Stay the Course

No pennants fly at Edison Field. The Stanley Cup occasionally visits the Arrowhead Pond, but only on loan. The “I’m going to Disneyland!” television commercials are part of Americana, but Disney’s athletes are never the ones shouting into the camera amid the delirium of a championship celebration.

The Angels and Mighty Ducks play on today, several years and scores of losses removed from nostalgic talk of Disney dynasties, of capturing hearts and wallets across Southern California and around the country, of championship parades down Katella Avenue and into Disneyland, with Tim Salmon and Paul Kariya riding side-by-side with Mickey Mouse.

Ever since Disney nearly sold its teams two years ago, chairman of Disney Parks and Resorts Paul Pressler and other company executives cannot shake the nagging perception among some in the sports industry that the company is more committed to selling than winning. The teams lose, and lose money.

And, in a company that so prides itself on imagination that it calls its designers and planners “imagineers,” some observers think Disney’s teams have failed to capture the imagination of local fans. The Ducks had it and lost it; the Angels lost it long before Disney bought the team five years ago.

In his first sports-related interview since adding the Angels and Ducks to his portfolio, Pressler insisted the teams can win without spending freely on free agents, declared Disney wants--and needs--to keep the teams and dismissed the notion that spiraling financial losses had soured the company on professional sports ownership.

“The losses aren’t significant enough for anyone to lose sleep over,” Pressler said, “and it supports our goal of supporting Anaheim.”

Since Jan. 1, Tony Tavares, president of Disney’s Anaheim Sports division, reports to Pressler, 44, who oversees 90,000 employees worldwide in such ventures as theme parks, cruise lines and hotels.

Tavares formerly reported to Sandy Litvack, who retired as Disney vice chairman on Dec. 31.

The Ducks, founded in 1993, produced windfall profits in their infancy--more than $10 million in their first season alone--but have lost money for three consecutive seasons. In a major league baseball report, the Angels claimed losses of $83 million from 1995-99, a figure exceeded in those years only by the San Francisco Giants and Toronto Blue Jays.

Disney reported $7.7 billion in profit on $99.7 billion in revenue from 1995-99, so the company can afford to write off relatively modest losses in pro sports as the cost of serving a greater corporate good.

As president of Disneyland from 1994-98, Pressler said he was a “major sponsor within the company” of owning the Angels and Ducks. Pressler steered Disney’s $1.4-billion Anaheim expansion, including the California Adventure theme park and Downtown Disney entertainment promenade, and he believed securing teams in state-of-the-art venues enhanced Anaheim as a destination for locals and tourists alike. With planning underway for a third Disney theme park in Anaheim, the teams provide the company with additional attractions and promotional options within its growing Orange County kingdom.

Disney saved Anaheim from opening the Pond without a tenant, extracting a highly favorable lease for the Ducks in the process. And, at a time when former co-owner Jackie Autry threatened the Angels might follow the Rams out of town, Disney spent $140 million to buy the Angels and another $98 million to renovate aging Anaheim Stadium, binding the team to the stadium through 2016.

In 1999, when a group led by Henry T. Nicholas III, co-founder of Irvine-based computer-chip powerhouse Broadcom, approached Disney about acquiring interactive broadcast rights for the Angels and Ducks, Disney responded by offering to sell the teams. With the Angels and Ducks anchored in Anaheim, and in modern venues, with the teams losing money and with the collapse of the proposed ESPN West cable channel that would have carried Angel and Duck broadcasts and rivaled Fox Sports Net, Disney apparently no longer needed to own the teams.

Negotiations ceased after four months. While the company remains willing to consider offers for the teams, separately or together, Pressler said no serious negotiations have taken place since the Nicholas deal fell apart. Yet the perception of Disney’s disenchantment with pro sports remains such that Peter Gammons of Disney-owned ESPN recently reported the company would consider dissolving the Angels if it could not find a buyer, a report Pressler called “erroneous.”

“As we have said all along, if someone came along who was a quality owner and who made a more-than-reasonable approach, we would consider it,” Pressler said. “I think it’s only fair to our shareholders.

“But it’s not our strategy to sell these clubs. We think we need to stay in to maintain our relationship with Anaheim.”

If Disney truly wanted to dump the Ducks, the company could have made an offer to Michael Heisley, owner of the NBA’s Vancouver Grizzlies. Heisley considered moving his team to the Pond before selecting Memphis as the Grizzlies’ new home.

For Disney, Heisley would have been the perfect buyer, because he would have maximized revenue by operating two teams in the same arena and hence would have no incentive to consider moving the Ducks. The Duck lease allows the team to move with two years’ notice.

“If he thought he could pick up a hockey team in a fire sale, he might have been interested,” Anaheim Mayor Tom Daly said. “There was no fire sale.”

Pressler and Tavares met with Heisley at the city’s request, discussing potential marketing partnerships and offering concessions in the Ducks’ lease, which diverts millions of dollars in premium seating revenue from NBA games into Disney’s pocket.

While Disney would welcome an NBA team at the Pond, the company would not buy a team, Pressler said.

“I would think that having a basketball team in Anaheim is no longer, in my opinion, a strategic need,” he said. “If the right opportunity comes up, maybe there’s a joint venture of some kind that, if someone wants to come to the community, we’d be open to considering.”

Hockey purists lambasted Disney for naming the Ducks after a movie, but the company laughed all the way to the bank, with parents across North America flocking to outfit their kids, and themselves, in team apparel.

In the ensuing years, Disney has learned a painful lesson. Those parents were consumers, not fans. Consumers follow trends, and there’s nothing trendy about following a bad team, not when that bad team is eight years removed from the warm and cuddly feelings of its inaugural season.

