Link to Portland Tribune article (please use link, thx)

Merritt's system
Timbers and Beavers owner, Merritt Paulson, has big-league ambitions
By Todd Murphy
3/18/2008

He's in the middle of an empty PGE Park. Standing on the new FieldTurf, in dress pants and an open-collared dress shirt.

He's bouncing a soccer ball on his knee for a photographer. Promising, as the camera clicks, that he'll keep it going longer this time.

And then he does, bouncing the ball a dozen or more times on one knee, then the other. Until all the shots are taken.

Then, 35-year-old Merritt Paulson – lean and lanky and looking, well, all of 31 or 32 – moves on to his next bit of work.

Like: Explaining why nine months ago he spent what was reportedly $16 million on two minor league Portland sports franchises. Spent the money on Portland, really.

And the potential of its sports future.

Last May, Paulson announced that his company, Shortstop LLC, had bought the Portland Timbers soccer team and the Triple-A Portland Beavers from a group headed by a Sacramento, Calif., businessman that had owned the teams less than a year. The sale was finalized in June.

Paulson's purchase made him the fourth owner of the teams since 2001.

But his purchase just might give the teams some stability. It definitely has given Portland something it hasn't seen in a while: a real-life hometown sports-team owner.

Paulson – the son of U.S. Treasury Secretary Henry Paulson Jr., who's a minority investor in his son's company – left his job in New York as senior director of marketing and business development for NBA Entertainment to buy the teams.

His wife, Heather, a Harvard Law School graduate, left her job as a New York hedge fund investor and now works for Nike Inc.

They bought a house – their first – in Lake Oswego. Paulson has since spent 12- to 16-hour days at his office at PGE Park, marketing the teams, talking about changes, and about big dreams.

He says he sees him and his wife staying in Portland for quite a while.

"This is not a short-term thing," he says.

Bevo attendance needs boost
"The teams were moving solidly in the right direction," he says, sitting in his office suite above the PGE Park field and referring to the ownership group he bought the team from – led by California businessman Abe Alizadeh. "Now, it's just a question of investing in the long term."

The teams are hardly without their troubles – the Beavers especially.

Featuring players who are one step away from suiting up for major league baseball's San Diego Padres, the Beavers last year drew fewer than 5,500 fans a game – in the largest market in all of minor league baseball.

It actually was a few hundred per game less than the year before, when the Beavers were ranked 10th out of 16 Pacific Coast League teams in attendance.

Still, so far, more than a few Portland sports watchers seem to like Paulson's attitude. And what he could mean for Portland sports.

"I'm very impressed," says Lynn Lashbrook, a sports management consultant who led a campaign several years ago to bring major league baseball to Portland. "What we've never had locally, even with the Blazers, is the resourceful local owner who has a vision. That's always been a vacuum – not having the local ownership and leadership.

"We're starting over with the piece that was missing all along."

Marketing made a mission
Paulson seems to agree – at least about what local and involved ownership can mean for the Beavers and Timbers.

"The Beavers and Timbers ... this is one of the best markets there is," he says. But the teams need to be marketed better, he says. They need to sell season tickets in a more creative way, giving season ticket holders a chance to take batting practice with the Beavers, for instance, or scrimmage with the Timbers.

And both teams need to be more involved in the community.

"A lot of it is just about doing the right things in the community – sports ownership fundamentals," Paulson says. "It's not rocket science."

Paulson's purchase – with the assumed resources of his company, and his relatively young age – has spurred people to talk about bigger things for Portland as well.

It's a conversation that Paulson sometimes participates in.

Some wonder whether he might someday play a part in bringing major league baseball to Portland, for instance.

Paulson doesn't reject the idea entirely, but does say Portland is not yet ready for the big leagues – not in terms of the amount of built-in revenue a major league owner needs to get from a community's large corporations.

"Could I be interested, in the right time and the right place for the opportunity? Sure," Paulson says.

But, he says, "major league baseball needs a lot more private sector support than currently exists (in Portland). It needs to have a bigger corporate presence. It's not about population. It's about what type of business infrastructure (a city has). The costs associated with major league baseball ... are just radically different."

