It’s the second week of August and the San Diego Padres lead baseball’s National League West division with a roster of obscure names and the second-lowest payroll in the game.
Jeff Moorad said he had high hopes when he led a group of investors to buy the Padres last year. But he confessed he never envisioned this in his second year as owner.
“I’d have to say the club has exceeded our expectations thus far,” the longtime Newport Beach resident said from his Petco Park office before a recent game against the Florida Marlins.
Many baseball pundits had picked the rival Los Angeles Dodgers to take the division with their $95 million payroll, the 10th highest in baseball.
But, as of last week, the Dodgers were in fourth place, watching the sun set on their season.
Instead, the surging San Francisco Giants are the Padres’ greatest challenge to winning the division. As of late last week, the Padres had a tight lead in the National League West.
With the third best winning percentage in baseball, the low-budget Padres have defied the odds.
“I think there’s a misconception about payroll,” said Moorad, who made his name as a sports agent inking record deals from Orange County. “The media and some fans would have you believe if you spend more money you have a better chance to win.”
He points to winning teams with smaller payrolls, including the Tampa Bay Rays, Oakland Athletics, Minnesota Twins and Arizona Diamondbacks, where he was chief executive and part owner from 2004 to 2009.
But none of those teams have won a championship in the past decade. And for every feel good story in smaller baseball towns, there are sad tales of the Pittsburgh Pirates, Baltimore Orioles or the Kansas City Royals.
Combined, those teams have 35 years of losing seasons.
Yankees
Moorad points to the big money New York Yankees to make his point.
“With the exception of the last season, for 10 straight years the Yankees maintained the highest payroll in baseball and didn’t win the World Series,” he said.
True.
But the Yankees, with a $206 million payroll this year, have missed the playoffs only once since 1995, winning five championships in that span.
Other big spenders, such as the Boston Red Sox and Philadelphia Phillies, also won championships in the modern era of skyrocketing salaries.
“If there was a single recipe for success we’d all use it,” Moorad said. “We believe we can compete in the NL West on a San Diego-centric payroll. By definition, it’s not going to be one of the higher ones in baseball.”
Thanks to strong pitching and timely hitting, the Padres have been remarkable since Moorad assembled 12 investors to buy the team in April 2009 from software entrepreneur John Moores, who was embroiled in a divorce.
Not many outsiders projected a quick Padres turnaround, particularly under the helm of a largely untested owner who made his name as a super agent, crafting some of the most lucrative deals in sports history.
Agent Days
Moorad teamed up with Leigh Steinberg in 1985 with the two striking more than $3 billion in contracts in 18 years. They later were joined by David Dunn to form Steinberg, Moorad and Dunn Inc. in Fashion Island.
The sports agency was sold in 1999 to what’s now Assante Wealth Management Ltd. of Canada for an estimated $120 million.
Moorad, who continued to run the business until joining the Diamondbacks, negotiated several landmark contracts, including Manny Ramirez’s eight-year, $160 million deal in 2001 with the Boston Red Sox. It was baseball’s third-largest deal at the time and still ranks in the top 10 today.
As an owner, Moorad is “an excellent listener” and “lets us do our job,” said Tom Garfinkel, the Padres president and chief operating officer who worked with Moorad at the Diamondbacks.
Moorad’s put his stamp on the team. He’s made changes not only to appease loyal fans but to combat the realities of a San Diego economy upended in the housing crash.
With advertising deteriorating, Moorad replaced department leaders. The team just renewed its largest advertiser, Sycuan Resort and Casino, for another three years.
Other major advertisers include Toyota Motor Corp., Wells Fargo & Co., Sony Corp., Petco Animal Supplies Inc., MillerCoors LLC and Ashford University.
When Moorad found out the team’s ticket sales were run from Tijuana, he held open tryouts for 35 positions and moved the operation in-house. More than 600 people applied for the jobs, most of them die-hard fans.