The Ducks sold out 51 consecutive games from 1993-95, but attendance is down 21% over the last four seasons and the Ducks finished in last place in three of those seasons.

Disney’s $5-million ad campaign touting the renovated Edison Field helped the Angels attract 2.5 million in 1998, the most in eight years. Attendance dropped 18% over the next two seasons, as the Angels finished in last place in their division in 1999 and next-to-last in 2000.

“It’s kind of like a movie,” Pressler said. “All the marketing in the world, maybe it helps open a movie, but if people don’t like it, you’re not going to do the box office.”

Pressler acknowledges that Disney, so renowned for its marketing prowess, has been humbled by its failure to sell professional sports.

The splashy stunts aimed at expanding the Angels’ aging and shrinking fan base--most notoriously bands and cheerleaders atop the dugout roof and decibel-busting entertainment between innings--alienated loyal fans without drawing new ones.

Disney now emphasizes taking care of its best customers, rewarding what Pressler calls “our season passholders” with discounts and prizes while embarking on grass-roots efforts to nurture community loyalty and broaden the fan base of the Angels and Ducks.

Players and coaches from both teams have made some 200 community appearances over the last two years at schools, hospitals, sports clinics and civic organizations, and the Angels Care and Mighty Ducks Care foundations donated $1.7 million last year to dozens of local charities. The Angels alone donated tickets, merchandise and autographed memorabilia to nearly 2,000 nonprofit organizations.

As he talks, Pressler echoes this year’s Angel marketing slogan: “It’s about baseball.”

“This business is about getting the community pumped up about sports,” Pressler said. “It’s not about, gee whiz, here’s a new marketing campaign. It’s about, are you embedded into the fiber of the community? It’s about getting the players out there. It’s about having important fan loyalty programs.

“There isn’t this magic wand you can wave. You’ve got to do the marketing that is appropriate for that business. We’re continuing to learn.”

And the most important lesson?

“At the end of the day, putting a competitive team on the field is 90% of marketing,” he said. “The other 10% is really on the margin.”

Pressler heartily endorsed his general managers, the Ducks’ Pierre Gauthier and the Angels’ Bill Stoneman, and their emphasis on developing young talent instead of buying proven talent.

“I think both of these guys can bring us to championships,” Pressler said.

In his first opportunity as an NHL general manager, Gauthier won raves for transforming the laughingstock Ottawa Senators into a playoff team on a shoestring budget. However, after three seasons as the Ducks’ president and general manager, and after inheriting a roster with the almost unthinkable blessing of superstars Kariya and Teemu Selanne, Gauthier failed to assemble a worthy supporting cast.

The Ducks opened last season with a player payroll of $38.5 million, eighth among the 30 NHL teams, although that payroll is expected to drop next season after Gauthier shifted direction by trading Selanne and his $8-million salary to the San Jose Sharks in March.

“We probably, within our company, are what I would say to be more forgiving, or more tolerant, than what I’ve seen in this industry,” Pressler said. “They’re very quick to pull triggers on people and fire people. That’s not really our style. These things have to develop and take time.”

In baseball, far more than in hockey, the willingness to exercise patience and develop talent appears increasingly secondary to the willingness to spend money. When asked why Fox’s Dodgers could open this season with a $110-million player payroll while Disney’s Angels opened at $47 million, Angel Manager Mike Scioscia jokingly responded, “I guess their shows or movies are doing better.”

The financial answer comes from Forbes magazine, which estimated the Dodgers’ revenue last year at $131 million and the Angels’ revenue at $94 million. The philosophical answer comes from Pressler, mindful that the Dodgers won 86 games last season, the Angels won 82, and neither team made the playoffs.

“Would I go out and spend $109 million to not necessarily create a winner? No,” he said. “I don’t think that’s prudent for our shareholders at all. Someone has made that decision, and how they justify it is their business. . . . But we’re not going to engage in what I think is ridiculous behavior by some, to spend ridiculous amounts of money, because it clearly doesn’t guarantee success. We’ll do it with what I think is a reasonable and prudent amount of money.”

Spending might not guarantee success, but a lack of spending all but guarantees a lack of success. Tavares and Litvack served on the Commissioner’s Blue Ribbon Panel on Baseball Economics, which reported last year that “a high payroll has become an increasingly necessary ingredient of on-field success” and that no team with a payroll ranked among the bottom half of the 30 major league teams won a playoff game from 1995-99. The Angels’ payroll ranks 21st.

“Clearly, spending a lot of money adds to the potential for doing well,” Pressler said, “but we think we’ve gotten lucky in a lot of ways. We’ve got a lot of good young talent that has come up through the organization,” citing a nucleus that includes third baseman Troy Glaus and outfielders Tim Salmon, Darin Erstad and Garret Anderson. Disney’s $80-million investment in Mo Vaughn appears more of an anomaly with each passing day, no matter how desperately the Angels might need an ace starting pitcher.

“Would another major star be a help? Possibly,” Pressler said. “But I feel pretty good about our prospects with what we have.”

Pressler said he speaks with his general managers primarily when he attends games but delegates responsibility for the teams to Tavares, to whom he speaks “sometimes two or three times a day, sometimes once a week.”

But Pressler, who grew up in New York rooting for the Rangers and Yankees, follows the Angels closely enough to know that they hold their own against the Yankees. Although the Yankees won World Series championships in 1996, 1998, 1999 and 2000, they failed to win the season series from the Angels in any of those years.

“The Angels are the only team in the American League that can kick their you-know-what,” Pressler said. “If we could just go right to the playoffs and get to the Yankees, we’d be in great shape.”