Examining the Indians Ownership and the Front Office Message Heading Forward
Mike Brandyberry | On 05, Oct 2012
After a disappointing 2012 Cleveland Indians season the organization is at a crossroads to decide how to progress with the organization, not just for the 2013 season but several seasons to come. Decisions involve ownerships, the front office, managerial and coaching decisions and the players. For the month of October, we’ll look at the how the Indians ended up in their current predicament, but most importantly, Where Do the Indians Go From Here.
Years ago, I was told by a school superintendent, “perception is everything.” It doesn’t matter to the public what is true or not, once the perception is there. If you are in the public eye, always worry about your own personal perception.
The Indians have an image problem in Cleveland. The perception is the Indians don’t spend money, pinch pennies and don’t make those bold moves to compete in the billion dollar business of baseball, while pocketing money through revenue sharing.
In a town that has three last place teams, even after a 68-94 season concluded Wednesday night, a fan could argue the Indians have the best nucleus on the field and opportunity to succeed in town. While Major League Baseball is far from a perfect system, the Cleveland Cavaliers are slowly rebuilding and the Cleveland Browns are mired in their second straight decade of ineptitude, yet the Indians remain as the least trusted and respected franchise in Cleveland.
The disconnect and lack of trust begins at the top.
Larry and Paul Dolan purchased the Cleveland Indians in 2000, promising not to win a championship—but multiple championships. At the time, it was a statement that inspired and ignited fans to trust the new ownership group following Richard Jacobs, the man who rebuilt the Indians from 41 years of embarrassment and wreckage. In hindsight, it’s a statement that has probably haunted the Dolans for over a decade.
The Indians have made only two playoff appearances since the Dolans purchased the team and the 2001 squad was much the product of Jacobs and former General Manager John Hart’s creation. That creation, and the beginning of the cost of the franchise to outspend their income, has given the Dolans the ability to hang their hat on having had the largest payroll in team history in 2001 ($93.36 million). The 2007 team is the only playoff appearance the Dolans can truly take credit for.
Following the Jacobs and their “perfect storm,” of winning in the 1990s while the economy was great, the Browns didn’t exist and the Cavaliers were the worst team in basketball would have been difficult for any owner. However, the change in Cleveland’s economics and continuous need for more capital in Major League Baseball has created a situation where the Dolans and Jacobs seem to be stark contrasts.
Paul Dolan and Team President Mark Shapiro continue to tell fans the organization spends all the revenue they make and put that revenue back into the team and ballpark. Often they remind fans that local television contracts create new and huge nest eggs of incomes for franchises like the Texas Rangers and Los Angeles Angels, but with Detroit, Cincinnati and Pittsburgh all within 100 miles from Progressive Field the Indians don’t have the population or mileage to create a major influx of income through local television. Often the front office is quick to remind fans they are willing to lose money for the sake of winning.
“Professional sports in general, you don’t want to budget like normal businesses where every year you have to make money or break even,” Team President Mark Shapiro said on Monday. “You expect at certain points in competitive cycles you are probably going to outspend your projected revenue and hope things turn out like it did in the first half and not the second half. We will follow through and lose money this year. It is something we don’t want to do every year, but something we can operationally handle without any impact heading forward.”
Meanwhile, Forbes Magazine estimates each season that the Indians are one of the more profitable teams in Major League Baseball through the game’s revenue sharing system. Forbes reported the Indians made over $30 million during the 2011 season. However, the Indians brass refutes all of Forbes’ claims, while making it clear that those numbers are created without any information from Major League Baseball, the Indians or their employees. How could Forbes’ evaluations be accurate? It would be similar to someone projecting your value without talking to your employer, wife or bank.
However, this winter could be a tell tale sign as to who is telling the truth, the Indians or Forbes. While this winter’s free agent pool is rather shallow, the Indians do have assets to trade and very few long term payroll commitments. If the situation presents itself, the Indians should be able to take on payroll to improve the roster.
“Paul Dolan has communicated that if the right player is there, the right trade is there, payroll can expand,” Shapiro said.
Shapiro was quick to remind fans though that despite available assets, it doesn’t mean their payroll will substantially escalate. The Dolans expect this team to build through their minor league system and supplemented through free agency, not the opposite method.
“Where you have to be careful is where does that lead? We’re not going to expand our payroll by $60 million,” Shapiro said. “We are still about development and developing our own players. When we are one or two players and that’s all we need, we can use free agency to supplement.”
General Manager Chris Antonetti seconded Shapiro’s thoughts on Thursday during his end of the year press conference. Antonetti feels the trade market will be utilized more this winter than free agency.
“There are going to be more opportunities via trade than free agency just because of the nature of the guys available, but that may change as we go through the offseason,” Antonetti said.
The Indians finished 13th of 14 American League teams in attendance in 2012 and by their own admission have a dwindling season ticket fan base of only 8,500 accounts. It takes the Indians nearly 12,000 presale and walk up tickets to be sold just to have a crowd of 20,000. With the Cleveland economy still struggling and the disappointment of a season that was supposed to be a contender, that season ticket base is not going to grow this winter but more likely shrink.
If ticket sales are one of the important factors in the Tribe economics, certainly the statement by Clevelanders over the last couple seasons has been clear. Any business model—whether it be baseball or widgets—forces an organizational change when the customer is not happy.
With attendance already near the bottom, can the Dolans afford another long term rebuild of this team that was supposed to compete? Wouldn’t that be detrimental to their income and future when frustrated fans do not fill Progressive Field for the next couple seasons during the rebuild?
It seems like a certainty that Shin-Soo Choo will be traded. He has not given any indication of signing a long term contract with the Indians. Moving him for younger talent to go with Jason Kipnis, Michael Brantley, Carlos Santana and Lonnie Chisenhall seems like the logical move. But if General Manager Chris Antonetti is forced to trade Chris Perez, Justin Masterson or Asdrubal Cabrera—players with escalating salaries, yet under team control for two more seasons—the concern about attendance having a major affect over revenue would seem to be a faulty argument for the Indians to make because if those players are gone in 2013, the fans will be too.
“We need to do a better job of finding the right mix around them,” Antonetti said in regards to building around a young nucleus. “Where that takes us, we’ll have to see, but that’s a process we’ll go through this winter.”
If this team is gutted of talented players with escalating contracts through arbitration, and ticket sales are down and television revenue is minimal, the Dolans have to be making money to stay afloat somewhere. Forbes’ information might not be exactly accurate, but the idea the Indians are making money through revenue sharing would be more believable than ever.
More importantly, if the Indians aren’t profiting each year like Forbes claims, why are the Dolans insistent they are not looking to sell the team? Why is there no urgency from the front office to compete quickly? Why are Shapiro and Antonetti’s jobs so safe? Any businessman who has made millions would unload a product losing money for a decade if there was no immediate sign of change.
It’s a perception the Dolans can’t shake.
Photo: Getty Images