Why Baseball Might Be the World’s Greatest Business

J.R. Ball Finance, Issue 09 - Jan/Feb 2014 Leave a Comment

Instead of centerfield, Major League Baseball CFO Jonathan Mariner swings for the bottom line.

By J.R. Ball

Since its very inception, a seemingly endless cavalcade of writers, poets, orators, historians, statisticians, filmmakers and arm-chair pundits have inked their proverbial quills to extoll the virtues of a game that Pulitzer Prize-winning commentator George Will once described as “heaven’s gift to mortals.”

While few can argue with the visual splendor of a perfectly turned double-play, the majesty of a 400-ft homerun or the dominating tour-de-force that is a no-hitter, the most remarkable quality that defines baseball may well be the romance of the game itself.

Romance, as well as impeccable stats, transformed fractured characters like Babe Ruth, Mickey Mantle and the incredulous Ty Cobb into national icons—mythical figures beyond reproach.

Romance, and the passionate devotion of fans from coast to coast, has kept stadiums filled through economic booms and busts. And, perhaps most notable in recent history, the romance of a homerun race led by two of the league’s most charismatic stars kept the game alive after post-strike cynicism threatened to upend our national pastime once and for all.

Although this “je ne sais quoi” can be found in each of the 162 games played over the course of the regular season, romance is simply not enough to pay the bills. Love, it is said, may be all you need, but it does not keep the lights on. Baseball is a business. And, despite what hopeless romantics may claim about the good old days, the business of baseball has existed since the very old days.

In 1870, as the first wooden caissons were laid in construction of the Brooklyn Bridge and the state of Virginia sought entry back into the Union during the reconstruction period following the Civil War, a scrappy, 21-year-old Pennsylvanian named Levi Meyerle inked a one-year $1,500 deal with the Chicago White Stockings in what Major League Historian John Thorn has identified as the game’s first official contract.

While Meyerle’s payout may have netted him double the annual U.S. salary at the time, his earnings would be but a drop in the bucket some 143 years later. According to “Forbes,” today’s major leaguer rakes in, on average, slightly more than $3 million a year. At the franchise level, the average team’s net worth eclipses $744 million. Atop the ledger sits the New York Yankees, valued at a whopping $2.3 billion. Across the spectrum are the Tampa Bay Rays, who net just $451 million—which, according to the “2012 CIA World Factbook,” exceeds the gross domestic products of South Africa, New Zealand and Lebanon… combined.

A very big business indeed. Financially speaking, it may seem reasonable to assume that managing a $6.5-billion portfolio that includes compensation, finance and labor planning, as well as the league’s long-term investment fund for 30 franchises that collectively draw more than 70 million fans annually and operate within one of the most progressive corporate profit-sharing programs ever enacted, would be a insurmountable task.

Actually, it is no more difficult than catching a pop fly hit squarely to centerfield, according to Jonathan Mariner, Chief Financial Officer (CFO) and Executive Vice President of Major League Baseball (MLB).

“Believe it or not, running an accounting shop in baseball is not fundamentally different than doing it in any other business,” Mariner said. “Every month, you’ve got to close your books, pay bills, collect cash and project cash issues. It’s quite routine.”


Despite his humble assessment, should Cooperstown ever induct the game’s finance chiefs into its hallowed halls, one would expect Mariner’s name to be atop the list.

A University of Virginia graduate who received his MBA from the Harvard Business School, Mariner had never worked in professional sports prior to being handpicked to join the Florida Marlins (now Miami Marlins) as CFO on the heels of the franchise’s 1993 inaugural season.

“We were too naïve to know that we couldn’t do it,” Mariner said. “If you work in sports today, you’ll step into something that’s already there, but we had a chance to write the blueprint for what the franchise would become.”

Simply put, Mariner acknowledged that being part of what could be considered the ultimate startup was “truly a once-in-a lifetime opportunity.”

Welcome to the Show

What became of the franchise, and MLB as a whole, during Mariner’s tenure with the Marlins is a tale even the game’s most ardent devotee may first dismiss as fiction.

“Our 1993 season was magical,” said Mariner, who notes some 3 million spectators filled the stands that year. “People were excited to have professional baseball in south Florida, and we were on pace to draw 2.8 to 2.9 million fans the next year, which would have been a huge win for us.”

But the initial success would be short lived. In 1994, as owners and players failed to reach an agreement on a salary cap, the players’ union declared a strike that lasted 232 days, cost a total of 948 games and yielded the first World Series cancellation in 90 years.

“Our trajectory of growth just went hard negative,” Mariner said. “From a financial perspective, it was day to day, week to week. We literally just started a franchise, now we’re making decisions on whom to lay off. At that point, we’re dealing with people’s lives.”

Once play resumed in the 1995 season, Mariner and company quickly found that fans—and profits—were slow to return. Then, after just three seasons, Marlins Owner Wayne Huizenga—a man who had founded three Fortune 500 companies, including Blockbuster—decided the team’s financial losses were too great to sustain and announced that he would sell the franchise at the end of the 1997 season. But not before going all in.

