Prospectus Q&A: Miles Prentice: Potential new Royals’ owner discusses the team

The Kansas City Royals are in a state of flux. The dependence on veteran
mediocrity is being abolished, and the team’s commitment to youth has
provided an opportunity for potential stars like The Brothers Carlos to
play every day. And just as the situation on the field has changed, so has
the front office, where the unwieldy Board of Directors that has piloted
the franchise for the last six years finally approved a new owner last
fall. Miles Prentice lacks the deep pockets of predecessor Ewing Kauffman,
but his passion for baseball and knowledge of the game has intrigued a city
that has been eagerly awaiting a return to winning baseball for years.

Earlier this week I had the privilege of talking with Prentice about his
plans for the future of the Royals and Major League Baseball. As
advertised, Prentice was friendly, candid and eager to talk baseball–a
scheduled 15-minute interview ran close to an hour. I would have expected
an interview with one of the Lords of Baseball, as it were, to be rather
formal and lacking any meaningful content. But Prentice let his guard down,
and didn’t hold back his opinions. He trusts others to not take advantage
of his openness, and most journalists have kept that commitment.

After speaking with him, I have joined the growing list of people who are
no longer surprised that he overcame staggering odds to be awarded
ownership of the Kansas City Royals, and who are more than a little excited
about the future of the franchise.

(Ed. Note: On Friday, it was learned that Prentice will have to rework
his group to provide fewer investors and more cash, so he will remain just
outside the gates for a bit longer.)

RJ: While the approval process for your ownership application seems to
be going smoothly, there have been a few comments in recent weeks–one by
Peter Gammons and one by Tim Belcher–that hint that your application might
not get approved. Have you been given any reason by Major League Baseball
to worry that they might not approve your ownership?

MP: No! Where does Tim Belcher get his information? (Laughing.)

We do have a large group, there’s no question, and that has been of some
concern, but mostly from a logistical standpoint. The Giants had 26
investors when they started, and we’re a little north of 40, so it’s not
impossible to deal with. Major League Baseball has a structure for groups
of that size, so once they clear everyone, it’s not an issue. This is
actually as close to a community-owned team as anything in baseball. We
have two African-Americans in the group, a woman, a Japanese-American. It’s
a wonderful group, and while some of them aren’t baseball fans, they care
about Kansas City. And it’s that sort of commitment that I find reassuring
as I go down this path.

That’s very interesting about Belcher – when did he say that?

RJ: When the Angels were in Kansas City a few weeks ago. He was in his
"complaining" mode, as he’s been known to do.

MP: No comment. (Laughing.) It looks like the Angels got stuck–I don’t
think he’s going to do anything with them. As you probably know, I own the
Double-A Midland team, which had been an Angels’ affiliate for many years,
so I know that organization pretty well.

RJ: And you probably know the Angels haven’t had a very strong farm
system during that time.

MP: No, and that’s one of the reasons we switched. I like the people in the
organization, by the way. I think they’re very good–Bavasi, the Autrys–I
thought the world of Jackie Autry, and I never heard anyone say a bad word
about Gene Autry. We did have some great individual players come through,
like Tim Salmon and Jim Edmonds, but actually Midland has had the worst
record in the Texas League over the last 15 years. I know a lot of people
say they’re not there to win, but they have to develop a winning attitude.
If someone’s never won, my position is they might not know how to win!

In any event, we’re with Oakland now, and they have a good farm system. For
small market teams, I think you have to have a strong farm system.

RJ: I think the team’s poor showing on the field has made your success
at the turnstile that much more impressive.

MP: I have a very good organization down there, and of course that is one
of the things I believe in doing: getting good people in the right jobs and
letting them to do their work. I’ve got a great GM and a great staff down
there, and we’ve done pretty well.

RJ: If and when you get approved as owner of the Royals, are you going
to have to divest yourself of that team?

MP: I’ve been told no.

RJ: Really? Are you still going to be affiliated with another
organization, or do you plan on making them a Royals’ affiliate?

MP: I’ve been told I can keep them as an Oakland affiliate. There would
obviously be some rationale for making them a Royals’ affiliate, but
Wichita is such a natural choice as the Royals Double-A team.

RJ: The Royals currently have a payroll around $25 million, which the
current administration is trying to pare down. What, realistically, is a
payroll that you think you can afford?

MP: When we have deliberated this, we have always felt that we needed a
payroll between 20 and 25 million dollars.

