Attanasio: New Brewers Owner Taking In First Spring Training

Mark Attanasio has invested in and acquired companies in a variety of industries around the United States as an investor specialist, but baseball might be the highest profile, most unique industry of all. The new Brewers’ owner recently flew from his Los Angeles base to Phoenix to address his team before a spring training workout.

Attanasio told the players he has “always been part of a team in business,” and urged them to “look out for each other” in good and bad times. He assured them he and his partners are dedicated to building a winning, successful franchise in Milwaukee.

On the day he spoke, his sentiments were buoyed by the fact the Brewers set a single-game sales record for one day. In fact, in just four hours, the team sold 72,000 tickets, shattering the old one-day record of 46,000.

Attanasio also sat down in his Maryvale baseball complex office with writer Gregg Hoffmann to talk about baseball and business.

Gregg Hoffmann: This is a great view of the playing field for any baseball fan. I understand you haven’t taken the main executive’s office though at Miller Park.

Mark Attanasio: It’s so exciting to come here and actually get into baseball. We announced this at the end of the season, and a lot of the discussion has been about closing the deal and on the business side, and I’m doing it for my love of baseball. So, to actually walk out on the field and see all the players in their uniforms, it’s a real thrill. There’s nothing better. The view from here is great.

As for the office at Miller Park, I don’t like moving people. Their offices become their environments. So I took an inside office. It’s plenty big enough for what I need when I am there. Gord (Ash, assistant GM) had been there, but only a couple months. I didn’t want to move him but they wanted me to be there.

Hoffmann: How often do you think you will be in Milwaukee?

Attanasio: As much as I need to. I’ll be in spring training a couple of weekends. Then, I’ll be in Milwaukee the middle of March. I’ll spend a couple days there and meet some more of the local business leaders. I’m doing breakfast with the mayor. We’ll start having weekly business calls. I’d like to spend more time in person with some people. I’m going to be there when I need to be there. The one thing you can be sure of – I’m going to always want to be there.

Hoffmann: You’ve increased the team’s payroll. What will it be this season?

Attanasio: It’s $42 million right now, which is up 50 percent. It’s really driven more from the baseball side than the business side. We’re not going to spend money to say we spent the money. I frankly was very pleasantly surprised that we were able to get the players we did. If we hadn’t been able to trade for Carlos Lee, or sign Damian Miller, we might have had a much lower payroll. We weren’t going to sign players to just say, ‘hey, we signed them’. I’ve asked Doug (Melvin, general manager) and Gord to prepare a report on what the team will look like down the road from a payroll standpoint with some of the young players coming out of the farm system, so we can do some strategic planning from that standpoint.

Hoffmann: Will the payroll increase as much next season?

Attanasio: That would be highly unlikely. We have limits. We have a fixed media contracts – TV and radio contracts for example. The variables are the number of fans, ticket prices, concession sales, merchandise sales, sponsorships and alternative uses of Miller Park. There has to be a balance in that. Just raising ticket prices doesn’t do it. Sometimes, you can raise the ticket prices too high and keep the fans away. You also want to be fan friendly. We have a fan base that respects the fact we’re giving a good entertainment package for the price, respects the fact we haven’t raised ticket prices since 2002. Take a look at some other major league teams that have raised prices as much as 50 percent in that period of time. We have not done that because we are looking at the overall fan experience.

There are a lot of revenues that can be captured, all of which can be put back on the field. All of it will be put back on the field provided the baseball people have an interest. Goal is to not win for just one year, but to win consistently. So, we’re not going to load the team up to win for one year and have a bunch of players who are going to leave or we can’t afford. A lot of teams backload contracts. We’re not going to do that. It’s bad economics. It’s bad business. We will pay as you go. To pay players $5 million one year and backload to $14 million; we will never do that.

Hoffmann: You signed pitcher Ben Sheets for one year to avoid arbitration. He would have to be one of your priorities when you plan for the payroll. Do you have a timetable for negotiations?

Attanasio: Ben Sheets figures prominently. Our No. 1 decision to come to is how to sign Ben Sheets. You can be assured that a significant amount of attention at the top level will go towards that. He is a wonderful pitcher. Starting pitchers of that caliber are in short supply. I’ve gotten educated on what pitchers like Ben can demand. Timetables can be negative things. You can be working at a pace and then because of other circumstances that can change and people can wonder what is going on. I saw that with my purchase of the team. We announced it with a very simple letter of intent on Oct. 6. So, in my business, the United States acquisitions business, if you have a two-page letter of intent and you close the deal in three months that’s really fast. But because the expectation had been set that we would close before that everybody was writing and asking, ‘what’s wrong?’ Nothing at all was wrong. So, we don’t want to have any artificial deadlines that put pressure on us or on him.

We have to be able to afford him. It’s not going to be about the Brewers pinching pennies. We want to sign him, and be able to put a winning team on the field.