Huizenga, who Mariner said refused to “let fans ever say he didn’t try to win,” dismissed a budget proposal that could have put the franchise on course to break even. Instead, he decided to sink a total of $25 million to recruit a who’s-who list of free agents—including six-time All-Star Bobby Bonilla, seven-time Gold Glove winner Devon White and an up-and-coming Columbian shortstop named Edgar Rentería—to short-term contracts in a do-or-die bid for World Series glory. And the gamble paid off.

“We got to the World Series, and the town was going crazy,” Mariner said. “The fans came back, we won it all. We went from despair to euphoria, all in one season.”

When asked if he would still sell the team, Mariner said Huizenga made it clear that he was “prepared to lose $30 million to win a World Series one time. And he did. Which led to our 1998 season, where we lost 108 games.”

Big League Call-Up

After leaving the Marlins organization in 2000 to head an entrepreneurial charter school passion project based in south Florida, Mariner soon found himself back in the game. In 2002, he was personally recruited by MLB Commissioner Bud Selig to cover the game’s fiscal bases from the league’s corporate offices on the 31st floor of a Manhattan skyrise towering over Park Avenue.

Mariner’s modus operandi in taking the job as MLB CFO was not to replace the remaining staff that occupied his predecessor’s office, but rather play on the strengths of the existing team.

“I knew I would need the institutional memory of the people around me, so my approach was not to do anything dramatic when I first arrived,” Mariner said.

Mariner was quick to notice that the core of the team was still intact, and taking a page from Huizenga, his professional mentor of sorts, he empowered his staff to be much more proactive.

“[Huizenga] was an outstanding leader who delegated responsibilities in just the right way,” Mariner said. “He believed in empowering people to take chances and make mistakes—without lobbing their heads off.”

Mariner began pushing his starters to be more autonomous, which contributed to a lasting “culture shift.”

“It’s a simple management lesson,” Mariner said. “If you decide to make all the decisions for your staff, they won’t be proactive: They’ll just wait for you.”

The turnaround, according to Mariner, was noticed by those outside the Commissioner’s Office as well.

“A number of team owners who had previously worked with my staff have said, ‘Wow, I can’t believe how your group turned around,’” Mariner said. “The credit belongs to them. It was only a matter of empowering them to make good decisions.”


Grand Slam

Empowerment in the face of obstacles is a concept Mariner has taken far beyond his internal team. When discussing career high points, Mariner points to March 2002, just some six months after the 9/11 disasters and only a month into his tenure as MLB CFO, when the insurance markets were in turmoil.

“Many clubs and teams, all of whom were being insured individually, had trouble getting coverage,” said Mariner, who discovered the markets were either overpriced or unavailable to some teams.

To remedy the issue, Mariner set out to enact a league-wide insurance act that would collectively cover all 30 franchises from top to bottom.

“I had calls directly from underwriters and brokers saying there’s no way this will ever happen,” Mariner said, noting that the undertone was, “We’re not going to cooperate because we don’t want it to happen.”

Unbeknownst to those critical of Mariner’s plan, he sits a sign on his desk that reads: “Yes, I know it’s impossible, but if it can be done how would you do it?”

“Working with the Commissioner and several key owners, I put together a task force of seven CFOs—intentionally including people I knew didn’t like the idea to make sure that I had the benefit of understanding their issues and addressing them as best we could.”

The goal, Mariner conveyed, was to have the policy up and running by January 1 of the following year. And he did.

“We were able to get the unanimous support of the owners and saved teams upward of $80 million in premiums due to the fact we were able to buy collectively.”

The insurance act, which is still functional and profitable to this day, has been a model program—not only for the savings and coverage it provides, but also the progress it represents to Mariner.

“Over the course of my career,” he said, “I’ve seen that you can always overcome obstacles if you just keep at it.”

Bottom of the Ninth

Now, more than a decade into his tenure as CFO, Mariner’s list of accomplishments is varied and diverse. From his key role in negotiating baseball’s groundbreaking collective bargaining agreement to the enhanced, league-wide revenue-sharing model that came from it, Mariner is quick to point out that his proudest achievements have little to do with the sport loved by millions.

“Not withstanding anything I’ve done professionally, my most significant accomplishment is raising three, young African-American men,” Mariner said.

His sons, two of whom are Stanford graduates and the third of whom is a University of Virginia alum like his father, are now young professionals who have gone on to careers at Apple’s Cupertino headquarters and Price-Waterhouse Cooper.

“Without a doubt,” Mariner said, “that’s what I’m most proud of.”

To the legions of fans that comprise baseball’s rich, modern landscape, pride may mean more about the logo on their cap than a well-run finance shop keeping their beloved game alive into a new era. All should feel confident, however, in the man ensuring generations of fans can enjoy the romance of baseball for years to come.

J.R. Ball is a freelance writer based in Dallas, Texas.

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