Joy in Mudville

In 1888, Ernest L. Thayer, a reporter for the San Francisco Examiner, witnessed a baseball game played in Stockton on the muddy banks of the San Joaquin River, an area known as "Mudville." Afterwards, he composed one of the most lampooned ballads in American history, "Casey at the Bat." (This is poetic justice because Thayer, while at Harvard, had worked on the staff of the Harvard Lampoon.)

Oh, somewhere in this favored land the sun is shining bright;
The band is playing somewhere, and somewhere hearts are light,
And somewhere men are laughing, and somewhere children shout;
But there is no joy in Mudville - mighty Casey has struck out.

Since Casey whiffed with the winning runs on base, thus establishing a precedent for Jack Cust, Stockton has been a tough entertainment town. I hadn't been there since the early 1980's when I was promoting a bus-and-truck tour of "South Pacific." The show was so bad even the actor playing the part of Emile De Becque boycotted the production. The chorus schlub who replaced him sang "Some Enchanted Evening" as if the music had been written by Snoop Dogg.

For some reason, Stockton was cool to the production.

Entertainment times haven't changed much since then. The City of Stockton is bankrupt, the unemployment rate is 16%, and the local cops are still dragging the river for Emile De Becque. But minor league baseball, in the form of the Stockton Ports, is producing hits, despite tough times and Casey's legendary fail.

I'm not sure what I was expecting when I pulled into the parking lot of the Ports' Banner Island Ballpark, but it sure wasn't what I found. The ballpark is wonderful, 5,200 seats on one level surrounding a major league field, wide concourses, amenities, and history to boot. (The Ballpark stands in the very spot where the fictional Casey embarrassed himself.) You can actually tie up your boat at the dock next to the park, cheer for the Ports against the San Jose Giants, then get back on your boat and sail all the way to McCovey Cove to boo the San Francisco Giants.

Don't tell me Life isn't good.

I didn't expect Pat Filippone, either. This guy is no backwater hayseed. He speaks as articulately and as assuredly as anyone in a Silicon Valley boardroom. He knows his stuff because he has been riding herd on teams in the minor leagues for 23 years. For openers, I ask him about the difference between the minors and the majors.

"The scope of minor league ball is certainly more intimate," he says. "A minor league team can adjust quicker because the machinery behind it is much smaller. We don't have to manage the players. We don't have as much national attention because we're not on TV. Of course, not being on TV can be an advantage, too. If we try something a little whacky that doesn't work out, we're only impacted in our local area. We won't have commentators in New York asking, "What are these knuckleheads doing?"

Pat began his career with the Prince William Cannons (now the Potomac Nationals) in 1991 and, in four years, worked his way up to Vice President/General Manager. In 1997, he was named Carolina League Executive of the Year. After that, he found his way west and became the GM of the Rancho Cucamonga Quakes. His six-year stint in San Bernardino County ended in 2003 when two things happened: He won the California League Executive of the Year and he became General Manager of the Giants' Triple-A affiliate, the Fresno Grizzlies.

He was lured away from the Grizzlies in 2006 by 7^th Inning Stretch, LLC, the corporate owner of the Stockton Ports. It was an offer he couldn't refuse. He became President and he got a cut of the action. "I'm a ‘sweat equity' guy," he says. "The better we do, the more equity I get."

He was named California League Executive of the Year Award again in 2007. Do you see a pattern developing here?

Pat now oversees three teams owned by 7^th Inning Stretch, the Ports, the Delmarva Shorebirds (Class A, Baltimore) and the Everett (WA) AquaSox, the Single-A Short Season affiliate of the Seattle Mariners. The Ports still demand most of his time and focus, though.

The Ports have been around, in one form or another, for well over a century. The team has been called many names over the years (the Flyers, the Mudville Nine, etc.) and it has been affiliated with 12 other major league teams before its current gig with Oakland.