Soccer's a different story
Paulson is more immediately enthusiastic about bringing Portland into the major leagues in another area – Major League Soccer.

The Timbers are in the First Division of the United Soccer League, one rung below the top professional soccer league – Major League Soccer, which has West Coast franchises in places such as Los Angeles; San Jose, Calif.; and Salt Lake City.

While Portland just lost out to Seattle for a recent MLS expansion site, MLS officials have indicated there will be other expansion franchises likely granted for 2011 or 2012. Portland could be a top contender for one of them.

Paulson is enthusiastically pursuing owning that team, and having it play in PGE Park.

"This is a unique soccer market, pure and simple," Paulson says. "Arguably among the very best soccer markets in the United States."

That's evident not only in how the Timbers draw – they averaged more than 6,800 fans per game in their 14 home games last year, including almost 16,000 in their last regular season game against Charleston – but also in other intangibles, like the health of youth leagues throughout the metropolitan area, Paulson says.

"There are MLS teams that exist today that would die to have the Portland soccer market," he says.

Paulson says he believes MLS "would be terrific in Portland. The league is white-hot. I think it would be one of the most successful franchises in the league. But the city is going to need to want it."

This is where Paulson – in all his youthful unconventionality – can begin to sound like every other sports franchise owner.

Bringing Major League Soccer to Portland would require some significant renovation to city-owned PGE Park.

And eventually, within three to five years, Paulson figures, MLS would want the franchise to no longer share the stadium with a baseball team – meaning the Beavers would need a new stadium. Both ideas would require public money, Paulson says.

Turf upgrade helps a lot
Paulson declines to be specific about what he would ask in public help for any renovation of PGE Park. He says he is working on an economic impact and costs plan right now that he hopes to present to city officials in the next few months.

But, he says, "there's no way we could do it without having support from the public side."

John Doussard, a spokesman for Mayor Tom Potter, says Paulson has yet to talk to the mayor's office about the issue and declined to comment. "We'll wait to see what he's got in mind," he says.

One of the more noticeable changes to PGE Park since Paulson arrived – pushed by Paulson but paid for by the city, because the city is responsible for all capital improvements – is the new FieldTurf, installed in January and February.

The turf replaces the former NeXturf, installed during the PGE Park renovation completed in 2001. NeXturf company officials said in 2001 the turf might last 10 or 12 years; city officials now say the expected as little as seven. But the turf badly needed to be replaced, Paulson says.

FieldTurf is used at many college and National Football League stadiums; several major league baseball stadiums; and soccer fields. The installation cost the city about $1 million, according to David Logsdon, spectator facilities manager for the city.

It was an important change for the Timbers, because of the hardness and age of the old turf, coach Gavin Wilkinson says. "It was very hard to bring players in (with) the old surface," says Wilkinson, who compliments Paulson on other improvements he's made with the stadium and with the team.

"Everything he came in and said he would do, he did," Wilkinson says.

Among the player-related stadium changes, Paulson's company has renovated the players' locker rooms, added leather couches, and updated their training equipment. Paulson also has updated the luxury suites at the stadium with carpet and flat-screen televisions.

Paulson's company had a hand in bringing the 2009 Triple-A All-Star game to Portland. And his company brought a U.S. Women's soccer team exhibition to PGE Park last fall, and three Oregon State Beavers baseball games to the stadium a few weeks ago.

Paulson also arranged a Beavers-Timbers television package in which FSN will televise 20 Beavers games and five Timbers games this year.

Owners don't own; fans do
One Paulson initiative was less successful. He offered fans an opportunity to rename the Beavers, believing that the team was too easily confused with the Oregon State baseball team. But fan response was overwhelmingly in favor of keeping the name.

Which underlines what Paulson says is one of his beliefs about sports team ownership: "Any sports owner, first and foremost, has to understand you can be an owner from a legal standpoint, but you never truly own the team. The community owns the team. And I'm not sure every owner, from every level of sports, gets that."

At least one Timbers fan believes Paulson does get it – and says that's a significant change from previous Timbers owners.

