Lancaster Team Scores Before the 1st Pitch

Baseball lore comes rich with statistics. So consider this simple math about the Lancaster JetHawks Class A minor league baseball team, which moved this winter from Riverside into a brand-new, city-owned stadium here.

The JetHawks play their first road game Thursday, and their home opener April 16. But without a pitch being thrown, the franchise has already jumped at least 50% in value to $3 million.

Last year, they were the Riverside Pilots, a team that finished last in attendance in the California League, drawing 56,601 fans--or 820 fans per game--in a 3,000-seat stadium with no liquor license and no profit.

In Lancaster, the JetHawks’ home is a new 4,500-seat stadium that costs the city $9.5 million to build. There’s a 10-year lease, a liquor license, a baseball-hungry desert community that’s bought up 1,700 season tickets and all 12 luxury boxes, and a waiting list to buy ads on the JetHawks’ outfield fence. The team figures it can easily draw more than 210,000 fans to 70 home games this year.

“I’d be crazy if I said the value of the franchise hasn’t gone up. But we have no desire to sell. I love this,” said Matt Ellis, 27, part-owner and the JetHawks’ general manager. The “we” includes his father, Michael, part-owner and club president. “And I don’t want to lose money. This is my livelihood,” Matt Ellis said.

But for all the enthusiasm about being in Lancaster, it is a gamble. “We’ve got the highest lease in the league,” Ellis says. The JetHawks owe the city $300,000 in rent annually for 10 years, plus $150,000 this year for maintenance costs. “We have to do at least 3,000 [fans] per game” to break even.

Steve Pastorino, general manager of the rival High Desert Mavericks, says of the Lancaster rental contract: “I don’t think many teams would have taken that deal five years ago. And I’m not sure many cities would take anything less than that these days.”

In the desert town of Adelanto where the Mavericks play in a $6.5-million stadium the city built in 1990, Pastorino’s team drew 146,355 fans last year, yet it paid the city a mere $71,435 in rent. Dave Crandall, the city’s special projects manager, read the Mavericks’ lease carefully when he came on the job, trying to find a loophole. “It’s a beautiful golden contract” for the team, he said. “We’re locked into it till 2010.”

Now cities with new minor league stadiums cut shrewder deals and some in the game believe the city of Lancaster’s rent terms may become a benchmark. In Rancho Cucamonga, the hometown Quakes broke their own California League attendance record last year by drawing 446,146 fans. They also paid the city more than $600,000. The Quakes pay $50,000 in rent, plus 6% to 15% of their concessions (excluding liquor) after their first $1 million, and half the parking.

Ellis says it’s fair for Lancaster to take in a hefty rent guarantee for providing a new stadium. “The worst thing is we have to work for it. We’re not going to make money snapping our fingers.”

The way the JetHawks will make money is to draw more than 3,000 per game. In the minor leagues the key is food and fannies: About 40% of a team’s revenue is from tickets, 40% from food and souvenirs, the rest from advertising and radio deals. If the JetHawks do really well, Ellis won’t have to share any ticket or concessions income with the city.

And certainly making a profit would be a change for this team.

In 1988, Jack Patton and friends paid $450,000 to buy a San Diego Padres minor league club in Reno. The city-owned stadium was shared with local amateur teams, the field so jagged its nickname was “Astro rock” and the Padres told Patton, “We can’t send major league prospects there who keep taking a ground ball between the eyes.”

So Patton moved to Riverside where the infield was smooth and signed on as a Seattle Mariners farm club. But the stadium’s neighbors would not approve a liquor license--costing Patton $100,000 a year in sales--and fan interest in Riverside was steady and dismal, with the Pilots finishing last in league attendance their first two seasons even though the team had a winning record.

Tired of losing money, in late 1994 Patton sold the team for about $2 million--and finally turned a profit in the process--to the Ellises, who own 35%, and Horn Chen, a mercurial bamboo importer from Chicago who owns the remaining 65%. (Chen also owns nine minor league hockey teams and the Ottawa Rough Riders of the Canadian Football League.)

Owning a minor league team isn’t a get-rich-quick scheme anymore. Even a well-run team can only hope to turn a 5% to 10% profit, and not many teams do that.

