Will Royals owner David Glass finally field a winner?

2011-04-12T09:00:00Z Will Royals owner David Glass finally field a winner?McClatchy Tribune News Service Herald-Review.com
April 12, 2011 9:00 am  • 

KANSAS CITY, Mo. - David Glass is cheap. And greedy. 

That's the perception, anyway. He's viewed by many Royals fans as the team's absentee owner, satisfied with banking profits from Major League Baseball's growing revenue-sharing program even while overseeing the game's worst franchise.

Glass, 75 and the former Wal-Mart CEO, doesn't often speak publicly but said he knew what a lot of Royals fans thought of him. He hears it and even accepts it.

"We probably deserve it,'' he said of the criticism. "I've been truly unhappy with some of the results.''

There is truth in the complaints. The Royals have lost more games than anybody in baseball and have had just one winning season since Glass bought them 11 years ago this month. Only four teams have spent less on big -league talent in that span, and the Royals are one of only five that have not made the playoffs.

By those measures, Glass' Royals have been a failure. For many fans in a city and region whose commerce and psyche are largely defined by the resident Major League Baseball franchise, this is where the story ends. They want a winner and care little about business models and profit margins.

A closer examination of Glass' financial stewardship reveals just how low the Royals had sunk and how now, after more than a decade, the organization might finally be building toward a promising future. The catch? That future is predicated on the Royals' record crop of minor -league prospects making it to Kansas City and then staying here on long-term contracts.

And though Glass says he's committed to fielding a winner, it's clear he won't do so at all costs.

Glass' ownership of the Royals is defined by two distinctly different periods.

From his purchase in 2000 until 2006, the Royals operated on the cheap. Former scouts and coaches tell embarrassing stories of being underfunded and under equipped, from small essentials like cell phones to more obvious limitations on which amateur players could be drafted and signed.

"I'd ask guys I know from other organizations how we were viewed,'' Royals Hall of Famer and broadcaster Paul Splittorff said. "They'd say, 'You don't want to know.' Flat out, 'You do not want to know.' "

Current employees and those who left after 2006 tell a different story. The mile-marker is the hiring of general manager Dayton Moore five years ago this summer. Baseball operations people who worked for the Royals more recently say they've never been told no on matters of improving the organization's scouting and player -development systems. Before last season, they even outbid the Yankees and Red Sox, and spent $7 million on Cuban pitcher Noel Arguelles.

This emphasis on development has culminated in the Royals owning what Baseball America ranks as the game's best minor -league system in at least 22 years.

"What he's done after '06 is exactly what Mr. K did right out of the gate,'' Splittorff said, referring to longtime owner Ewing Kauffman. "Ewing was a business man, not a baseball man. He bought the team for the community, so he let the baseball people run it. I think that's what we're seeing now.''

The Royals first took the field in 1969 and quickly became a perennial winner. They went 85-76 in their third season, won the division in their eighth season and earned the American League pennant in their 12th year.

When they won the World Series in 1985, they were one of baseball's most envied franchises.

Then came a combination of key front -office personnel departures, Kauffman's death in 1993 and the strike the next year, events that conspired to turn the Royals into a perennial loser. They've had just one winning season since 1995, and by now an entire generation of baseball fans knows them only as one of baseball's worst teams.

Glass, who grew up in a small Missouri town listening to St. Louis Cardinals broadcasts and played second base, has been the team's leader for most of the last two decades. From 1993 to 2000 he was chairman of a board of directors that prioritized eliminating big financial commitments to make the team more attractive to a potential buyer.

That buyer turned out to be Glass himself in April 2000. At the time there were indications the Royals could leave Kansas City, and Glass' $96 million purchase kept the club in town.

But if Kansas City avoided the heartbreak of losing its baseball team, it has since endured the disappointment of losing a competitive one.

The baseball industry is a small world, so former employees are hesitant to talk on the record. But when speaking privately and independently, their stories illustrate a difficult work environment.

Scouts didn't have company cell phones, and when they finally got them they had limitson their monthly minutes. The organization's minor- league teams struggled to order and maintain basic equipment like practice balls, stopwatches and pitching dummies.