RJ: With the contracts of Jeff King, Hipolito Pichardo and Jeff
Montgomery all expiring, that frees up around $9 million in payroll, and if
Kevin Appier’s option is not picked up, or he’s traded, that lowers the it
another $5 million. Do you plan on using those savings to sign the team’s
younger players, or to increase the team’s scouting budget, or is that
money needed just to keep financially solvent?

MP: Without having a real opportunity to be involved in the day-to-day
operations at this point, there are a number of areas in which to use that
money: we want to beef up the scouting and development, and that would
probably include having money set aside for the signing of draft picks. And
if there’s a little left over, we’d want to keep it for a rainy day. We
would want to devote to the minor league system with an eye towards some of
our younger ballplayers as well.

RJ: What’s your take on signing the Royals’ best young players, guys
like Johnny Damon and Jose Rosado and Mike Sweeney, to long-term contracts
that give the players security and give the franchise some cost
containment?

MP: Well, I can’t comment on that at this particular time because I’m not
in a position to make those moves, but we’d look seriously at whatever
would make financial sense, because the hallmark of our organization will
be fiscal responsibility. Maybe to the union that means that I’m not going
to encourage the escalation of salaries. And I’ve got to be honest with
you–I’m certainly not going to, because I think it hurts the fan. I want a
family to be able to come to the ballpark cheaply.

In Midland, we have maintained as cheap a price as anywhere. Kansas City
has some of the cheapest tickets in the major leagues, and they may have to
go up a little with time, as does everything. Movie tickets now cost eight
dollars for what, an hour and a half of entertainment? Some of our Texas
League games go 4 hours with scores of 32 to 25! (Laughing.)

RJ: What do you consider to be the most important qualities for a GM?

MP: Leadership.

RJ: What’s your impression of Tony Muser? What is it that you want most
out of your manager?

MP: Both those positions require leadership, different kinds of leadership.
But the manager–let’s take Tony Muser–has to have a multi-faceted
personality. He has to be a leader. He also has to be a teacher. He has to
be a coach, an instructor. He probably has to be a disciplinarian, and at
times he has to be a father to some of these players. He has to do a lot of
things, and he might not be able to do it all, so then it’s incumbent on
him to surround himself with good people who can help him.

We’ve got Frank White, one of the best second baseman who ever played the
game, who can work with Carlos Febles and help him out. The most important
thing to me is leadership, and you can go on and on about how to define
leadership, but I tend to be optimistic, and I want people with a positive
attitude. If you don’t believe you can succeed, believe me, you won’t.

RJ: How involved do you see yourself with the franchise? Do you plan on
having any say in personnel decisions, or do you plan to let others run the
ballclub?

MP: Well, I am a hands-on person, and I played the game–without
distinction–in college and in the Army. But in any event, I plan on having
what we consider to be the best people in the positions that they should be
in, whether it be general manager, traveling secretary, financial VP… we
want the best possible people. And I’m going to let them do their job. For
example, the general manager will have guidance, and I expect to be involved.

But my primary role will be to market the team. And I’m going to go to
Wichita, to Topeka, to Jefferson City, to Des Moines, to Omaha, to Lincoln,
work my way down into Arkansas. We very much need those people to come back
to the ballpark. And if we can get the ballplayers out into the community,
so that the people can touch them and see them and really identify with them,
I think that’s more important in a place like Kansas City than in New York or
the other big markets. And you want kids who have that personality, that
tendency to warm up to people and not be aloof. The nice thing about Kansas
City is that it does protect and respect the ballplayer’s privacy.

I am a fan. I love this game, and this game has been so important to this
country and helped so many people. Look at the impact of this game on so
many minorities, whether it be Italian-Americans, German-Americans,
Irish-Americans, African-Americans, or Hispanic-Americans. Each group has
benefited from being able to play the game, and that’s something we have to
nourish and to encourage for the future.

RJ: The Royals have six of the first 59 draft picks this year. In recent
years, the draft has become so expensive that some of the small-market
teams have been unable to draft the best players; the Royals, for example,
passed on J.D. Drew last year. Are you willing to take chances in the
draft, to select the best player and spend four or five million dollars to
sign him, or do you plan to factor signability into the equation?

MP: The difficulty here is in trying to have the proverbial crystal ball,
to know that J.D. Drew is going to be the absolute best ballplayer in the
draft. After all, he’s struggling right now. I have a real problem with
some of these bonuses; remember back when the Yankees signed Brien Taylor
for $1.55 million? That guy may never throw a pitch in the big leagues.

