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Baseball's best nightmare
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January 18, 2002: 2:18 p.m. ET
Twins bidder Watkins says he can establish small-market profitability.
A twice weekly column by Staff Writer Chris Isidore
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NEW YORK (CNN/Money) - Donald Watkins could end up being Major League Baseball's worst nightmare or the best thing that has happened to the game. Or maybe both things at the same time.
A wealthy African-American attorney and businessman from Alabama, he has been given clearance to enter negotiations to buy the Minnesota Twins, one of the two teams that baseball leadership has been considering eliminating as part of its contraction plans.
With Baseball Commissioner Bud Selig and other baseball officials repeatedly on record in favor of more minority executives in the game, it'll be difficult to say no to him if he and Twins owner Carl Pohlad do reach a sales agreement.
But even if baseball finds another team to eliminate through contraction, Watkins' view of how to operate a profitable baseball team could make other owners very uncomfortable.
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Donald Watkins has ideas about how to make money with a small market baseball team that could shake up the sport if he's given the chance to buy the Twins. | |
Most other owners argue they desperately need the crutches of public finance for stadiums, greater revenue sharing and controls on player salaries in order to be profitable and competitive.
Watkins says he can make money with the Twins and field a winning team without any of those.
As to the stadium, he says he'll build a privately financed $350 million retractable-domed stadium, without tax dollars being spent for anything other than surrounding infrastructure improvements.
"The attitude of much of ownership is to seek publicly financed stadiums -- that's the easier route to travel," Watkins told me in an interview this week. "Because of the political climate, the more viable solution now is a privately financed facility."
"I have a project financing model that serves me well in other businesses," he said. "It requires only modest adaptation to work in baseball."
Watkins said a privately financed facility will give him access to all the revenue streams available, instead of having to share them. He also plans to locate a museum dedicated to athletes of color in all sports there to make it a year-round tourist attraction.
"The goal is to have revenue flowing 365 days a year, 24 hours a day," he said. "I predict my approach will become the industry model in the 21st century."
As to revenue sharing, Watkins says his business model for the Twins doesn't foresee any significant increase in assistance from the big-market teams that Selig and other owners say is needed for the team and other small market franchises to compete.
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Twins owner Carl Pohlad, right, is due to talk with Watkins about a possible sale of the team as soon as next week. | |
And he says that his way of making money calls for spending significantly more on payroll to improve the team's on-field performance, rather than keeping it at the bottom of league in terms of payroll.
"I anticipate there will be a significant increase in payroll," he said. "I see that as an investment in the club beyond the acquisition cost and the cost of stadium financing. I expect to recoup it in the future when the team's valuation increases."
Still Watkins isn't ready to completely challenge baseball's current economic arguments. For example, even though he sees a future for the Twins, he says he's not opposed to contraction of two teams.
"As an outsider, I've only studied the issue from public statements made by Major League Baseball," he said. "I support Bud Selig. He's studied this situation. In his judgment, contraction of two teams is a needed step. I would defer to his expertise."
Of course that is a smart position to take for a potential owner, since the support of Selig and other owners is of vital necessity to win approval to buy a team.
The battles taking place in Boston this week, when two apparently higher bidders lost out on their efforts to buy the Red Sox, are proof that it's whom you know, not how much money you have to spend, that's crucial for getting in the exclusive club of baseball ownership.
But the idea of an owner saying he could build new stadiums on his own nickel, raise team payroll as an investment, and still make money has got to be a scary thought for owners arguing just the opposite is true.
Watkins has been circumspect discussing his wealth, raising some questions about whether he has the resources to pull off his ambitious plans. He says he's provided the proof of his net worth necessary to satisfy baseball officials, though.
"I do believe I enjoy the right of privacy because I am not requesting any public assistance," he said. "I doubt very seriously Major League Baseball would green-light me to go to the next level if they had any question about my finances."
And Watkins says that baseball officials are also on board with his stadium finance plans, even if others have raised questions about its economic viability.
For example, his plans to have a retractable-roof stadium don't make economic sense for the team unless public funds are used to pay for it, according to Roger Noll, Stanford University professor of economics and an expert on sports facility financing.
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"The act of building a dome costs you $150 million right off the top," said Noll. "The attendance effect you get from having a domed stadium is way too small to justify the additional costs. You'd have to think 50 percent of attendance is at stake without a dome for it to make sense."
Still, it's tough not to pull for Watkins to succeed, if only because his success would shake up the powers-that-ain't in baseball and the rest of professional sports. But his views might yet be enough to keep him out of the ownership club.
Watkins said the reception he's received convinces him that his ideas would be welcomed by other owners.
"I don't think success threatens other people," he said. "I think intelligent people learn from the success of others."
Of course that's assuming the other owners are intelligent people. There's plenty of evidence to the contrary. 
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