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Not a Pretty Picture
L. JON WERTHEIM
July 12, 2010
With their rich heritage and jewel of a ballpark, the Pirates could be a major league treasure. Instead they're an object lesson in how a once-proud club can become the most futile franchise in sports
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July 12, 2010

Not A Pretty Picture

With their rich heritage and jewel of a ballpark, the Pirates could be a major league treasure. Instead they're an object lesson in how a once-proud club can become the most futile franchise in sports

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Acts of commission were compounded by acts of omission. Unlike other small-market teams able to overcome an economic disadvantage by savvy talent evaluation and player development, the Pirates long had one of the least fertile farm systems. Whereas other small-cap teams, notably the A's and the Rays, made use of sabermetrics and data-driven analysis to assess players and roster moves, the Pirates tended to rely on the intuition of scouts. The result was both a roster in perpetual flux with no real nucleus and a gnawing sense that there was no real plan in place. "That was the problem," says Mets outfielder Jason Bay, who played for the Pirates from 2003 to '08 until he was, predictably, traded for prospects before he became eligible for free agency. "Everyone thinks it's about payroll. It's not. You can't field a team of 25 with guys mixed and matched. You have to have guys continuously develop."

As the Pirates struggled in the standings and their precarious financial health became plain to the naked eye, problems perpetuated. Aware of the franchise's desperation, other teams seldom offered them fair value for trades. Pressured to preserve their jobs, executives put short-term gains over the long-term health of the organization. In July 2007 Pittsburgh acquired Matt Morris, a former 20-game winner, from the Giants for two prospects. It was the rare case of the Pirates taking on salary, not dumping it: Morris was making $10 million a year, more than 25% of his new team's payroll at the time. It was a popular move with some restless fans but backfired spectacularly when the aging Morris won just three games in 16 starts before being released the following year. When, say, the Yankees lavish $40 million on a pitcher like Carl Pavano and he fails miserably, they can cover their tracks with more spending and replace him in the rotation with another high-priced free agent. When the Pirates lose a $10 million bet, it can set the team back years. "Short-term fixes don't work in life, and they certainly don't work in baseball," says Frank Coonelly, the team's president since late 2007. "In fact, they're a big part of the reason we're in this situation."

One way to end the vicious cycle might be to spend more freely, even if it means taking on debt. But as the team has fallen further out of contention, "big spends" have been harder to justify. The 2009 Pirates won only 62 games. According to the metric Win Shares, a measurement of a player's impact on his team's record, the team would have won 69 games with the addition of a star pitcher, say, Roy Halladay, to the rotation. Committing more than $10 million to a player who, statistically, will only take your win total from 62 to 69? That's a tough sell with the board of directors. On the other hand, how does a team improve when every roster move fails a basic return-on-investment analysis? "We're not [averse to spending money]," says Huntington. "But we're going to be smart about it."

Raising more revenue would help. But how? It's the rare losing team that can increase ticket prices and not adversely affect demand; or attract more sponsors; or renegotiate its local television deals, currently worth roughly $15 million a year, among the lowest in the majors. While it's clearly the franchise's great asset, PNC Park is a complicating factor as well. The intimate stadium, opened in 2001 and constructed at a cost of $262 million, was built mostly with public funds. This eased the Pirates' financial burden but has added to fan disenchantment. The common lament goes like this: We gave this team a new home with money that could have been spent on parks or public fields or schools. When the Pirates don't field a competitive team as the Steelers and the Penguins do, they're not holding up their end of the bargain.

Father Bill Schwartz, a Roman Catholic priest, has been attending games since he was a kid, sitting in the $1 seats at Forbes Field. Now 67, he wears a Pirates shirt under his vestment, Pirates shoelaces on his loafers and wraps his toy poodle, Rusty, in a yellow-and-black Afghan. Instead of going on vacations, he leaves his parish in Beaver, Pa., and goes to games at PNC Park. "I have never lost faith in my home team, and I call myself a resilient fan," he says. "But this, as a topic, makes me cry. The people of Pittsburgh have been cheated." Then he launches into a rousing sermon about misspent dollars, bad personnel moves and the absence of starting pitching on the current team. "We're promoting bobbleheads and fireworks," he says forlornly. "Why not just promote a better team?"

