Padres’ New Owners Face $3.9 Billion Question After Record Purchase: Analysis

When the Los Angeles Dodgers introduced their current ownership group in May 2012, new chairman Mark Walter spent a few minutes — more than 10, less than 20 — answering questions from individual reporters in the dugout. It wasn't enough time to probe his understanding of the Dodgers as an object of local pride, let alone how he planned to pay for the team and finance its outsized expenses in the years to come.

Those questions were cause for concern at the time, and feel more pertinent now than ever.

Team president Stan Kasten reiterated Friday that the Dodgers are insulated from an ongoing investigation into loans within Walter's insurance empire. That might be true for now. But as the Padres formally welcome new principal owners José E. Feliciano and Kwanza Jones to San Diego this week, Walter's present saga is a cautionary tale about the kind of questions Jones and Feliciano don't want to be answering in 14 years.

As one of the few individual reporters tapped to interview Walter after his formal introduction (and still lamenting our time limit), I found Feliciano and especially Jones' frankness Monday refreshing.

When questions at their introductory press conference focused on how to run a sports franchise, the power couple demonstrated the requisite interpretation of their roles: not as businesspeople, but as stewards of a civic institution. When they did not know the answer to a question that required extensive local knowledge, they were unafraid to say so. When Jones recalled a conversation with Padres CEO Erik Greupner about the best local neighborhoods to live in, she all but asked the media for a recommendation.

None of that should insulate Jones or Feliciano from questions about the ethics of how they build and manage their wealth. For a day at least, they had all the right answers.

Will it be enough?

The Padres Were Sold at an All-Time High

Jones and Feliciano did their best to put a positive spin on a well-framed question about the Padres' unique circumstances. Specifically:

• With the exception of a World Series appearance, this has already been the most successful decade in franchise history. There's certainly room for the Padres' on-field fortunes to improve, but more room for them to fall.

• Long-term contracts for Manny Machado, Fernando Tatis Jr., Xander Bogaerts and others mean the Padres already have more money committed to their 2030 roster than all but one MLB team, per Spotrac.

• The Padres' average attendance ranks second in MLB for the second consecutive season. Given the capacity of Petco Park, there's nowhere to go but down.

• The Padres are one of several teams without a local television partner. MLB proposed a plan that would codify ideas floated previously by commissioner Rob Manfred about centralizing local media revenues in the next CBA. In theory, that would take financial pressure off teams in the Padres' situation.

• In practice, that plan is at least somewhat dependent on a hard salary cap going into effect. The MLB Players' Association has vowed to resist the hard cap. It's unclear how the Padres' media rights would be affected if the players prevail.

"We expect the unexpected," Feliciano said. "We expect, you know, that what sounds difficult and perhaps impossible, we will continue to do that. And yes, there'll be challenges along the way, and you mentioned some of them. But those are also opportunities that we have been again able to overcome in the past."

Record Price, Naïve Optimism?

The new owners' optimism is warranted by the circumstances. No one expects a slide deck with spreadsheets breaking down the 5-year business plan at an introductory press conference.

Expressing the requisite desire to win is table stakes for a new owner. Feliciano and Jones took on an added challenge; to dispel the broadly held notion that they paid too much for the team — an MLB record $3.9 billion.

Feliciano and Jones both acknowledged the Padres' market size, highlighting the perception of San Diego as an underdog city. But the limits inherent to the team's media footprint are merely one institutional force working against them. The franchise sold at a high point in its history. The Padres are the opposite of a distressed asset.

The Dodgers, by contrast, were literally bankrupt when Walter's group paid a reported $2.15 billion for them in 2012. Attendance was lagging. Payroll was low. A new TV contract was on the horizon — in an era when local TV contracts were large enough to bankroll a small country. No one questions whether that was a wise investment, at least not now.

Feliciano and Jones paid nearly twice as much for the Padres as Guggenheim did for the Dodgers. This is a less lucrative era in sports media. The Padres are a different team, with more limited exposure. Jones and Feliciano are clearly unafraid of chasing unreasonably high expectations. That's bold and commendable — but runs the risk of being naïve.

Now, the question is not whether the Padres' new owners "get the assignment," but if any MLB owner can do enough to justify the cost of a $3.9 billion purchase price. That's through no fault of Jones and Feliciano. It's simply that no one has tried it before, in San Diego or anywhere.

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