Friday, December 5, 2008

Glass.

After the season ended, I was hoping to hand out quick, Whitlock-like end-of-season grades for everyone associated with the Royals, but ran into a time crunch instead. (Although a comparison of Tony Pena’s 2008 with Eddie Drummond’s 2007 might have been interesting, in a grisly-car-wreck sort of way.)

If I had, though, the grade that might have surprised the most people was the grade I would have given to David Glass: an A. Glass (and particularly son Dan) had as much to do with the Royals’ stretch of 100-loss seasons as anyone, but things have changed dramatically in the Dayton Moore era.

There’s really three things you want from an owner: 1) open up the pocketbook when necessary; 2) hire the right people; and 3) stay the hell out of their way. In 2008, at least, Glass has done all that. The Royals have money to spend on free agency every year; Dayton Moore is highly-regarded in the industry, and just as importantly, has been allowed to hire a number of highly-regarded baseball men to assist him, most recently Mike Arbuckle.

And on the third point…when was the last time you saw David Glass’s name in the paper? Unlike five or even three years ago, you never see Glass weighing in on baseball matters. Occasionally he’ll talk about the finances of the club or the ongoing renovations, but that’s it.

Like today:

Royals owner David Glass has an easy explanation for the anticipated increase of 20 percent or more in the club’s payroll for the 2009 season.

“You just put money in,” he said with a chuckle. “It’s simple.”

The increase figures to boost the Royals to about $70 million — nearly $12 million more than last season’s franchise-record $58.2 million — and comes at a time when several teams are trimming payrolls because of concerns over the economy.

Glass cites two reasons for the increase:

•The Royals are making measurable progress in their rebuilding plan after winning 75 games last season and escaping last place in the American League Central for the first time since 2003.

•A sign of good faith to the fan base upon completion of $250 million in public-funded renovations to Kauffman Stadium.

Those are both good reasons. Let me add a third reason, far more compelling than the first two.

I want you to compare these three stocks:

Stock July 2 2007 December 4 2008 Change

A 35.51 27.55 -22.4%

B 36.23 14.11 -61.1%

C 48.33 55.11 +14.0%

Stock A is Wells Fargo & Company, which represents the bulk of Carl Pohlad’s fortune. Last year the Twins’ owner ranked 114th on Forbes’ list of the 400 wealthiest Americans, with an estimated net worth of $3.1 billion, $1.3 billion of which was tied up in Wells Fargo stock.

Stock B is Cablevision Systems Corporation, which is the primary source of wealth for the Dolan family. Larry Dolan, who bought the Cleveland Indians in 2002, doesn’t appear to be involved with the company all that much – it was founded by his brother Charles. (If only idiot nephew James could have bought the Indians instead. Based on the way he’s run the New York Knicks into the ground, you’d figure that by now the Indians would have a permanent hold on last place.) But it does appear from this article that Dolan’s wealth is tied into the company. He’s a successful Cleveland lawyer, but you don’t amass enough wealth to buy a major league baseball team just by being a successful lawyer. (Now is not the time for a Miles Prentice joke. Actually, scratch that – now is a perfect time for a Miles Prentice joke.)

And Stock C, of course, is Wal-Mart.

The stock market is in the midst of its worst decline since the Great Depression, but if your portfolio consisted mostly of Wal-Mart stock, you’d almost be forgiven for thinking otherwise. It’s a cliché to say that companies which service the bargain-basement sector of the economy are recession-proof, or even a hedge against the market, but in this case the cliché is absolutely true.

I can’t find a recent estimate of David Glass’s net worth; the best I can do is this KC Pitch article which (quoting a KC Star article that is behind the wall) estimates his net worth at $323 million in 1999 – before he bought the Royals. It’s instructive to note that from 1999 until mid-2007, Wal-Mart stock was essentially flat – the stock price was 47.94 in July, 1999, which meant the stock price went up about 1% in eight years. Where Glass has made a real killing this decade is on the Royals themselves – he paid $95 million for them in 2000, and in April Forbes appraised them at $301 million.

But over the last 18 months, while Carl Pohlad has lost hundreds of millions of dollars, and the Dolan family has seen their net worth cut in half…Glass has done well for himself. His net worth is still a fraction of Pohlad’s, but Pohlad has never seemed interested in using his financial assets to the Twins’ advantage anyway. A team like the Indians, though, are feeling the pinch. Most teams in baseball are.

The Padres are having a fire sale (in addition to everything else, their owner is going through a costly divorce.) The White Sox have unloaded Nick Swisher and Javier Vazquez in the last month, though if anyone knows how to rebuild and compete at the same time, it’s Kenny Williams. Meanwhile, the Royals felt they could take a risk on offering Mark Grudzielanek arbitration, even as the Yankees didn’t feel they could take the same risk with Andy Pettitte and Bobby Abreu.