In part to address discontent among fans like Schwartz, the Pirates took the unusual step of disclosing some of their finances to the Pittsburgh Post-Gazette in December. It became clear that the team all but owes its existence to revenue sharing, the de facto welfare policy whereby major league baseball's haves contribute money that is pooled and distributed to the have-nots in the hope of making the sport more competitive. The paper reported that the Pirates received $36 million from revenue sharing last season and an additional $30 million from a central revenue fund (generated by merchandise licensing and national television and advanced media money) divvied up equally among teams. For perspective, the Pirates reportedly will earn $24 million in gate receipts for this entire season. (For further perspective, the Yankees can earn that much in ticket sales for a seven-game homestand.) When the team reported a profit of roughly $5.5 million last year, it provoked spit takes in some corners. Fans, agents and some of baseball's big-market owners wondered aloud whether the Pirates weren't baseball's equivalent of The Producers, an outfit that has figured out a way to earn more money with a flop than with a hit.

It is here that Bob Nutting draws the line. The team's affable, plain-speaking chairman and principal owner, Nutting, 48, made his money in a family-owned newspaper chain. He assumed majority ownership in 2007 when he bought out Kevin McClatchy, the leader of a group that bought the franchise for $95 million in 1996. It's perhaps a fitting metaphor for the Pirates: One magnate of a dying industry taking over for another. McClatchy, the scion of a family-owned publishing company, was a newspaper baron as well. Upon taking over the team he was hailed as the Pirates' savior. He squelched talk that the team would move and was instrumental in pushing through the public-funding plan for the construction of PNC Park. But by the end of his time with the Pirates, McClatchy was railing against the unfairness of baseball's economic system, calling for a salary cap and insisting that teams that spent on expensive free agents must be drinking "funny water."

Nutting makes no excuses for the team's prolonged slump. ("I'm as disappointed as anyone.") He's aware of the various pressures besetting the franchise. ("No question we have slimmer margins for mistakes.") He empathizes with fans. ("We no longer have a right to ask for patience.") But his grin vanishes, and he shifts in his seat when talk turns to money. He asserts emphatically that no one is getting rich from losing games. Nutting claims that he draws no salary and that all profits are reinvested in the team. And the paltry payroll, currently lowest in the majors? "Improving the product is the requirement [for spending revenue-sharing funds]," he says. "Major League Baseball doesn't just believe we're spending the money appropriately, they're actively supportive of our plan." (An MLB spokesman confirms this characterization.)

Rather than lavish money on free agents and payroll, Nutting's plan has been to build—rebuild doesn't even apply here—"the core of the organization from within," investing in scouting, development and flooding the system with prospects. To this end, since January 2008 the Pirates have spent more than $5 million on a new academy in the Dominican Republic and $2 million toward refurbishing the Pirate City facility in Bradenton, Fla., and created an entire baseball analytics department. Undeniably, there have been some recent signs of encouragement. The Pirates' long-neglected farm system is now considered middle tier. Three young players, infielder Pedro Alvarez, outfielder Jose Tabata and pitcher Brad Lincoln, are among the most highly regarded prospects in baseball; all three made their major league debuts last month. Attendance at PNC Park is even up incrementally compared with last season, from an average of 18,486 through the first 39 home dates in '09 to 20,175 this year. "I'm committed to turning this organization around," says Nutting, who also vigorously denies speculation he's preparing for a sale. "And we're taking a different approach [than past ownership]."

The current executives are quick to divorce themselves from the previous regime. And unlike their predecessors, Nutting et al will not blame the economics of baseball for the team's predicament. Any suggestion that it's a suckers' game when teams are expected to compete evenly with opponents capable of generating multiples in revenue is quickly shot down. "The 'Woe is me, look at our market size,' that doesn't play here," says Coonelly, who was a lawyer in the commissioner's office before joining the Pirates. Adds Nutting, "If you do it the right way, you can be successful under this system."

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