The Yankees can afford to do that; but I don’t think J.D. Drew is worth
anywhere near what he got. I don’t care if he turns out to be Babe Ruth and
Hank Aaron all in one. At that level of money, I don’t believe that it is a
responsible decision to make. Again, we’ve got to have good scouts, as I
want to be able to know that this particular person that we’re going
to pay a really high price for really does have more than a 50-50 chance to
make it. I don’t want to be throwing money at these guys like darts at a
dartboard. I don’t think you can predict that with the degree of certainty
that makes such high bonuses something that we’re comfortable with. I
really think that long-term, that particular aspect of baseball has to be
looked at and has to be, I think, ameliorated.

RJ: How about the team’s involvement in foreign scouting? The Royals
have never been very involved in competing for the best amateur talent
abroad. Do you plan to change that, or do you want to continue to focus the
Royals’ scouting efforts in America?

MP: That’s a good question, and I think we have had some fair success in
Latin America, and the Dominican Republic is still a very fertile ground. I
think there’s going to be a lot of talent coming out of the Dominican and
other areas. We’ve already seen a few players come out of Australia and
Japan. The other countries around the world will be slower to develop, and
again, it’s going to be a cost-effective decision. I’m not going to shut
out those possibilities, but I believe that there are a lot of kids in
this country who aren’t playing baseball but ought to be. And we’re
going to go and really scout this country. We’re going to put a lot of
resources and a lot of effort into doing that.

A case in point: the RBI program in Kansas City. Last year, they had about
520 participants with four corporate sponsors. This year, one of the
investors in my group became a leader of the RBI program, and they had a
very ambitious plan to get 40 sponsors and maybe 700 kids. They got their
40 sponsors–Tom Watson paid for five, and at least half of the
sponsorships came directly or indirectly from my investor group. They had,
as of last count, close to 1400 applications from kids to play. So that, to
me, is a real positive. To have that kind of involvement from the inner
cities is wonderful–we need to have the African-American community back in
the ballpark, playing baseball.

The Cubs, for example, have signed three players into their farm system out
of the Chicago RBI program. That’s a fairly recent phenomenon, but one I
think you’re going to see become more common. Bo Jackson was not really a
baseball player, but he was a good athlete, and probably would have been a
superstar if he hadn’t injured himself playing football. So we need to find
those kids.

RJ: Do you have a timetable to make the Royals competitive?

MP: I think they’re competitive right now! They played the Yankees pretty
tough, splitting the series, and could just have easily won three. They
took charge in the first game, they fell behind David Cone in the second
game but tried to come back on a grand slam. The problem was that Cone was
getting them to swing at his first pitch and fall behind in the count. I
can’t stand it when hitters swing at the pitcher’s first pitch. You have to
get a sense for what a pitcher is throwing. In the third game Febles had
that great at-bat against Mariano Rivera, fouling off tough pitches and
finally getting a single up the middle to drive in a run, even though the
Royals ended up a run short. I was listening last night on the radio, and I
could sense in the Yankee announcers that their tone changed from the first
game to the last game. They recognized that these young kids are playing
good ball.

In all honesty, developing a farm system is a three-to-five-year plan. You
ask any general manager, any scouting director, and they’ll all tell you
that. And the Royals have some good young talent that’s developing. It’s
not the same as it was in the ’70s and early ’80s, but compared to the
early part of the 1990s, when the Royals signed all those free agents and
gave up a bunch of draft picks, it’s a lot better.

If you’ll allow me to digress for a moment: I’ve seen a lot of players come
along and a guy who played for the Angels, Orlando Palmeiro, everyone said
he couldn’t make it. He was a 56th-round draft pick. I watched the kid, the
smile on his face and his enthusiasm, and I remember saying to someone
(whose name will go unmentioned) that this kid has a lot of heart and he
wants it so bad, so don’t underrate him and count him out. And he’s now a
very good fourth outfielder. He doesn’t have any power, but he gives you
quality at-bats, he’s good defensively and he plays smart. But more than
that: he loves the game. And you know what? The fans recognize that. Kansas
City is a small market, but that can be a benefit, because it’s a small
town, and people recognize when players are trying hard.

RJ: The Royals have had a very poor home record over the last four
years, in large part because the team now plays in a good home run
ballpark, but is not built as a power-hitting team. Do you plan on changing
the dimensions of the stadium, or do you think the Royals simply need to
add more power?

