An Outside Pitch

Feb. 10, 1992
Feb. 10, 1992

Table of Contents
Feb. 10, 1992

First Person
Sled Dog Racing
The Knicks
The Tyson Trial
Seattle Mariners
Elmore Spencer
Baseball Cruise
Point After

An Outside Pitch

A Japanese-led group offered to buy the Seattle Mariners, and baseball reacted with confusion and apprehension

In super Mario land, one of Nintendo's most popular games, Mario the plumber must travel through four kingdoms, dodging arrow-dropping bees (Bunbuns), defeating bomb-carrying turtles (Nokobons) and jumping over man-eating plants (Pakkuns) so he can rescue the Princess Daisy from the evil Tatanga.

This is an article from the Feb. 10, 1992 issue Original Layout

In Nintendo's newest game, Hiroshi the billionaire must negotiate his way through a hostile country, avoiding the venomous Jingos and skiing past the antagonistic Moguls so that he can rescue Ken Griffey Jr. from the clutches of the Tampa Bay Baseball Task Force and save the day for the beleaguered Rain People.

This latest game from Japan—let's call it Super Mariner Land—is not available in stores, but it is being played out right now in a great many places: the back rooms of baseball, the office of the commissioner, the halls of Congress, the streets of Seattle and the newspapers of North America and Japan. Hiroshi Yamauchi, the 63-year-old president of the Nintendo Co. Ltd. of Kyoto, Japan, is willing to bankroll 60% of the $100 million (plus 60% of $25 million for reorganization costs) needed to purchase the Seattle Mariners from current owner Jeff Smulyan and thus keep him from selling them to a Florida group that wants to transport Griffey, Kevin Mitchell, Harold Reynolds et al. from the Kingdome to the Florida Suncoast Dome in St. Petersburg. Yamauchi is one of a consortium of investors known as the Baseball Club of Seattle that last week formally presented its proposal to Smulyan and baseball's ownership committee for consideration.

Yamauchi's purchase of the Mariners, or the rejection of his group's offer, will affect the future of not only the American League club but, by providing a precedent, much of the rest of U.S. professional sports as well. Some baseball people see the Japanese purchase of the Mariners as a great opportunity, a way to solve some of the major leagues' financial woes while at the same time making the game truly global. Others, not necessarily xenophobes, fear that Japanese ownership would open up a high-priced can of worms and change the very nature of the national pastime.

In Japanese, nintendo literally means "work hard, but in the end it is in heaven's hands." No doubt Nintendo has worked hard. Its market capitalization of $19 billion in 1990 was more than that of either Sony or Nissan, to name two other Japanese companies that are part of the American fabric. Its U.S. subsidiary, Nintendo of America Inc., accounts for 80% of the $4.4 billion U.S. market in video games and employs 1,400 people at its Redmond, Wash., facility, making it one of the Seattle area's largest employers.

Ownership of the Mariners is not in heaven's hands but rather in those of the owners of major league baseball teams. After scrutiny by the ownership committee, the purchase of the Mariners could be voted on by all the owners at their March 4 meeting in Chicago. Approval requires yea votes from three fourths of the American League owners and a simple majority of National League clubs.

Commissioner Fay Vincent admits he spoke too quickly two weeks ago when he characterized the sale of the Mariners to the Baseball Club of Seattle as "unlikely" since, he said, baseball had an unwritten rule against ownership "outside the United States and Canada." Now he's not speaking at all, leaving that task to deputy commissioner Steve Greenberg. "Though we have been developing a policy regarding foreign ownership, this proposal raises a scenario that had not come up," says Greenberg. In fact, the members of the ownership committee could not come to an agreement on foreign ownership at their December meeting, so they decided to table the discussion for another year, thinking that such a circumstance would not soon arise. Shortly after this, Washington's Republican senator, Slade Gorton, put together the Baseball Club of Seattle, which included not only the Japanese interests but also local investors: Christopher Larson of Microsoft, who would put up 30%, and John McCaw of McCaw Cellular Communications, who was in for 10%. The chairman of the board would be Minoru Arakawa, the 45-year-old president of Nintendo of America and son-in-law of Yamauchi. Arakawa happens to be a 15-year resident of Washington with a master's degree in civil engineering from MIT and a membership in Seattle's tony Over-lake Golf and Country Club. The owners' representative for the baseball club would be John Ellis, chairman and CEO of Puget Sound Power & Light Co. Says Washington's other senator, Democrat Brock Adams, "In 1947, Jackie Robinson broke baseball's racial barrier. It's 45 years later, and I would hope Fay Vincent is at least as progressive as Happy Chandler."

But it's not Vincent's call, it's the owners', and they're not talking. Texas Rangers general partner George W. Bush, a member of the ownership committee, says merely, "It's all premature." Under the cloak of anonymity, one club official, alluding to the great disparities in wealth among major league teams, did hazard this opinion on Japanese investors: "They're coming. That's where the future is. The way to handle all this big-market, small-market stuff is to get their money involved. Besides, would we rather have the Japanese or Marge Schott?"

