Return Of The Rockies
Tom Van Riper, August 2011
Thanks to Dick Monfort, baseball is back in the Mile High City.
Colorado Rockies owner Dick Monfort is watching his future from a box at Coors Field. On a cool night in July he’s studying the warm-up of Ubaldo Jimenez, a talented 27- year-old right-handed pitcher from the Dominican Republic, a product of the team’s international scouting operation. Over five years with the Rockies, Jimenez, who earned $2.8 million this year, has shown stretches of greatness. But he’s due for a bump to $4.2 million next season. Trade rumors have grown since the Rockies fell out of playoff contention. A midmarket club like Monfort’s can’t keep everyone. “We live in the payroll we live in,” Monfort says. “If the right deal is there, one that makes you better for five or six years, you’re crazy not to look at it.”
It’s a tough call, but not an unfamiliar one for Monfort. Since taking control of the Rockies in 2005 he’s turned their fortunes around through a mix of smart, scaled-back spending on players and lucrative development at his stadium. As the team’s on-field performance improved, so did attendance–up 50%. He’s increased revenue every season since taking control. As a result FORBES estimates the value of the Rockies is now $414 million, up from $298 million in 2005, largely on the strength of the improving gate.
“The Monforts have a strong backbone and a consistent approach to build from within,” says industry consultant Bernie Mullin, who served as a senior Rockies executive during the club’s early years.
That praise does little to comfort Monfort. As with other teams that lack the first-tier payrolls of the New York Yankees or Boston Red Sox, a single bad trade or contract mistake could sink him. It’s happened. “We did some free agent signings and got into some financial trouble,” says Monfort, whose team has the 14th-biggest payroll in baseball in 2011 at $88.1 million. “The team didn’t play well, and our balance sheet got all cockeyed.”
That he would even have to rally the city around his ball club would have been unthinkable 18 years ago. When they debuted in 1993, the Rockies were the most successful expansion franchise in the history of pro sports. The team drew a record 4.4 million fans that year to Mile High Stadium, home of the Denver Broncos, and was on pace to outdo that the following year before a players’ strike canceled the season’s final six weeks. Monfort was not part of the ownership group then, having turned down an offer to become a limited partner during the club’s startup years. He joined his brother Charles in the general partnership in 1997. “I didn’t want to invest without some say,” he says.
How big a deal was baseball in Denver? Season-ticket seekers rang phones off the hook in the team offices the day after the National League announced its expansion into the city in the summer of 1991, laying down deposits for seats they wouldn’t see for two years. By the time the first season began, more than 35,000 people had signed up. The city threw the Rockies a parade before they’d even played a game. In April of 1993 cavernous Mile High was crammed with temporary seats so the team could fit 80,000 fans into the home opener against the Montreal Expos. They weren’t disappointed. Rockies second baseman Eric Young, whose son now plays for the team, led off the bottom of the first inning with a home run. They won.
The Rockies reigned as baseball’s attendance leaders through their first seven years, buoyed by the unveiling of Coors Field in 1995 and a turn at hosting the All-Star Game in 1998. “We had three honeymoons,” says Monfort, citing the inaugural year, the new ballpark and the All-Star gig. “People were hanging on to their season tickets because they knew it was the only way to see the All-Star Game.” The early years featured a customer-service operation modeled after Disney’s, with ushers in Panama hats and purple shirts helping fans navigate parking lots and seat sections.
The good times didn’t last. After watching the Florida Marlins (another expansion team that debuted in 1993) win the 1997 World Series by writing a series of big checks for veteran talent, the Rockies’ managing partner, Jerry McMorris, a Colorado-based trucking magnate, felt the urge do the same. “We thought we were a big-market team because we drew well,” says Monfort, who had just bought in as a minority partner.
Between 1996 and 2001 payroll shot up from $34 million to $71 million, a river of spending highlighted by the disastrous free agent signings of pitchers Mike Hampton and Denny Neagle, to whom the team committed $172 million from 2001 to 2008. Both pitchers famously flopped in Denver, though Monfort says the team’s problems ran deeper. “It was a mind-set,” he says. “We were selling out every game, and we figured we could always raise prices.” But as the team struggled, attendance fell below 3 million in 2002 and then below 2 million by 2005. The club was losing money and borrowing to make cash calls. “We were looking at the numbers and realized this wasn’t going to work; the banks weren’t going to keep lending us the losses,” says Monfort. “We felt we had a $40 million to $50 million problem.”
Former club insiders say McMorris favored management by committee, avoiding tough decisions as he tried to please everyone. The Monforts finally forced the issue in 2005, buying McMorris out for a reported $20 million and taking control of the team. A year earlier the club had flipped a 14% stake to Fox for $20 million, which came from the limited shares of another troubled owner, the late Oren Benton, a uranium trader who had taken a bath when that market tumbled.
Still, local fans and baseball writers weren’t impressed. Many of them called for the brothers to sell after the next two seasons brought little progress. Unmoved by the criticism, Monfort preached patience. He kept senior executives, including general manager Dan O’Dowd, through several years of mediocrity and a lot of red ink.
The payoff finally came with an improbable 21–1 run at the end of 2007 that landed the club in its first World Series. The Rockies lost to the Red Sox in a four-game sweep, but a workable midmarket model was up and running. With a commitment to player development, including an international scouting operation that’s yielded rich pitching talent, the team had won the National League championship with a mostly homegrown roster and baseball’s sixth-lowest payroll. Only veteran first baseman Todd Helton earned more than $4.5 million.
Meanwhile, Monfort and brother Charles (whom Dick officially succeeded as CEO this season) opened snazzy new restaurants at Coors Field (the Mountain Ranch Club on the right-field line comes with a personal TV at every seat, while the new Wazee Market serves brick-oven pizza), inked a $20 million annual cable deal with Fox Sports (in addition to the 14% equity stake) and upped the occupancy rates for the stadium’s 60 suites to 70%–not great but 15% higher than last year, according to Chief Operating Officer Greg Feasel. Season ticket sales in 2011 were up roughly 20% from 2010. The team even created its own branded hamburger, for which Montfort–who made his fortune in the family meatpacking business in nearby Greely, Colo.–devised the recipe.
The added cash enabled the Rockies to reduce their ratio of debt to enterprise value to 19%, down from 35% when Monfort took over. Despite a disappointing 2011 season so far (the Rockies were 48–56 through July 26), ESPN ranked the team number 9 of 122 major North American sports teams in its annual Ultimate Standings roundup, which measures teams by the overall value they provide to fans through winning, affordability and stadium experience, among other attributes.
Five straight years of profitability convinced Monfort to commit $200 million through 2020 to his two young stars, outfielder Carlos Gonzalez and shortstop Troy Tulowitzki, who’s become Denver’s most popular athlete since John Elway.
As Monfort watched from his box in July, Tulowitzki and Gonzalez both homered to ignite a 12–3 rout of the Atlanta Braves. Fans also cheered beloved veteran Todd Helton after he legged out a first inning double. But the 37-year-old’s $19.1 million salary takes up almost a quarter of the team’s payroll–an albatross for the Rockies that limits Monfort’s personnel options. “We’re a midmarket team; we can’t afford to make mistakes on older players,” he says.
He’d rather focus on another number: 36,460. That was the night’s paid attendance, in line with the averages of the past two seasons and among the best in years despite fading playoff hopes. It’s a sure sign that after a decade of decline baseball is back in Denver.