet, canneries for said fleet, and more. In August of 1955, that “more” included the San Diego Padres, then a minor league club in the Pacific Coast League, which he bought for $250,000 through his fishing and canning business, the Westgate-California Tuna Packing Co., when the previous owners’ attempt to build a new stadium fell through.

“The owner, Bill Starr,” Smith remembered, “was having financial problems. He had an opportunity to sell the team to one of the cities upstate, and when word got around everybody screamed bloody murder. ‘Jeez, we can’t let the team leave,’ and things like that. Starr, who was banking with us, said ‘Well, why the hell don’t you buy it, and then you can handle the thing down here. It isn’t too much money, and it would save my bacon.’ So, like a damn fool, I stepped up and said I’d help keep the team here in San Diego.”

The timing turned out not to be ideal, as the Dodgers announced plans to move to Los Angeles in the winter of 1957. Arnholt and his brother John (an oil magnate with financial interests in Chavez Ravine), vehemently opposed the move and tried to force a public referendum on whether to hand over the 300 acres and $5 million the city was planning to give the club. That effort succeeded, and John debated Walter O’Malley on local television the night before the election. But the results of the referendum went against the brothers, and Chavez Ravine belonged to the Dodgers.

But even as critics predicted the death of the PCL, Smith was undaunted, opening the privately funded Westgate Park just in time for the 1958 season, which was only 10 minutes from downtown San Diego and would seat 7,000, but could be expanded to 35,000 if major league baseball ever wanted to expand to the area. The Sporting News was effusive, with Earl Keller writing that:

It’s doubtful whether any park in the country–major or minor–has the beautiful setting of Westgate Park. It must be seen to be appreciated. When a fan steps to one of the ten ticket windows, he can turn around and gaze at Smith’s attractive Valley Lane Farms, where horses, cattle and sheep can be seen grazing…All can watch the game from the latest contour-type seats, with arm rests. The roof, covering all seats except a few in extreme right and left fields, is the latest cantilever type, balanced into position by 19 pylons and a like number of steel posts in the grandstand area. There is a metal roof over the stands. No park has a better lighting system. Smith spared no expense in making sure everything was the latest and best in the new park. Westgate Park is a tremendous credit to San Diego, and it could be the stepping stone to major league baseball here. Smith can take a bow for a tremendous accomplishment.”

It’s this kind of civic leadership that earned Smith the title “Mr. San Diego” in 1961. According to the Los Angeles Times, “His influence in his adopted city was nonpareil and his aggressive ways went largely unchallenged by the local news media…Smith used his bank to buy and expand existing businesses and create thousands of jobs, for which he was lionized as a civic benefactor.”

Former mayor Frank Curran said, “He gave the downtown a face-lift when it needed it badly.” “Anything that happened in this town required his approval and blessing,” said UCSD professor Steve Erie, upon his death. “A small group of six or seven men ran San Diego, but he was at the top.” But he was something of an unknown quantity, according to The Sporting News’ Bob Ortman, who wrote, “Although deeply involved in San Diego civic and business affairs and national activities of the Republican Party, Smith has escaped the glare of the spotlight. An impeccably neat dresser, with a penchant for beige suits, he seldom is photographed and remains a mystery man to all but a select circle of friends.”

With so much of his own money invested in the new park and the Dodgers eating into his market share, there was no way for Smith to get out from under the Padres, so he did the next best thing. When the American League began looking for ways to expand to the West Coast in the fall of 1960, Smith positioned himself as the solution to all their problems, teaming with Hank Greenberg to put together an offer for the expansion team. For most of the winter, they were the lead–and in fact, only–candidates to own the Angels, but they couldn’t reach a deal with LA owner Walter O’Malley over how to compensate him for coming into his territory, a prospect that surely seemed unpleasantly ironic to the San Diego mogul.

With mere weeks to go before the expansion draft, Smith and Greenberg pulled out of negotiations, with Greenberg saying he didn’t see how anyone could set up a successful operation in LA before the season started. Of course, that’s just what Gene Autry did, leaving Smith again on the outside looking in as major league baseball bit deeper into his potential audience.

But Smith was patient and seems to have understood that major league ball was eventually coming to San Diego, then approaching 700,000 residents. In 1968, he moved his Padres from Westgate to the newly constructed San Diego Stadium, which seated 45,000, in anticipation of the National League’s announcement in May that it was expanding and that Smith’s ownership group, which included Dodgers vice-president Buzzie Bavasi and future Hall of Famer Ralph Kiner, would get to turn the Padres into a major league operation for a $10 million fee.

Smith was undoubtedly at the height of his influence in the spring of 1969. His cool friend Richard Nixon had just been inaugurated, and he was a frequent guest at the White House. He was the most powerful man in San Diego, and he had turned the city into a major league town. But his luck was about to take an abrupt turn.