The Royals spent big on a select few draft picks but limited payments in other places. One year, after the fifth round, the team could only draft players who would sign for $1,000. The postseason banquet was canceled. A Negro Leagues tribute game was famously cut because the uniforms would be too expensive.

"It was robbing Peter to pay Paul, and doing more for less,'' one high-ranking scout from those days told The Star. "That's the reality of it. From business operations to baseball operations, scouting, player development, those were just the realities and limits we all had to deal with. There wasn't going to be any discussion about it. It's just how it was.''

Keeping expenses low helped Glass turn Wal-Mart from a regional operation into the biggest company on the planet, but the same strategy only hurt the once-proud Royals. They lost 97 games in Glass' first full season in charge, then 100 the next year before bottoming out with 210 combined losses in 2004 and 2005.

Glass is evasive when asked about some of the limitations the club had before 2006. But he answers directly when asked whether he has any regrets about his pre-2006 leadership.

"No,'' he said. "If you did what you thought was best at the time, and you took your best shot at it ... the fact it didn't work very well, you can't regret that as long as you were trying to do what you thought was the right thing for the franchise.''

Dan Glass, David's son and the team president, said the same resources now provided for Moore were available in past years, though he is similarly vague when asked about that time. Former general manager Allard Baird, who preceded Moore, could not be reached for comment.

"I don't dwell too much on the past or what was lacking then,'' Dan Glass said. "Seems like that's over and so far behind us now, I don't really think about it.''

Others do. Conversations with people involved at the time lay out a drastic change that took place five years ago this summer. The shift was strong enough that two people close to the situation think the commissioner's office put pressure on Glass to spend more on player development, though an MLB source is adamant the league has never had a problem with how the Royals use what they receive through revenue sharing-an amount thought to have approached $30 million in recent years.

Several people close to Glass told The Kansas City Star that he became embarrassed by the losing and began to rely more on the people he hired to run the team's baseball operations. Moore was the game's hottest general manager candidate when he interviewed with the Royals, and he made sure that he would have a certain level of money to work with before taking the job.

"When that happened,'' says Drayton McLane, the Houston Astros owner and a close friend of Glass' for more than 40 years, "I think David felt he had a GM that really knew how to execute what David wanted to do in player development.''

It was around this point that Glass' ownership stopped being one of limitations. If the change had been marked by a different person in charge instead of a different operating method, it would be easier to see what was happening.

The Royals' first three first-round draft picks after Moore's hire were represented by super-agent Scott Boras. Such players were considered mostly off limits for the Royals before 2006 because of Boras' reputation of securing high-dollar contracts for his clients.

The selections sent an inadvertent message that the Royals were operating differently than in the past.

"Dayton just told us, 'Do what you have to do to get the best players,' " said a scout who worked for the Royals before and after 2006. "I can't tell you how many times I asked the question, 'Are you sure?' Because I didn't want the same thing to happen that happened in the past. I didn't want to waste my time.

"But once we got started, it was invigorating. It was damn fun to be in any ballpark and go, 'OK, we are your competition now.' It's a big difference when you get to play in the big leagues rather than Triple-A.''

Starting in the winter after the 2006 season, the Royals gave out the AL Central's biggest free -agent contracts two years in a row. In 2008 they set the MLB record for signing bonuses to amateur picks, spending $11 million.

In 2009 they played with a franchise-record payroll approaching $75 million. A minor -league affiliate was added. Eleven front -office positions were created in the first six months of the year.

The club's academy in the Dominican Republic underwent major improvements, and the Royals went from having virtually no presence in Latin America to being one of the top 10 spenders there.

"David Glass is a very competitive person, and he demands that you qualify what you're trying to accomplish,'' Moore said. "He asks questions, but as long as you qualify it, he's supported everything we've done. It's his job as the owner to validate and substantiate the judgment of all his people. He requires that we do just that.''

Glass allowed Moore to create 17 new baseball operations positions in his first three years on the job, and budgeted enough to hire people with championship experience to fill most of those roles.

The top three prospects in the Royals' farm system - Eric Hosmer, Mike Moustakas and Wil Myers - all signed for more than baseball's recommended allowance. They were light on shortstops, so they spent about $6 million on that position alone in the past year.

Of course, even after five years of operating this way, the Royals have still lost between 87 and 100 games each season since Moore was hired. The hope is still mostly on spec. S ome scouts jokingly call the Royals "Baseball America's champion.'' There is, so far, nothing more than promise.

