01 Mar 2011
Rescued and revived by president and limited partner Larry Baer, the San Francisco Giants brought home baseball’s biggest prize last season, the World Series trophy.by Deborah BlaggTopics:
One of Larry Baer’s (MBA ’85) fondest summer memories is of playing in the yard of his boyhood home in San Francisco on Friday afternoons, waiting for his dad to return from work. “I’d be out throwing a ball against the stairs or something, and I could tell right away if he had a couple of tickets for the Giants game on Saturday,” Baer recalls. “He’d give me a little nod, and I’d know — yes! — we would be going to Candlestick to watch Willie Mays play center field.”
Fast-forward a few decades to last December, when Baer, now 53 and president and COO of the 2010 World Series–winning Giants, is on the air at a local sports radio station. He’s announcing plans to take the Series trophy on tour, not only throughout Northern California but also across the country to the site of the team’s pre-1958 Polo Grounds home in New York City. “We want everyone to be able to touch the trophy,” declares an elated Baer, who well understands the innate desire for tangible proof of a championship that was over half a century in the making. “It belongs to Giants fans everywhere.”
Baer’s odyssey from avid boyhood fan to catalyst of the team’s rise from a franchise on the brink of leaving town in 1992 to toast of the town in 2010 is the stuff of Hollywood scripts. And indeed, when the lanky, loquacious executive talks about his lifelong history with the team, his reminiscences are captivating.
Baer’s career in the business of baseball actually began with the Giants’ cross-bay rivals, the Oakland A’s. As a political science major at the University of California, Berkeley, Baer fed his passion for journalism and sports by serving as business manager and sports director of the school’s radio station. In 1978, when he heard that the A’s legendary impresario Charlie Finley was having trouble finding a radio station to broadcast his struggling team’s games, the young entrepreneur made his pitch. “I called Mr. Finley ten days before Opening Day, and we negotiated at first without him knowing that I represented a college station,” Baer recounts during an interview at his memorabilia-filled office at the Giants’ AT&T Park.
No stranger to wacky publicity gimmicks, Finley eventually agreed to let the low-watt station broadcast games for the first few weeks of the season, with Baer as announcer and broadcast producer. “We gave him a token payment of $1,” Baer laughs. “It was probably the first and last single-figure contract in broadcast history.”
After graduating Phi Beta Kappa from Berkeley, Baer parlayed the experience, contacts, and notoriety he gained during his short-lived but memorable stint as A’s announcer into a job in marketing for the Giants. “My job was to put warm butts into cold seats,” notes Baer, who says he learned a lot about all aspects of the business during the three years he spent promoting fan interest and attendance at the notoriously uncomfortable and wind-swept Candlestick Park. While he loved the job, he increasingly saw sports as a subset of the entertainment industry, and in 1983 he left the Giants to study at HBS to prepare for a career in that broader arena.
After a summer internship with Columbia Pictures, Baer’s first post-HBS assignment was engineering a turnaround of a CBS affiliate in San Francisco. Following a subsequent job at Westinghouse Broadcasting headquarters in New York, in 1989 he became assistant to the chairman and CEO of CBS, Laurence Tisch. During a “fascinating” three years with Tisch, Baer became involved in charting strategic management decisions at the media giant and added to his growing expertise in what it takes to “compete for a share of the entertainment hour” — a talent his beloved hometown baseball team, in dire economic straits back in San Francisco, sorely needed.
On the wall of Baer’s office, displayed among other colorful artifacts of Giants history, is a framed copy of the front page of the August 8, 1992, San Francisco Examiner. On that particular day, the editors co-opted the signature home-run call — “Bye-Bye Baby!” — of the Giants’ Hall of Fame broadcaster Russ Hodges to announce a far less happy game-changer: the team’s $111 million sale to Florida investors and impending departure from San Francisco.
“That’s my ‘Dewey Defeats Truman’ headline,” declares Baer, for whom keeping the Giants in San Francisco is one of the remarkable business accomplishments he achieved after his return to the West Coast in 1992. While in New York, Baer had closely monitored the Giants’ plummeting finances and their unsuccessful attempts to get San Francisco voters to approve funds for a new stadium. After East Coast business hours and with Tisch’s blessing, he began networking and discussing the club’s options with, among others, Safeway chairman and CEO Peter Magowan, a member of the Giants’ board of directors, as well as with San Francisco city development official Ron Blatman, a longtime friend. When the deal with the Florida investors was announced — but, critically, before the sale had been approved by National League owners — Baer and Magowan’s efforts to put together a bid to keep the team in San Francisco kicked into high gear.
With financial promises from a stellar list of Northern California investors that included Arthur Rock (MBA ’51), Charles Schwab, Donald Fisher, Walter Shorenstein, and William Hewlett, Baer and Magowan had a respectable offer in place when the National League owners unexpectedly rejected the proposed move to Florida. “We put together this group, and we raised some money, but the one thing that was always missing was someone to run the team,” Baer relates.