Shortly after buying the Padres, Moorad told our sister publication, the San Diego Business Journal, that he wanted to keep games affordable for families, echoing Los Angeles Angels of Anaheim owner Arte Moreno.
After surveying fans, the Padres heard complaints about costly beers, food and team gear. So Moorad cut prices on concessions and lowered season ticket prices.
At about $120, the Padres have the second most affordable game experience for a family of four, according to Wilmette, Ill.-based Team Marketing Report’s annual Fan Cost Index.
The Diamondbacks rank as the most affordable on the index at about $115. The Red Sox are the least at $335. The Angels are No. 4 at $132.
This year the Padres are slightly ahead of their attendance goal of 2 million people at home games. In a recent home stand against the Dodgers and Marlins, the team drew more than 200,000 fans, including a sell-out, one of only a handful this season.
“We’re continuing to pick up momentum,” said Moorad, who was interrupted by a call from an agent trying to work out a last minute deal before the July 31 trade deadline.
Moorad tells him to contact General Manager Jed Hoyer, who he hired last October from the Red Sox.
Before the deadline, the Padres ended up acquiring infielder Miguel Tejada from the Baltimore Orioles and outfielder Ryan Ludwick from the St. Louis Cardinals.
“The deals that we worked make sense, both in the short and long term,” Moorad said.
Diamondbacks
Moorad learned a lot about the business of baseball in Arizona, which went through plenty of growing pains, despite winning a championship in 2001 and two subsequent playoff appearances.
When the Diamondbacks won the World Series, the team lost millions, in large part because of deferred contract money, a practice Moorad said he will never entertain.
“It’s a path to destruction,” he said.
The Padres are hampered by one of the worst TV deals in sports. The agreement, signed more than a decade ago, bars DirecTV Group Inc. from broadcasting games.
“We have the worst broadcast contract in baseball,” Moorad said. “The good news is there’s only a year and a half left.”
Moorad’s negotiation skills will be tested as he tries to develop a regional sports network to air Padres games or work out a traditional rights fee deal.
Baseball teams primarily make money from TV deals and ticket sales. Moorad could take another cue from the Angels’ Moreno, who inked a 10-year, $500 million TV deal in 2006 with Fox Sports Net.
The Dodgers’ deal with Fox expires in 2013 with the team hoping a new agreement can bring $100 million a year.
The Padres won’t be profitable this year, according to Moorad. Any operating surplus will be put back into payroll or stadium upgrades, he said, though big improvements aren’t needed for the seven-year-old park.
The Padres are valued by Forbes at No. 15 in baseball at $408 million. The Angels are No. 7 at $521 million. The Yankees are tops at $1.6 billion.
Moorad said he thought he’d never leave his job running the Diamondbacks. While in Arizona, he split his time between the affluent Phoenix suburb of Paradise Valley and Newport Beach, his adopted home for more than two decades.
When the chance to own the Padres came up, he jumped at it to be closer to home.
Local Ties
Moorad grew up in Modesto. His ties to OC date back to 1980 when he clerked for Newport Beach-based Irvine Company. He’s still active in the Young Presidents’ Organization chapter here and regularly holds meetings at Big Canyon Country Club.
Real estate developer Al Baldwin has known Moorad more than 20 years through YPO and is the only other OC resident in the Padres investment team, which includes former Dallas Cowboys quarterback Troy Aikman. Each investor put in $10 million to $20 million.
Baldwin, who lives in Emerald Bay and is chairman of Newport Beach-based Baldwin and Sons—developer of Otay Ranch in Chula Vista—owns 6% of the Padres.
“Jeff is a very smart guy,” Baldwin said. “He manages very professionally, which I think attracts quality people. He mentors them and lets them manage.”
Moorad said he’s working on his next move. He’s in talks with a handful of cities in northern San Diego County to relocate the Padres AAA affiliate, the Portland Beavers, from Oregon to Southern California.
“It’s a bit of an unconventional approach but one we think makes sense,” he said. “I’m hopeful something can be worked out.”