First, the team drew just 513,000 fans in that inaugural season, and that fall he began dropping hints about needing to move the team if attendance didn’t pick up. Then incumbent and establishment candidate Frank Curran was beaten by future California Sen. and Gov. Pete Wilson in the race for San Diego mayor. Wilson proceeded to restructure the city council and campaign contribution rules to begin to limit the influence of Smith and his cronies.

In the fall of 1971, after reportedly losing more than $2 million in the franchise’s first three seasons, Smith began listening to offers for his club, most of them coming from Washington, D.C., which had twice been abandoned by the American League in the last decade. The offer was rebuffed, but there was blood in the water, and fans began a “Save Our Padres” campaign.

In 1972, Smith secured the Republican National Convention for his adopted hometown, but a corruption scandal, in which a telephone company contributed $400,000 toward the convention in exchange for preferential treatment from Nixon’s Department of Justice, prompted the party to move the convention to Miami just weeks before the event. Mr. San Diego seemed to have lost his touch.

But those were just symbolic losses. The situation became far more dire for Smith in May of 1973 when, just five months after Bavasi called Smith “Santa Clause in baseball” for refusing to move the Padres yet again. The Securities and Exchange Commission sued the U.S. National Bank, Smith, and many others for, according to the write-up in The New York Times, “engaging in a fraudulent scheme to appropriate the assets of Westgate and the U.S. National Bank of San Diego for their own use.” The suit added they created ostensible profits for Westgate and “published false and misleading statements of these profits to camouflage the unlawful activities.”

Among other things, Smith and his associates were accused of selling their assets to buyers who obtained the cash to buy those assets from Smith’s own bank, allowing him to remain in control of them without having to list them as liabilities. The bank was ordered to liquidate all of the loans on these fraudulent purchases and was ruled insolvent. At the time, it was the largest bank failure in the history of the United States.

In what was surely just an amazing coincidence, four days before he was named in that SEC suit, Smith finally pulled the trigger and agreed to sell the Padres to an ownership group in Washington D.C. for the largest price tag in baseball history. He would proceed to liquidate a number of other assets. And while he denied it, saying “I wanted to get rid of the team because we were losing our shirt in the damn thing,” it seems clear this sale, and the others, were designed to help him cover whatever fines and debts he was about to incur in what was sure to be a costly and lengthy legal process. “When the city heard about it,” he recalled, “they were ready to tar and feather me for losing the team for San Diego. I don’t know who the hell they thought the team belonged to.”

While Smith was putting the final touches on the team’s sale to the Washington syndicate, who were demanding to have input on roster decisions, Buzzie Bavasi was working behind the scenes to try to salvage San Diego as a major league market, including talking to Japanese investors. Bavasi was an owner in name only, having put up none of the initial capital to buy the franchise, meaning he wouldn’t actually see a dime of the sale price and didn’t have to be consulted on the sale. In fact, he and Smith weren’t talking for most of 1973. What he did have was an option to buy up to 32 percent of the team, and if it was sold out from under him, that option would go away. The good news was, with Smith announcing the deal in the middle of the season, Bavasi still had months to maneuver before anything was finalized.

And there were other complications. The Padres were only five years into a 20-year lease, for one thing, and any abdication of that lease would require paying a significant penalty. Also, the National League was unenthusiastic about the Padres being moved to a city where baseball had failed twice before. The IRS put a lien on $22 million worth of Smith’s assets. In October of 1973, as Smith was being charged with evading federal income taxes, NL President Chub Feeney announced he would not allow the Padres to move without more study.

With the process stalled, Smith announced he suddenly had new mystery investors who were prepared to help him prop up the club in San Diego, with him staying on as majority owner. That mysterious investor was revealed to be disgraced racetrack owner Marge Everett, who announced she would be buying 100 percent of the team from Smith. But the NL had even more reservations about getting into bed with someone who had been involved in corruption scandals back in Illinois, so it refused to support that deal. Instead, at Smith’s request, the league removed its objections to the Washington sale, voting to approve it if certain conditions were met.

Bavasi was devastated, telling Phil Collier of The Sporting News, “Last night we were assured we had the club for San Diego and we woke up this morning and found out that Mr. Smith had changed his mind. He changed his mind and the lives of a lot of people.” The reactions were angry. The recently acquired Willie McCovey threatened to retire. Mayor Wilson and the city’s attorney promised a legal response that would challenge MLB’s antitrust exemption.

Finally, Bavasi came through with a last ditch compromise offer:

Buzzie…called me up one day,” Smith recalled in his two-part interview with the San Diego Reader in 1992, “and said, ‘Hey, I want you to have lunch with some people that might be interested in the Padres….Some man was sitting next to me at the table who I’d never seen before….we talked about everything under the sun except the Padres. So he says to me, ‘I hear you own the Padres.’ ‘Yes, I control it.’ And he said to me, ‘I hear you might possibly sell it.’ I said, ‘Yeah, I’m thinking about it….’ What do you want for it?’ Great negotiation. He caught me flat footed…. I didn’t know what to say…so I said, ‘Well, $12,500,000….’ He thought for a minute, and he said. ‘I’ll take it.’ That was it. He said, ‘I’ll have my lawyers get in touch with you.’ So as we were moving out, I got over alongside of Bavasi and said, ‘Christ, who the hell is that jerk?’ Bavasi said, ‘Jeez, don’t you know? He’s the guy that owns McDonald’s.’”