Speaking of Schott, one would think the Cincinnati Reds' owner would be dead set against the Japanese since her money was made selling Chevys and Buicks. "I'm a buy-American person," she says, "but if it would help Seattle keep the team...."

Here, like so many Bunbuns, are some of the questions baseball's men and women of vision and wisdom must confront in the next few weeks:

What's so good about having Nintendo money in the Mariners?

As Schott said, it would certainly help Seattle keep the Mariners. Baseball has a long-standing policy favoring local ownership, a policy that would appear to preclude foreign ownership. Yet the stated purpose of the policy is to provide stability, and given the representation of so many Seattle business leaders and the deep pockets of Yamauchi, the Mariners would have stability for the first time in their checkered, cash-poor history. Seattle is the U.S. city that has prospered most from a strong business relationship with the Far East; both of Seattle's daily newspapers have thrown themselves behind the sale, and polls indicate that the populace favors the purchase.

Another reason baseball should welcome Japanese investment is that it is having a hard time attracting well-moneyed owners. The last five franchise sales—of the Mariners, Rangers, Baltimore Orioles, San Diego Padres and Montreal Expos—were to heavily leveraged groups. Japanese money could help out a number of financially fragile franchises, and even the richer clubs might see Japanese investment as an alternative to—gasp!—increased revenue sharing.

Those who favor the sale also point to the prospects of an expanded consumer marketplace: i.e., all of Japan. The Mariners, who would surely become Japan's favorite U.S. team, would be required to share with the other 27 clubs all proceeds from foreign sources, and major league baseball would almost certainly benefit in other ways from a closer relationship with the Japanese, which might eventually include a true World Series. Says one NBA executive, "Baseball should not blow this opportunity to go global."

What's so bad about having Nintendo money in the Mariners?

This is not the best time to raise the specter of Japanese investment in baseball. Japan-bashing is at a fever pitch in the wake of last month's ill-fated trip to Japan by President Bush. Says Hide Ishii, an editor at the Nikkan Sports News, Japan's most widely read sports newspaper, "Nintendo is doing a very bad thing to make the offer when Japan and the U.S. are undergoing tensions. Maybe it will deepen the friction."

There is also the worry that Japanese ownership would somehow change the character of the U.S. pastime. Says Warren Cromartie, who played in Japan for seven years before finishing out his career with the Kansas City Royals last season, "Baseball is an American game, and it belongs in America. Plus, I didn't take too kindly to that Japanese official calling American workers 'lazy.' "

Even the sale's supporters admit the offer came at the wrong time. Says Tom Keefe, legal counsel to Senator Adams, "We found ourselves in the middle of a transpacific food fight. But just because it's a great idea at a bad time doesn't mean it's a bad idea."

Some baseball people fear that foreign investors would spend more lavishly for players than even the most profligate U.S. owners have. Says one American League owner, "I wouldn't be opposed to foreign investment per se, but we don't need somebody who is going to come in and spend a lot of money without thinking of the consequences for them and others." Says Philadelphia Phillies owner Bill Giles, "If you ever got some oil sheikh who had $10 billion, you could wind up with an owner who might go overboard."

Several owners expressed concern that foreign investment would be harder to audit than American investment. No cause for concern there; that's what journalism is for. On Friday, The Tampa Tribune reported that Nintendo is involved in off-track betting and lottery games in Japan. The Tampa Tribune may have a vested interest in seeing the deal scotched, but Nintendo will have to satisfy the owners that its gambling interests are minimal and innocent.

What does Nintendo intendo?

Why buy a team that has little chance of making money? Yamauchi has said that investing in the Mariners is simply his way of thanking the people of Washington for their treatment of Nintendo. But buying the Mariners would not be pure altruism. Owning a major league baseball team would give Nintendo expanded credibility in the U.S. and added prestige in Japan. Says Frank Koughan, producer of the recent PBS documentary Losing the War with Japan, "If Nintendo can own the Mariners, it can prove it's as American as apple pie. Besides, $100 million is petty cash to Nintendo."

Every team in the Japanese leagues is owned by a corporation—the Seibu (a department store) Lions, the Yomiuri (a media corporation) Giants etc.—and most of the clubs operate at a financial loss but at a public relations gain. Their owners as a rule care less about winning than about keeping their names out front. Yamauchi knows he couldn't rename the Seattle team the Nintendo Mariners, but doubtless he and his son-in-law are keenly aware of the p.r. benefits that come with owning a major league team. And Nintendo does not intend to limit its business in the U.S. to video games; it wants to get America wired to Nintendo consoles for movies, personal computing, voting and all manner of electronic endeavors.

How would the Mariners be operated?