The team opened this season with a $35 million payroll, by far the smallest in baseball and the franchise's lowest since 2001. Part of that is Gil Meche's unexpected retirement, which saved the Royals $12.4 million. Much of t he rest can be attributed to an unwillingness to sign veterans who could block the progression to the majors of their young and still-inexpensive prospects.

But even if there are legitimate baseball reasons for the low payroll, it brings up the issue of Glass' spending habits.

Specifically, what is an owner's obligation to his fan base? And should Glass be spending more?

David Glass regularly commutes by private jet from his Arkansas home to Kansas City, as well as vacation spots around the country.

But by baseball owner standards he is decidedly ordinary. He is a former Wal-Mart employee, not a Walton family member. Forbes lists 10 owners of baseball teams with a net worth of $1 billion or more, a group Glass isn't in and likely doesn't approach.

Glass' net worth remains a closely guarded secret, but one baseball insider told The Star that it's "definitely among the 10 lowest, and probably five,'' among baseball's owners.

Glass has always maintained he only wants to avoid losing money in yearly operating costs.

"Most of the owners I know would like to break even,'' he says. "None of us ... I don't know any of the owners who bought their team and said, 'This is a good investment.' That's not the motivation. You buy the team, or we did, because we love baseball. My family does, and we wanted to make sure the team stayed in Kansas City forever.''

That may be true, but the Royals are worth about $250 million more now than what Glass paid for them, so he stands to make a fortune if and when he sells the team.

His original purchase included a clause that prevented him from profiting from a sale, though two people with knowledge of the situation said that clause ha d now expired. Glass said he wasn't sure, "because we have no interest in not owning the team, and it doesn't really matter.''

Forbes estimates that before taxes and a few other calculations, the Royals turned a $10.3 million profit last year, their eighth consecutive year in the black. But the Forbes numbers don't include expenditures that could be anywhere from $6 million to $17 million, according to the financial documents of six other teams leaked to Deadspin and The Associated Press last year.

"The Royals have spent money on par with their revenue, traditionally,'' said Kurt Badenhausen, senior editor at Forbes. "Some teams keep player costs down low and book huge profits, but I wouldn't consider the Royals one of those teams by any stretch. I don't think David Glass is getting rich off the back of (revenue sharing) distributions to the Royals.''

The financial rules of baseball are evening out but still tilt in favor of the richer clubs. And if some of the club's prospects turn into stars, as hoped, it will only highlight an issue that's always been there: Will any of them stay in Kansas City?

The Royals once lost Carlos Beltran, then one of the best players in baseball, over a million dollars. The story is almost seven years old, but it still haunts the club.

Beltran was momentarily outside the influence of Boras and willing to sign long term with the Royals. He wanted $25 million over three years. The Royals offered $24 million. Neither side budged, and a legitimate star left over the equivalent of tip money.

The narrative of losing good players to other teams doesn't end there. Johnny Damon left. Jermaine Dye, too. And Zack Greinke forced a trade. Kansas City fans are trained now to think their favorite players are only here temporarily, a concern that's resurfacing as Boras clients Moustakas and Hosmer headline the club's high-ceiling group of prospects.

Glass thinks the Royals can keep a fair percentage of their stars of tomorrow as long as the team wins and the organization continues to supplement with the next wave of affordable young players. In the last five years the Royals have signed their three best young players - Greinke, Joakim Soria and Billy Butler - to long-term contracts.

"These kids have the benefit of playing together,'' Glass says of the organization's future stars. "They're going to come up together, and they're going to know each other, and they're going to want to play together.

"So I wouldn't rule out the possibilities of keeping these kids and keeping the bulk of them together regardless of who their agent is.''

It's an optimistic viewpoint. One baseball insider told The Star there is "no freaking chance'' the Royals can sign the Boras clients to long-term contracts. The goal then would be to keep as many of the others as possible.

This will be the next test of Glass' new spending habits.

His team needs to win. For himself, for this city, and for the way he'll be remembered.

"The transition starts this year,'' he says. "T he thing that's hard ... it's hard not to be impatient. It's hard to be patient. You kind of want to see some of these kids up here now.''

 

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