“We all had day jobs,” he continues. “I remember sitting in Walter Shorenstein’s conference room on the 49th floor of the Bank of America building in San Francisco, with everyone looking around the table. The obvious person to run the team was Peter Magowan, because he was already on the board and had a lot of passion for the game. Finally Peter said he would do it,” reveals Baer, “but only if I would be the day-to-day operating person. Neither of us had any prior intention of leaving our jobs, but that’s how the deal went through.”
A Likable Leader
The group Baer helped assemble paid $100 million for a storied franchise with a multitude of problems. “As one of our investors said at the time,” Baer recounts, “ ‘The good news is we just bought the team. The bad news is we just bought the team. What the hell do we do with it?’ ” As a business, the Giants organization was losing around $15 million a year. The public had refused to back a new stadium in four consecutive elections, yet the new owners had promised to find a way to finance and build a new home for the team.
That Baer was able to help the ownership group keep that promise has to do, in no small part, with a well-honed instinct for marketing and the joy he takes in the old-fashioned art of managing by walking around. One of Baer’s Major League Baseball (MLB) peers, Boston Red Sox president and CEO Larry Lucchino, calls him “one of baseball’s most versatile and effective executives.” “He leads the league in energy, drive, smarts, and executive imagination,” says Lucchino, “yet people still like him!”
During the new group’s first ownership season in 1993, well before they put together the financing for what would be the first privately funded MLB park since 1962, Baer and his colleagues took the pulse of the fans. “After all the failed stadium votes and the criticism, the fans were numb,” he explains. “We walked around Candlestick wearing ‘We’re Listening’ buttons, with the goal of improving the fan experience as much as possible until we could build a better park.” New food concessions, the first female MLB public address announcer, the reintroduction of bobblehead doll souvenirs, a center field foghorn to celebrate Giants’ home runs, and hiring the Grateful Dead to sing the national anthem on Opening Day were among the innovations that caught fans’ attention the first year.
With fan-friendly improvements and the off-season signing of slugger Barry Bonds — who had virtually grown up at the park while his father, Bobby Bonds, played for the team — the Giants won 103 games in 1993 and set a new attendance record for Candlestick Park. As the on-field product and public image of the team improved, behind the scenes, Baer became the driving force in getting voters to approve, in 1996, the concept of a privately funded stadium. “That vote cleared the way for some of the permits we would need and eliminated the possibility that someone would put forward a competing measure,” explains the politically savvy Baer, who also helped develop a financing plan that involved individual and corporate sponsors; naming rights; 29,500 season tickets (including 15,000 “charter seats”); and the loans it would take to cover the price tag for a $357 million ballpark.
“Larry is the nicest person in the world, but he is also a gutsy negotiator,” comments Keith Van Sickle (MBA ’85), who lives in the Bay Area and has closely followed the career of his first-year HBS study group friend. “The park was a keystone in the team’s rise, and Larry was all over that, but he also has great competence in media, marketing, and community relations. His unique combination of skills is a perfect fit with the Giants’ needs.”
The Giants’ new home opened on April 11, 2000, in a stunning waterfront setting rivaled, Baer proudly maintains, “only by the site of the Sydney Opera House.” The park immediately became one of San Francisco’s most recognizable landmarks. Like Baltimore’s Camden Yards, the 41,500-seat facility was designed to give fans the experience of an old-time park, but with all the modern amenities. With luxury boxes, jumbotron, unobstructed views, and stadium-wide Wi-Fi access, the park feels state-of-the-art and spacious, yet at only 48 feet from home plate, some of the stands are closer to the batter than the pitcher is. The complex is so close to the water that fans in all manner of floating craft regularly camp out to catch “splash hits” — the official term for home runs that clear the right field wall and land in San Francisco Bay.
“We wanted the park to be fun and accessible for all kinds of fans,” says Baer, whose favorite game-time activity is “meandering through the aisles of the upper deck, seeing parents, kids, and grandparents sharing a memorable experience.” In addition to a “Portwalk” where visitors strolling along the shore of San Francisco Bay can check the progress of games through open archways in the right field wall, the team offers budget-conscious fans “dynamic pricing” — a Baer innovation that makes tickets to less popular games available at reduced rates.
Proving the Skeptics Wrong
While attentive to fans’ priorities, Baer is also in charge of the team’s bottom line. “The skeptics in town predicted that even if we raised enough private funds to build the park, we’d still fall on our faces, because we’d have $20 million in debt that no other team in baseball has,” reveals Baer. To “out revenue” the debt, the team needs to draw over 3 million fans a year, as it has done for nine of its eleven seasons at AT&T Park. However, in an industry where filling the airwaves has become as important as filling the stands, Baer’s brokering of a partnership in a regional sports network — yet another major managerial feat with the Giants — was critical to the team’s economic well-being.