“The Padres are another case of something that I did that brought credit and profit to somebody in the community. It’s helped put San Diego on the map, and yet I walked out of it with nothing,” Smith complained years later.

And so Ray Kroc saved the Padres in early February of 1974, but no one could save Smith. In 1975, the Feds charged him with bank fraud and making illegal contributions to the Nixon campaign, and he pled no contest. California charged him with income tax evasion and arrested him later that year. He also was charged with embezzling almost $9 million from his various businesses. Convicted in 1979, he served eight months and then lived the rest of his life in relative obscurity with his daughter, his only income from Social Security. He died in 1996 at the age of 97 of heart failure after a short stay in a nursing home.

Ultimately, Smith did have a lasting effect on San Diego, even as he left thousands of people in financial ruin when his bank and businesses collapsed. He did help transform the city. And one of the ways he did that was by teaching it, and Padres fans, a valuable lesson.

There was probably no major league owner more intertwined with his hometown than C. Arnholt Smith was with San Diego. It nurtured him and he helped build it. He was unquestionably its leading citizen. And then, in greed and desperation, he betrayed it. Smith committed actual crimes in addition to his baseball sins, and so stands somewhat apart. But, then, so did George Steinbrenner. And all of the owners felt free to violate the collective bargain agreement in the 1980s; some speculate they might be doing so again in 2019. The other lords of baseball still seem to prioritize their teams’ performance as businesses over their performance on the field since, with the exponential increase in broadcast revenue, those two things have become increasingly divorced from one another.

Maybe that’s how it should be. Or maybe you, like me, believe that owners have a civic responsibility to give back considering how much they’ve received. Whatever your view, we should, when they steadfastly refuse to improve their rosters or claim they need the public to contribute to the construction of a new gaudy palace, perhaps remember not to take them at their word, to arch a skeptical eyebrow. I mean, if you’re San Diego and you can’t trust “Mr. San Diego,” then who the hell can you trust?

References and Resources

• “Arnholt Smith Resigns as U.S. National Bank Chief.” Los Angeles Times. May 5, 1973.
• Phil Collier. “Buzzie Seeks Yen for Padre Salvation.” The Sporting News. June 16, 1973.
• Phil Collier. “IRS Could Nip Padre Plans to Move.” The Sporting News. August 25, 1973.
• Phil Collier. “Marge Everett May Race To the Rescue of Padres.” The Sporting News. November 3, 1973.
• Phil Collier. “N.L. Reported Chilly to Invasion of Washington.” The Sporting News. July 7, 1973.
• Phil Collier. “Only a Prayer Ties Padres to San Diego.” The Sporting News. December 22, 1973.
• Phil Collier. “Padres Get Break They Deserve, From Big Mac.” The Sporting News. February 9, 1974.
• Phil Collier. “Padres Sweat It Out at Altar of Confusion.” The Sporting News. December 15, 1973.
• Paul Cour. “Padre Shakeup Coming–Deals on Tap.” The Sporting News. October 23, 1971.
• Paul Cour. “Papa Gomez: He’s Proud of Padres’ Kids.” The Sporting News. October 4, 1969.
• Jerome Holtzman. “‘More Study Time’ N.L.’s Answer to Padres’ Move Bid.” The Sporting News. October 6, 1973.
• Earl Keller. “Tuna Packing Firm Busy padres, May Name O’Doul G.M.” The Sporting News. August 31, 1955.
• “Mogul Accused: Arnholt Smith Charged in Suit by SEC.” Los Angeles Times. May 31, 1973.
• Bill Ott. “County Grand Jury Indicts C.A. Smith In Theft, Fraud.” The San Diego Union. December 16, 1975.
• Poulson Names Millionaire as Dodger Foe. Los Angeles Times. November 5, 1957.
• “San Diego Tycoon C. Arnholt Smith Dies.” Los Angeles Times. June 10, 1996.
• C. Arnholt Smith, Linda Nevin, Neal Matthews. “C. Arnholt Smith, in his own words – part 1.” San Diego Reader. March 19, 1992.
• C. Arnholt Smith, Linda Nevin, Neal Matthews. “C. Arnholt Smith, in his own words – part 2.” San Diego Reader. March 26, 1992.
• Robert A. Wright. “Bank in San Diego Ruled Insolvent.” New York Times. October 19, 1973.
• Paul Zimmerman. “Baseball Not New to Bavasi Partner.” Los Angeles Times. May 29, 1968.