No need to worry here. Even in Japan the corporations pretty much leave the running of the teams to the baseball professionals. Says Boston Red Sox pitching coach Rich Gale, a veteran of the Japanese leagues, "From what I saw, the large conglomerates that own the teams are very efficient. There wasn't much meddling. And I think major league baseball could learn from their marketing techniques. I wouldn't be opposed to Japanese ownership at all."

One U.S. baseball person with firsthand experience of Japanese ownership is Bill Hardekopf, president of the minor league Birmingham Barons, which were bought by Japan's Suntory distillery two years ago. "We don't sell sushi in the concession stand," says Hardekopf. "They have been strictly hands off. The only difference in their management style is that they want daily reports of ticket sales, concession sales, parking revenue."

Are the Seattle Mariners even worth saving?

Good question. Smulyan is not a favorite son of Seattle, but nobody can say he hasn't tried hard. Largely because of his marketing and sales efforts, the franchise outdrew the New York Yankees last year, 2.1 million to 1.9 million, and for the first time in the Mariners' 15-year history, they finished over .500. While Smulyan, an Indianapolis resident, has never made Seattle his full-time home, he has missed only five home games in two years. Still, he has lost money hand over fist; last year's operating loss is projected to be $10 million.

Says Smulyan, "Baseball really should be asking, 'Can Seattle support a major league franchise?' I don't know that it can. I do know that when I bought the Mariners, I thought I was getting a baseball team. What I was getting was a doctoral education in how a community interacts with its baseball franchise. Don't get me wrong: Seattle is a wonderful town. It just may not be a baseball town." But there's no proof that St. Petersburg is a baseball town, either. (Those who have been inside the Suncoast Dome will attest to the fact that it is not a baseball stadium—it makes Seattle's dreary Kingdome look like Wrigley Field.) And would putting an established team in St. Pete in 1993 be fair to Miami's Florida Marlins, who debut in the National League in 1993?

If baseball allows the Mariners to move to Tampa or wherever, it will face another sticky situation. As Ellis notes, "Seattle does have a history of fighting to keep its baseball team."

When the owners allowed the Seattle Pilots to move to Milwaukee in 1970, the state of Washington sued to reclaim its team, and the suit resulted in the creation of the Mariners in 1976. The attorney general of the state at the time was one Slade Gorton. Now both Gorton and another top politician from Washington, Speaker of the House Thomas Foley, have vowed that if Seattle loses this franchise, Congress will take a close look at baseball's antitrust exemption. Such saber rattling, however, could have an adverse effect on the owners' vote.

What is the prevailing opinion among the owners?

As always, it's hard to read these men and women of vision and wisdom, but the Baseball Club of Seattle, as currently constituted, probably won't get the necessary votes to allow the purchase. However, the ownership committee could suggest that if the group restructured the deal so that Yamauchi would hold, say, 40% of the club, it might have a better chance of passing muster. For now, Yamauchi is insisting on 60%, but he might yield if it means getting his foot in the door.

If the sale is approved, what will happen?

What will not happen is an invasion of baseball by Japanese investors. Nintendo, almost alone among Japanese corporations, is thriving despite Japan's own recession and its recent stock market downturn, so there are not a lot of men with Yamauchi's resources.

Then again, if Yamauchi is the first Japanese investor in a major league team, he won't be the last. The Houston Astros are for sale, and there are a number of other clubs that might attract Japanese investors: the Orioles, Padres, Rangers, Cleveland Indians. Says Jack Veatch, a managing director for the investment banking department at Salomon Brothers in Dallas, "Within 48 months there are going to be some foreign owners of sports franchises in America. It nearly happened in 1988 when I was contacted by a representative for a Japanese industrialist who wanted to buy the Dallas Cowboys, America's Team. But Jerry Jones preempted his bid. The franchises they'll really want are the trophy properties."

Baseball and its fans might as well prepare themselves for the future. May Jean Yawkey live long and prosper, but when the 82-year-old owner of the Boston Red Sox dies, who in Boston will be able to buy the team? The Red Sox could be worth $300 million by then. Would Bostonians rather their team be sold to an American entrepreneur who might decide that Fenway Park is outdated and that a spanking new stadium in Marblehead would do nicely, or would Boston rather the Red Sox go to a Japanese enthusiast who might see Fenway for what it is, a sacred temple of baseball?

In other words, it's better to consider where someone's going than where he comes from.

ILLUSTRATIONKINUKO CRAFTSome observers feel that if Griffey and the Mariners become a Nintendo product, the major leagues will benefit. Others say, "Baseball beware."ILLUSTRATIONKINUKO CRAFTPHOTOH. EDWARD KIMPlayers in Super Mariner Land include (from top) Yamauchi the money man, Arakawa the son-in-law, Smulyan the outgoing owner and Vincent the wary commissioner.PHOTONINTENDO OF AMERICA[See caption above.]PHOTOJ. SWART/ALLSPORT USA[See caption above.]PHOTOFOCUS ON SPORTS[See caption above.]ILLUSTRATION