In fact, while prices for minor league baseball teams have soared in the past decade, so has the risk because typically the profits come only when a team owner sells out, not from actually operating the team.

Bob Richmond, a baseball broker who helped the Ellises buy the team, says a majority of the 155 minor league teams affiliated with Major League Baseball lost money last year. And five of the 10 California League teams lost money last year too, league President Joe Gagliardi said.

“The appreciation is when they sell out. That’s where the returns come from, not the cash flow. How much longer can that go on? I don’t know,” Richmond says.

Major league teams talk once again of trimming player-development costs and cutting the number of minor league clubs and that could push down the value of some minor league teams.

“It’s a fragile industry,” Richmond concedes. All the more important to make money from actually running a team. Miles Wolff, minor league president of the Northern League, says that when a club moves into a new town with a new stadium, “You’ve got three years of a honeymoon, if you don’t mess up.”

Ellis doesn’t believe in honeymoons. Opening day is sold out, but he still plans on having skydivers and fireworks. “Each day you have to have a surprise,” so that when “the newness wears off in two or three years,” attendance won’t sink, he says.

What Ellis sells is a cheap, pleasant entertainment under the stars. Like other minor league owners, he has no say in what players are fielded. The Seattle Mariners pick the talent, Ellis merely provides the yard.

So like any promoter, Ellis plots out his season. Every night will have a trivia contest. Winners get four tickets and can sit in a big hot tub next to the field. Fridays are giveaways--baseball caps, mini-bats, T-shirts; Saturdays are set aside for the hired entertainment.

For a decade, minor league attendance in the United States has climbed steadily, and the California League may hit a record 2 million fans this year.

Most new stadiums in this league are in suburban areas where “families are trying to find entertainment closer to home. In the L.A. area, Dad can drive an hour and a half to work. He doesn’t want to drive again back into L.A. to go to a ballgame,” says Patton, now general manager of the Bakersfield Blaze team owned by his father. Kevin Haughian, GM for the Lake Elsinore Storm, says, “In many ways the minor leagues provide what fans remember from major league baseball 20, 30 or 50 years ago.”

JetHawks’ tickets run from $2.50 to $6; hot dogs will cost $2 and buffalo burgers will be offered. Ellis hired a firm to handle food and drink sales, and in return the JetHawks get 30% of the gross.

This, however, remains a small business, and he must watch his costs. Ellis will have 50 picnic benches set up overlooking the field so fans can enjoy barbecues. He wanted 100 tables, but they cost $200 each and he couldn’t spare an extra $10,000. And while the Mariners pay players and coaches and provide most of the equipment, the JetHawks must supply the whirlpool and batting cages and pay for 15 hotel rooms on the road plus $35,000 a year to charter buses.

He not only must keep the fans happy, but also the Seattle Mariners. On a recent day in Lancaster the desert winds hit 40 mph, blasting out to right field. Contrasted with the heavy smog in Riverside, Ellis figures the “ball will carry better in the clear desert air.” So the foul lines in Lancaster run 350 feet, 20 feet farther than at most stadiums, to eliminate games that turn into home run derbies. “Seattle wants to measure its players’ stats accurately. They asked if we’d put the fences back.”

Ellis’ first taste of pro ball came when his mom flipped burgers for the Lodi Crushers, a Chicago Cubs’ minor league team, where he chased down foul balls and turned them in for corn dogs. After studying marketing in college he went to work in the minor leagues and, much like a utility infielder, he has traveled, with stops in Phoenix--on 120-degree days, he says, they hauled in “big blocks of ice so fans could rub against them”--Bellingham, Wash., Modesto and Lethbridge in Alberta, Canada, where his dad became part-owner.

If Ellis does everything right, maybe the JetHawks can hit $2 million in sales this year--in the same league as a typical McDonalds restaurant.

Then again, there are 16,000 McDonalds while there are only 155 minor league teams that develop players for the big leagues.

Says Wolf: “Franchise values are not based on business-earnings multiples. They are based on the fact they are a scarce commodity. If you want to be in the club, you’ve got to pay.”

Ellis has paid his way in; now he has to make it pay off.