Hoffmann: This is a high-profile business compared to a lot of others, isn’t it?

Attanasio: This is very high profile. You know everybody loves baseball, and follows the major leagues. We otherwise have tried to follow a very low profile in our investment business. So, this is completely uncharted territory. Major League Baseball has a unique set of circumstances that other businesses do not. It’s really an investment in players. Even long-term contracts are four years. So, you have an asset and then it’s going to be gone. If you invest in a plant in America, you have those assets for 15 years. You wish you could look at those players out on the field – all a bunch of talented young players – and wish we could all be here for 15 years together, but you know that is virtually an impossibility. Maybe that was the case in the ’50s, but that’s not the case any longer. So, it really is a unique business.

Hoffmann: The club hasn’t had a president since Ulice Payne left. Are you addressing that?

Attanasio: We’re going to start to address that over the summer. We have a board of advisers and are going to have our first meeting on April 10th. If you look at it from a standpoint of needs, first of all things are functioning well. Could they function better? Of course, things can always function better. But, we are functioning well from a business management perspective. Secondly, I want to learn more about the organization and what our needs are. First, we might not need a president. Second, if we want one, what qualities should that person have? That will take time to assess. And, then if we do have one we’re going to have a very disciplined search.

You talk about the unique aspect of baseball. You have extremely talented people who are willing to forego unbelievable careers to become involved in baseball. You could see some unbelievable resumes. There are 30 major league teams. There are thousands of investment firms.

Hoffmann: Has the Lubar family of the Lake Express ferry business officially become involved in your ownership group? When will you announce all your partners?

Attanasio: David Lubar is part of the team now. I think it (Lake Express) is an example of how innovative they are in their thinking. There’s been a need for that high-speed ferry for years. I think he will bring some sound business judgment to us. He obviously has been able to market that successfully, so he will bring some expertise in that area. Obviously, he can work with contacts that is of immeasurable value to me in Milwaukee.

There will be eight investors, plus me. They will be announced in the near future.

Hoffmann: It sounds like you like to do your research? Do you consider that one of your fortes?

Attanasio: I try to balance doing all my research with having the ability to make a decision. In my business, we talk sometimes about ‘analysis paralysis’. It’s important you do your research, but if you become a prisoner of your research it does not lead to good results. I do like to collect all the facts; understand things fully. Sometimes you can collect all the facts, and sometimes you can’t. So, you have to make the decision and keep collecting the facts.

This year, we had to make a decision on the ticket prices. We made the decision to have the premium pricing on the 13 games. We made the decision to otherwise not increase prices. We made a decision to sell tickets in a 9-game pack because that’s what we heard from our fans.

I’ve asked Doug to get me a comparison of teams that have won and payrolls. There has not been any real detailed research on that. What we hope to do is analyze if there are things that teams that have won with relative low payrolls have been able to do that are in common. Maybe we will be able to apply some of those things here.

So, yes, I believe in doing my research and being thorough, but also know you have to be able to make decisions.

Hoffmann: There are a lot of revenue sources for a baseball team. How do you analyze which will work for your club?

Attanasio: Whether it’s an airline, or a hotel room, there are a number of different metrics and ways you can analyze how to maximize revenue. For example, if you have 15,000 fans for a game, and you sell every other ticket for a dollar, it adds up. If you don’t sell the tickets, they are forever gone. On the other hand, if you start cannibalizing the pricing, which is the position the airlines took, people will just sit back and wait.

That’s one of the issues we had with suites. Anecdotally, and I don’t have the research, everybody around Milwaukee was saying ‘I can get a suite anytime I want.’ Well, now it will cost you $4,000 to get a suite if you are not already a suite holder. It will be a real premium to get those suites. They will be in demand for those games with the Yankees and Cubs. That will cover half of the budget for those suites. If we have 15 unsold suites, those premium games will cover half of our costs. I’m willing to have them dark otherwise if I have to because I believe we have to have some pricing power. We also have talked about how we might want to turn a couple of those suites into common areas.

Hoffmann: Milwaukee has been labeled a borderline pro sports market by some. You’re investing a lot of money there, so you must think differently.

Attanasio: I think it’s a great sports market. It’s a great sports town. It’s an up-and-coming city. And, it’s a city that managed to get a new ballpark built. There is no question that if the Brewers had not managed to get a new ballpark built, it would have been an extreme challenge to keep a team there. Just look at the numbers. We can’t command a media contract like the bigger markets can. But, with the support for sports shown in the city, there is great potential there. If you do things in a topnotch way – look at the Calatrava as an example – you can be successful. We were 20th in baseball in attendance last year, I might be wrong, but somewhere right in the middle. I think we will be up this year. There’s no question the city can support baseball. We can’t be New York or Chicago, but we can have a successful baseball franchise in Milwaukee.