Scoring Profit in the Big Leagues : Though his Seattle Mariners haven’t won a World Series, Newport Beach owner George Argyros stands to more than quadruple his investment in the team.
When Newport Beach businessman George Argyros said goodby to major league baseball, he said hello to major league profits.
At a tearful news conference Tuesday in Seattle, Argyros announced that he plans to sell the beleaguered Seattle Mariners to two Indiana businessmen. He bought the team in 1981 for $13 million; it was appraised in June at $76.1 million, which is believed to be the purchase price.
For the record:
12:00 a.m. Aug. 25, 1989 For the Record
Los Angeles Times Friday August 25, 1989 Orange County Edition Metro Part 2 Page 2 Column 5 Metro Desk 1 inches; 28 words Type of Material: Correction
Steven Matt--The name of the manager in the appraisal and valuations group of Arthur Andersen & Co. in Dallas was misspelled in a story Thursday about George Argyros. The correct spelling is Steven Matt.
While the team’s value has skyrocketed, its performance has trapped it in the cellar of the American League West, giving credence to the criticism that Argyros is better at business than baseball.
Seattle fans have long griped that “Money Makes the World Go Around” and “Take Me Out to the Ballgame” don’t harmonize well--a music lesson that they learned from Argyros, whose critics have characterized him as a tight-fisted team owner.
‘Proof in Pudding’
But baseball is big business, not simply sport. While all professional sports franchises have increased in value in the 1980s, industry watchers say, baseball in particular has cashed in. The Mariners sale is evidence.
“When I looked at the Mariners, I saw a very well-run business,” said Steven Watt, whose major task at the accounting firm Arthur Andersen & Co. in Dallas is appraising baseball franchises. “The proof is in the pudding. They took a franchise that cost $13 million in 1981 and turned it into a $76-million business by 1989.”
Other franchises have similarly increased in value, Watt said. Edward Bennett Williams bought the Baltimore Orioles in 1979 for about $12.3 million and sold them in 1989 for a reported $70 million. And Doubleday & Co. paid $21 million for the New York Mets in 1980 and sold control of the team for $81 million in 1986.
So Argyros stands to get a pretty good return on his investment, considering that his team has never recorded a winning season since its birth in 1977; the team has finished in last place for five of its 12 years.
But even dismal statistics didn’t dampen the team’s value. Watt appraised the team in January, 1988, at $58.6 million. By the next appraisal, 18 months later, the figure had jumped to $76.1 million. Credit business--not batting--for the improvement.
No. 5 in Orange County
“There was a very important event that took place in major league baseball between appraisals--the signing of new TV contracts with CBS and ESPN,” Watt said. “That will dramatically increase the revenue that each club will receive from national television. . . . It was better to sell after the signing of those agreements than prior.”
Still, Argyros says money didn’t get him into the sport eight years ago, and it didn’t get him out this week.
“I didn’t consider it as an investment,” Argyros said in an interview Wednesday. “I was never really interested in it from a profit standpoint. It was a sport that I love. It’s a part of our American fabric.”
So is making money, a sport at which the Newport Beach businessman has a much better record. Argyros, 52, broke into the Forbes magazine list of the 400 richest Americans last October. With a fortune estimated at $250 million, he is the 335th richest man in the nation, No. 5 in Orange County.
Argyros made much of his fortune in real estate development, starting with a strip mall in Tustin in the mid-1960s. He began building apartments in 1968. Over the past two decades, his company, Arnel Development, has built some 700,000 square feet of office space and 5,500 apartments in Orange County.
The same year that Argyros bought the Mariners, he also teamed up with developer William Lyon to buy AirCal for $61.5 million. The developers sold the airline in 1986 for $225 million.
It was pressing business in the Southland and the difficulty of the California-Washington commute that caused Argyros to sell the team.
“I want to relax my life style,” Argyros said. “I have some other commitments. I’d like to devote a little time to my family for a change. It is a life-style issue. It became increasingly difficult to spend the time in Seattle that I wanted and needed to.”
His status as an absentee owner didn’t help Argyros much in Seattle. But it was his penurious reputation that raised hackles--particularly with sports columnists. When Argyros traded left-handed pitcher Mark Langston to the Montreal Expos in May, Denver Post columnist John McGrath called Argyros “the miserly, mean-spirited owner of the Seattle Mariners.”
About the trade, McGrath griped that it was “seemingly constructed to disgust the followers of baseball’s bleakest franchise,” that Argyros traded the high-priced ace Langston for “a troika of glorified bush-league pitchers” with low salaries.
But Watt, appraiser for Arthur Andersen, said that the trade highlighted Argyros’ business acumen.
“You can have a situation where one or two star players isn’t enough to make you a winner,” Watt said. “In a situation like that, you are better off trading those sorts of people for several strong, young prospects and build for the future. That’s pretty much the stage that Seattle was in.”
Not everyone agrees.
From the Seattle Times: “Argyros, known for running a tight-fisted operation, has been criticized for not doing more to build a winner.”
From Angel batting coach Deron Johnson, a coach in Seattle from 1985 to 1986: “He (Argyros) didn’t spend that much money. He didn’t want to pay them (players). If he’d have kept all the people that got away, they’d have an awesome team. . . . All I know is that winners have got bigger payrolls than losers--and there’s a reason for it.”
From Michael Megna, vice president of American Appraisal Associates and a sports franchise appraiser: “He let a star pitcher get away from him because he didn’t want to pay the salary. It’s a matter of choice. If you want to pay the price, you pay the price.”
But Megna is quick to point out that it’s not always possible to buy your way to the World Series. Gene Autry’s California Angels are his favorite example. Not even one of the highest payrolls in baseball has gotten Autry his wish.
Some kind of happy medium has to be possible. Argyros’ Mariners are not it, Megna said, and Argyros has sacrificed pennants for profitability.
“He certainly ran it (the team) like a business,” Megna said. “He monitored his costs, made sure he maximized revenue benefits. He ran a professional operation. But if you run a sports franchise like the business you’re supposed to, invariably you don’t win any championships.”
But Argyros contends that baseball is not an easy business and that it is the unique nature of a team as a commodity that brings high prices.
“There are only 26 (teams) in the world,” he said. “That’s the key. They don’t make economic sense. It’s a very tough business from a business standpoint.”
Times staff writer Mike Penner contributed to this story.
GEORGE LEON ARGYROS
HOME: Newport Beach.
ESTIMATED WEALTH: $250 million (according to Forbes magazine in 1988). Argyros began his real estate development career with a small strip shopping center in Tustin in the 1960s. His company, Arnel Development, builds offices and apartments. Argyros bought the Seattle Mariners baseball team in 1981. The same year, he and developer William Lyon acquired AirCal, which they sold in 1986.
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