“Our 2008 partnership with Comcast was as transformational as building the park,” stresses Baer. “The economics of major league sports have been ratcheted up to the point where even winning teams can struggle if they don’t diversify their interests. Our deal with Comcast put us in the content business, with a share not only in baseball broadcasts but also in NBA basketball, Pac-10, and other college sports broadcasts; news shows; magazine shows; and various specials.”
When asked about a key driver of baseball economics — players’ salaries — Baer, whose 2010 team ranked only ninth in MLB payroll, makes a distinction between price and performance. “There’s no straight-line equation from money to winning,” he offers. “If there were, the same two or three teams would win the Series every year, and that doesn’t happen.” He believes that a vibrant farm system, good scouting, shrewd free agent signings, and human judgment are as critical to a team’s success as fat contract offers. “ ‘Money ball’ is in vogue right now,” he adds, “and being here in Silicon Valley, of course we use analytics as much as any team to look at on-base percentages and so on. But analytics don’t tell you about desire or how a young player might develop in terms of skills or body type over two or three years. That’s human judgment.”
To illustrate his point, Baer talks about two of the players who helped to bring the championship to San Francisco. “Nobody got excited when we signed Aubrey Huff to a one-year, $3 million contract in the off-season,” he notes. “Huff even described himself as being ‘off the scrapheap.’ Not only did he have a magical year for us as a player, but what he contributed to the team in terms of building morale was amazing. Buster Posey, a player at the beginning of his career, is another surprising success story. Here’s someone who looks like the kid from next door who mows your lawn, and he played like a veteran in a pivotal position under the toughest pressure in baseball.”
Winning a World Series brings another kind of magic. With a value estimated by Forbes magazine of over $480 million, the team ranks in the top third financially among MLB franchises. Even before last season’s title, the Giants’ fall pennant run yielded 4,000 new season ticket requests. Merchandise sales, television revenue, and sponsorships typically spike after a championship year, as does the opportunity to increase ticket prices. Clearly, the World Series win presages a significant revenue uptick for the team, especially going forward this year.
A Fan at Heart
While immersed in his front-office duties, Baer remains, first and foremost, a Giants fan. He understands fans’ fascination with what he calls “the rolling soap opera” of the prolonged baseball season. He still can’t quite believe it when he sees baseball icons such as Willie Mays (who serves as an official ambassador for the Giants), Orlando Cepeda, or Willie McCovey around the park. “Just being able to give those guys a hug or shoot the breeze with them — for me, it’s surreal,” he observes.
“Larry knows what brings him joy, and he actually chooses to spend his life doing that,” observes Baer’s HBS classmate and friend Beth Hardin (MBA ’85). “Not only that, but he lives in the place he loves and devotes his time to places and people he loves. He lives a powerful life.”
While Baer is “incredibly proud” of the team that gave San Francisco its first-ever World Series title, what brought him the most joy was the reaction of the estimated 1 million fans who turned out for the victory celebration in early November. “Everybody came together,” says Baer, who rode in the parade with his wife, Pam, and their four children. “To have a role in creating an experience that helps unite fans from all walks of life, that gives me chills.”
Both Baer and the Giants organization have long been involved in community outreach through charitable and civic activities. Baer and his family live in the city (as do many of the players), and he and Pam have taken leadership roles in numerous nonprofit organizations. Among many other honors, Baer has received the San Francisco Distinguished Leadership Award and the Anti-Defamation League’s Torch of Liberty Award.
He describes the ball club as a “quasi-public utility.” “We are not the ‘Nike Giants,’ ” he stresses, “we’re the San Francisco Giants. When you put that name on your jersey, it means you have a responsibility to the community.” In 1994, the Giants were the first MLB team to sponsor an AIDS awareness campaign, an ongoing project. All Giants players are involved in at least one community organization, and many participate in the team’s flagship project, the Junior Giants, an initiative that has brought the game of baseball to over 16,000 children in low-income neighborhoods across California and neighboring states.
Observes Baer, “When your organization is such a visible part of a city, you have a unique opportunity to take actions — either through community outreach or through business transactions — that are transformational.” Looking ahead to a project that could benefit both the team and the city, a Giants-led consortium is currently involved in plans to develop a 27-acre site adjacent to the park. “We envision a mixed-use neighborhood with residential, retail, office, and parking space, along with a performing arts arena,” Baer explains. “We’re still in the early stages, but a project such as this could create a vibrant new neighborhood and be of strong economic benefit to the region.”
When he talks about the city, Baer can sound more like a politician than a baseball executive, and many, including classmate Van Sickle, believe he would make a great San Francisco mayor. “Even before the Series win,” notes Van Sickle, “while walking the streets with Larry, a dozen people would say hello and shake his hand.”
Baer, however, says he harbors no political ambitions. “I love the business I’m in,” he insists. “On a good day, we bring fans joy, and even on a losing day, we provide an experience that helps them escape from their cares. Who else is lucky enough to have a job where they can do that?”
Class of MBA 1985, Section B
Class of MBA 1951, Section E