MP: To be honest, I’m not totally sold on those statistics which say that
the Royals need to change their ballpark. I know Joe Posnanski [a columnist
for the Kansas City Star] and some others have suggested that. I
think a big part of the problem has been that the Royals haven’t been
drawing many fans to the ballpark. If you think about what it’s like when
the Royals come home and play against, say, the Yankees, and there’s only
8,000 fans in the park, the fans aren’t loud and into the game, the players
themselves don’t have the enthusiasm to play well. Then when they go on the
road and play in front of 20,000 or more people, the underdog mentality
sets in and the players are more focused. Muser does a great job of keeping
the team very focused on their jobs.

So if we can get the attendance to go up, I think you’ll see that problem
go away.

RJ: I’m aware that after the 1981 strike, you refused to attend a
baseball game for almost 10 years. Now that you’re in an ownership
position, there is a lot of talk around baseball that at the conclusion of
the current bargaining agreement (either after the 2000 or 2001 season),
there could be a lockout by owners to get a salary cap, a lockout that
could wipe out an entire season. What is your take on baseball’s financial
situation? What do you think can be done, and can it be done without a work
stoppage?

MP: Unfortunately, I’m not in a position yet where I’m allowed to comment
specifically. But I would hope that everyone recognizes the benefits of the
game continuing. It’s in nobody’s interest to have a work
stoppage–players, agents, unions, owners or fans. So it’s my hope that
people will be able to sit down and do what’s really good for the game. And
that means what’s good for the fans. I mean, the players are in pretty good
shape, financially and in every other way. Maybe it’s time for everybody to
say, let’s look at the fans a little bit here, and see where this game is
going. We don’t want to be the ones who killed the goose that laid the
golden egg.

In my view, we can all succeed if we have a common goal of trying to be
fair to all parties. I understand that the players want fair compensation.
But starting at $200,000 is something not even lawyers or doctors get to
do. From an economic point of view, the players are in pretty good shape,
and maybe they ought to sit back with the owners and say, what can we
really do for the fan? What makes sense for the fan? I don’t know whether
anybody will approach it that way, but that would be something I would hope
people give some thought to.

RJ: Do you have any interest in becoming heavily involved with labor
relations and the financial issues surrounding the game?

MP: Maybe they don’t want me involved! (Laughing.) Maybe that’s where
Belcher was coming from!

RJ: The Montreal Expos, perhaps the epitome of the small-market team,
may end up the first team in almost 30 years to move. What is your feeling
on that? Do you think that more of an effort should be made to stabilize
the franchise up north, or is it time for them to move to Virginia? At what
point does a team have an obligation to move?

MP: That’s a difficult question. The first thing is that the community has
to want the team–you can’t force that. I can tell you that I have seen
what has happened to communities that have lost teams, and then it’s too
late. People will say that I’m just in a potential ownership mode and I
would say things like that, but that’s not true. I had a chance to move
Midland when I bought the team in 1990, but I didn’t. At first we struggled
a bit, but not much. We worked hard to improve the team as much as we
could. But we had local support. We had the city agree to spend some money
to improve the ballpark, and now they’re even thinking about building a new
ballpark, which they really need to do if they want to keep a Double-A team
for the next 50 or 60 years.

You have to look long-term, and so many people are just looking one or two
years ahead. If Montreal moves, I doubt that they’ll ever get a team again.
And that’s something the citizens of Montreal have to understand. And it’s
not dollars and cents that is the issue. Do they want major league
baseball? If they don’t, that’s a decision they have to make. That’s really
true of any community, major or minor leagues.

But let’s look at Pittsburgh. The Pirates, just three years ago, drew
something like 900,000 people. Last year, they brought in close to 1.5
million fans. Their payroll has been among the lowest in baseball during
that time. They’ve been competitive some years – two years ago they took
Houston down to the final week, last year they were not as successful. But
they have managed to put 600,000 more people in the ballpark. If the Royals
put 600,000 more people in the stands, we’re over two million. And you’ve
got to have around two million in attendance to have any semblance of
opportunity to succeed. Unless you really have a bare-bones operation, and
then you run the risk of not being able to be competitive.

And if you’ve got two million people in the ballpark, if you spend your
money wisely and develop players and talents, I think you can put a very
competitive team on the field.

Baseball Prospectus thanks Miles Prentice for his time and his candor.