So why is Glass willing to raise payroll while other teams are looking to cut costs everywhere? Partly because he can afford to. With the White Sox retrenching, with the Tigers adrift, and with the Indians’ ownership watching their net worth crater – Cablevision stock is down almost 10% today as I write this – Glass may be thinking that a well-timed cash spend this winter might put the Royals into contention much sooner than anyone thinks.

If there’s a silver lining to the economic meltdown – at least if you’re a big fan of schadenfreude – is that some of the richest and most successful titans in America have been brought down with it. But at least a few of them have survived nicely. As a Royals fan, I guess I can’t complain that David Glass is one of them.

30 comments:

collinincalifornia said...

Good analysis, Rany. I agree that Glass has been a good owner since the signing of Dayton Moore.

The economy is sort of leveling the playing field a bit this offseason, so it's as good a time as any to increase payroll and see if it will pay huge dividends in '09.

It's good to see Glass 'opening up the pocketbooks' thru the draft, free agency, minor league affiliates, and overall payroll. I agree with your A grade.

Minda said...

If anyone had told me within the last decade that a well-respected/brilliant baseball thinker would give David Glass an 'A' for the season, and I would agree with his assessment, I'd think that was crazy!

He was such a great scapegoat for our misery for so long, but he's turning it around.

steak said...

I don't know what we've done to deserve so many updates in such a small span of time, but thank you, Rany!

This post was great... there are many moving parts in a baseball organization and ownership and management aren't to be ignored.

Eric said...

Rany--

I think your description of how Glass has evolved from part of the problem to (at least this year) as part of the solution was spot-on. Glass will probably never be as revered as Ewing Kauffman was, but he can at least give the Royals a shot at reclaiming some of the glory the franchise enjoyed under Kauffman, and he seems intent on doing so.

BobDD said...

Amazing (but true) that Glass gets a better grade than his GM this year(Guillen, Jacobs, Gload, etc).

Anonymous said...

I don't think its fair at all to grade DMGM on the Jacobs/Crisp trades seeing as how neither has yet to play one inning as a KC Royal.

That's not to say that I love them, and if they perform poorly, I'll be just as upset as any other true Royals fan, but its too early to tell right now.

Anonymous said...

DM is doing fine.

In terms of the commentary I'm glad Rany is happy, though I would like to point out that one reason there is room for our salary to grow since - even with cutbacks - other teams are still well above us.

Anonymous said...

I still think Glass can (should?) have a payroll of between 80 and 90 million.

Remember, he is on record as saying he wants no more than to break even on the Royals. Supposedly the team made a profit north of 20 million in 07; presumably 08 was around the same. Couple that with the anticipated increase in revenue from the renovations, and normal "baseball inflation", and a good argument for the payroll bumping up against 90 million is already makeable.

I believe Soren Petro on 810 has been advocating this exact same thing over and over again on his talk show, FWIW.

Anonymous said...

Well, there has to be some concern that the revenues on the new stadium might not bring in as much extra revenue as originally thought with the downturn our economy has taken. Some constraint is nice so that we don't end up like the D-backs are, filing for bankruptcy and drastically cutting payroll in a few years.

Nathan said...

Anonymous @ 4:11 pm,

You may be right, but 2009 might also not be the year for it. I'm more hopeful about 2009 than most Royals fans, assuming Hillman has the sense to platoon Jacobs with Kila or Shealy, and keep Butler in the linup every day. But everyone acknowledges our chances are better in '10 and '11 than in '09, so it might be wise to hedge in something like the way Glass appears to have done: spend enough in '09 to take a shot, and save the aggressive free-agency forays for next off-season.

Yeah, I'd love to see Tiexiera in a Royals uni, but assuming that wasn't going to happen, the spending pattern we see now strikes me as the next best thing. Anyway, even if it isn't what we could hope for, it's a gigantic improvement over the past.

rey rey said...

Great analysis! Since Glass has a very shady record on coming through with payroll increases (many over his reign including just last year)and considering he comes from Wal-Mart which is marketing/sales driven and finally, because the Royals are trying to sell the ticket price increase via the new Diamond Club (and are having a tough time from what I hear) for me, the proof in the pudding will be this time next year and where he is willing to go with the payroll. Remember 6 weeks ago when the Star whote an article saying Dayton was topped out in payroll flexibility (with quotes from Dayton). This came out the same time the people sitting behind home had to comeplete their relo email, telling the Royals their desire to accept the Diamond Club's 110% increase or move. And within 10 days a new story came out that actually Dayton had room to increase payroll (no quotes from Dayton though). Read into that what you want but Ive been down this road before with Glass. Lets see what happens in the fall of '09I hope he proves me wrong.

Ted said...

Rany, I'd like to see some talk about Dunn. We already made the move for Guillen and Jacobs, which seems to block Dunn on the field, but assuming we could move one (or maybe both!?), why not make a run at Dunn? His hig OBP, big power bat would seem to be a great fit for the Royals, and I just read this from Crasnick:

"In addition, Dunn's price might be dropping in a down market. Two NL officials wondered whether Dunn would command even a Jose Guillen-caliber, three-year, $36 million deal from a team other than Washington."