"A minor league team is a good business, if you do it right," Pat says. "A lot of people think this is easy but they ultimately fail." One of his biggest problems is how to promote ticket sales when he has no control over the players.

"Mostly we promote the entertainment value of coming out to the ballpark," Pat explains. "We don't set up a grand promotional plan around one guy because he may not be here when the season starts. We do promote guys who have moved on to the big leagues. This year we are going to do a Josh Donaldson Bobblehead Day. And a Sean Doolittle Day, too."

Ports attendance spiked after 2005 when the team moved to its new (and current) ballpark. Attendance dropped during the Great Financial Meltdown but has been rebounding steadily since. For the 2013 season (71 games) Ports attendance was around 199,000, an average of about 2,800 per game. Tickets prices range between $6 and $10 while season tickets cost between $400 and $750. Pat can't say what percentage of his capacity is taken up by season tickets but he says the season ticket retention rate is a bit more than 85%. He must be doing something right.

The Ports have 14 year-round employees. In mid-season when the Ports operation is in full swing, the team engages up to 130 people, staff and sub-contractors. The Ports recruit their staff from all over the nation. Two new people will be joining the staff in December. One is coming from Maine, the other from Indiana.

The Ports are a surprisingly sophisticated business and that leads me to a larger story in Stockton. It is a story about investments, global investments. Over the years, a lot of smart global risk capital has found its way into sports franchises, in general, and into minor league baseball, in particular.

Before interviewing Pat, I read a book by Arthur Solomon called "Making It in the Minors." The book is pretty boring but Solomon himself is interesting. He owns two minor league teams, the New Hampshire Fisher Cats and the Bowling Green (KY) Hot Rods. He's a real estate/Wall Street guy with degrees from Brown University, Trinity College, and a Ph.D. in economics from Harvard. He does not drive a turnip truck for a living.

The majority owner of 7^th Inning Stretch is Tom Volpe, formerly CEO of an international investment company called the Dubai Group. I'm not sure whether that means Volpe made investments in Dubai, or on behalf of Dubai, or he's simply rich enough to own Dubai itself. He holds a B.A. degree in Economics from Harvard University, a Master's degree in Economics from the London School of Economics, and an M.B.A. from the Harvard Business School. He is not a guy you find down at the liquor store buying lottery tickets.

I ask again, do you see a pattern developing? From what I can tell, owners like Volpe and Solomon are fairly typical in minor league baseball.

In many ways, a minor league baseball team is a far better bet than a major league team. True, there are only 30 MLB teams versus 160 affiliated minor league teams. But that makes the ante into the minor league ownership game a lot lower. Solomon says purchase prices for affiliated MiLB teams range from $4 million for a short season Single-A team to $30-$35 million for a Triple-A team. Pat disputes those figures.

"That's low on the low end and high on the upper end," he says. "I can't recall seeing any Short season teams go as low as $4million in the last five or six years. But I haven't seen any Triple-A teams going as high as $35 million, either. There's no question the franchise values have gone up significantly over the last 20 or 30 years."

Even so, less than $10 million to buy a team sounds like a better risk/reward proposition than shelling out a BILLION dollars for a MLB team. And what better return on investment than the Stockton Ports? There is no upfront cost or long-term obligation to build a plant (the ballpark). The City of Stockton floated the bonds for the stadium construction. (The Ports pay rent to the City and also collect a municipal admissions tax for Stockton.) There is no cost for players or coaches because the A's foot that bill. There is a need to cover the staff and field operation expenses, but you hire a guy like Pat Filippone to handle that, and you are set.

Don't get me wrong, there is risk involved. For example, the Memphis Redbirds, the Cardinals Triple-A affiliate, has been losing dough for years. But who needs to speculate in gold bullion when there is a much better play on the banks of San Joaquin River?

Truly, there can be joy in Mudville. In honor of that, I will leave you with this stirring recitation of Thayer's "Casey at the Bat" by Penn and Teller.

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