DM used the "Jacobs is the cheapest power bat around" logic when bringing over that albatross, and if Guillen was worth $12 per, why not make a run at Guillen for $10-12/year? Obviously salary is now an issue, and maybe Dunn has no interest in playing for KC, but why is there Absolutely No Talk about even Trying to bring in Dunn?

Also, I should admit, I thought the Royals should try to land Swisher through trade.

Anonymous said...

Lets just wait and see what happens during the winter meetings next week. I have a feeling we're going to be coming home with more than just a reliever or two.

One big news item for Royals fans, Furcal rejected the A's offer of 4 years and 35-40 million. I wonder what it would take to get him to KC? And can we afford that?

Isaac said...

I still hear people who hate Glass by reflex and I have been saying for a while now exactly what Rany has said here. I also believe that an owner of a professional sports team has three basic duties when it comes to running the on the field team. Hire a good GM, open your pocketbook, and shut your mouth. Although DM is not getting a gold star from me for this last year, I believe that Glass has done all three of the previously mentioned things.

As far as spending more money, I am also a strong proponent of the idea that you don't spend money to spend money. You don't sign players that don't exist. We are in a position where we aren't pressed to make certain moves. We aren't one player away from contention and we wont be seeing it this next year. Therefore, if nothing is on the market that is feasible for us, we should not spend that money and save it for the following year. Spending money on a Guillen will prevent us from spending money on someone much better for us the next year. So, hitting that "salary cap" of sorts every year is not the best idea for a team like us that actually has one.

Ryan said...

FYI, Eric Cordier, the power pitcher with arm problems the Royals traded to the Braves for Tony Pena, Jr., was left unprotected for the Rule 5 draft by the Braves.

He hasn't been able to regain his mid to upper 90s heat evidently, as well as had some control problems.

Ryan said...

Milton Bradley is a free agent. How great would it be to have Bradley and Jose Guillen in the clubhouse together? That's fun times.

Supposedly Bradley is asking for four years, $10 million per. Just think if we never signed Guillen, we could sign Bradley for less money per year (albeit for one more year), and he can actually hit, and (somebody call Dayton) get on base.

Then Royals fans could wager daily whether or not Bradley would be in the lineup or if he'd pull his hammy on the walk from his car to the clubhouse.

Mike said...

Tejada rumors.
Can we swap trash? Guillen for Tejada?

Nathan said...

If we want to play the game of guessing what we could do with $36-million in this free agent market, I would also point out that Bobby Abreu is also available for not a lot more than that. Yeah, it sure would be nice to get a mulligan on the Guillen contract.

dave said...

Tejada for Guillen would be awesome. Glass needs to phone his buddy Drayton and get this done.

Anonymous said...

From mlbtraderumors:

From: Tony Massarotti of the Boston Globe:


According to one National League executive, the Kansas City Royals and Atlanta Braves have had serious discussions about a trade that would send outfielder Jeff Francouer to the Royals for pitcher Zack Greinke. The same source said he believed the teams were close to executing the deal, but that Atlanta was holding up any and all trade discussions until the Braves had a resolution of their pursuit of right-hander A.J. Burnett.

Granted, even the MLBTR writer is skeptical, but if this ever even reached preliminary discussion, just shoot me now.

Ryan said...

Francouer for Greinke would never happen in a million years. That's one of the dumbest rumors of the winter.

Anonymous said...

I would stop being a fan if that happened. Seriously.

Anonymous said...

No f'ing way. Now a package that included Francoeur and Greinke in it? Maybe....

Anonymous said...

If we signed Milton Bradley, you could look for a following press release that announced that Zach Grienke and Ryan Lefebvre had been traded for Jeff Francour and cash considerations. A Bradley/Lefebvre clubhouse is just too much excitement.

Anonymous said...

Hello Rany. I just wanted to say “Thanks!” for all of your posts. As a huge Royals fan in Denver, I find them incredibly insightful and a delight to read. I check every morning of everyday hoping there will be a new post. You are the best! Thanks again. - Justin (Zubudubu@yahoo.com)

Brendan said...

Apparently the Royals are close to trading Greinke for Jeff Francoeur. Dayton Moore loves OBP!

Shelby said...

Rumor has it that the Royals are talking to Orlando Cabrera.

I do NOT want that guy on my team. Why would the Royals consider him?

Anonymous said...

There's a new rumor out now that the Royals have asked the Rangers about Michael Young and that the Rangers, while not acitvely shopping him, are "listening to offers." I think Greinke would be a little too much to give up for Young. Maybe a package w/ Greinke and a couple prospects for Young and one of their catchers???

Anonymous said...

Why is everyone in such a hurry to trade away Greinke? All that means is we are still the Royals of the Allard Baird era and nothing has changed. We develop good players and then ship them off to real teams.

Antonio. said...

Well, considering we develop so few good players simultaneously...