"I've actually seen him in the (Timber Army fan) section, raising the flag after a goal," says Allison Andrews, who operates a Timbers fan Web site that is independent of the team. "He deliberately throws himself into it. That's a big deal to us. He's one of us now."

More community links sought
Paulson says he hopes both teams can be more involved in the community – both in terms of players participating in more events and interactions, and in the teams financially supporting more local charities and other community projects.

He has created a Beavers and Timbers community fund and says, "We're going to be, in very short order, giving away more money through direct donations to the community than any team in Triple-A baseball."

As for the Beavers' mediocre attendance figures, Pacific Coast League President Branch Rickey III says league executives and other owners understand that PGE Park's age – even with its renovation – and the difficulty of finding easy parking around it means "you don't expect to be able to bring to Portland the kind of success that Pacific Coast League baseball is realizing elsewhere."

Still, Paulson says, "I think we're going to see growth."

Rickey says it took league executives only about five minutes after they met Paulson to forget about his relative youth. When they considered his academic background – he has a master's degree in business administration from Harvard –"and combine it with the positions he's had in the NBA, and then combine that with his ability to articulate his commitment and his ambition, and his dedication and zeal – you've got a pretty compelling package," Rickey says.

"He's a terrific reflection on our sport, and he will distinguish himself in Portland for exactly that."

toddmurphy@portlandtribune.com

quote:

Some wonder whether he might someday play a part in bringing major league baseball to Portland, for instance.

Paulson doesn't reject the idea entirely, but does say Portland is not yet ready for the big leagues – not in terms of the amount of built-in revenue a major league owner needs to get from a community's large corporations.

"Could I be interested, in the right time and the right place for the opportunity? Sure," Paulson says.

But, he says, "major league baseball needs a lot more private sector support than currently exists (in Portland). It needs to have a bigger corporate presence. It's not about population. It's about what type of business infrastructure (a city has). The costs associated with major league baseball ... are just radically different."

I loved the article except for this part. If MLB is all about Fortune 500 headquarters, we can just forget about ever getting MLB.

But the reality is, it's not all about that. Phoenix and San Diego aren't exactly overrun with Fortune 500 companies. The A's new stadium is focused more on mini-suites to accommodate smaller businesses, and I'm sure Portland will need to do the same.

When we made our pitch to the Expos, we clearly demonstrated that there was ample disposable income in the community to support MLB. If anything, I would bet that we are even more capable now since our population growth and our economy have been doing better overall than the majority of current and potential MLB locations.

But hey, I'm not a Harvard MBA, so what do I know. Regardless of whether Portland is ready for MLB, the far greater obstacles are:

1. Is MLB ready for any new markets period; and
2. Is there the political will to get the stadium.

These, IMHO, are bigger questions than whether or not the large, growing, and massively underserved Portland sports market is financially capable of handling an MLB franchise.

quote:

Originally posted by The Cactus Leaguer:
[QUOTE]Some wonder whether he might someday play a part in bringing major league baseball to Portland, for instance.

Paulson doesn't reject the idea entirely, but does say Portland is not yet ready for the big leagues – not in terms of the amount of built-in revenue a major league owner needs to get from a community's large corporations.

"Could I be interested, in the right time and the right place for the opportunity? Sure," Paulson says.

But, he says, "major league baseball needs a lot more private sector support than currently exists (in Portland). It needs to have a bigger corporate presence. It's not about population. It's about what type of business infrastructure (a city has). The costs associated with major league baseball ... are just radically different."

I loved the article except for this part. If MLB is all about Fortune 500 headquarters, we can just forget about ever getting MLB.

But the reality is, it's not all about that. Phoenix and San Diego aren't exactly overrun with Fortune 500 companies. The A's new stadium is focused more on mini-suites to accommodate smaller businesses, and I'm sure Portland will need to do the same.
[\quote]
I'm not going to ask for the numbers on San Diego, but I am curious to see how many Fortune 500's, Fortune 1000's, etc. exist in Phoenix and then I would like to see that compared to Portland. There are two reasons I'm not interested in seeing the numbers on San Diego:
1. San Diego came into MLB long before this corporate infrastructure became a big deal.
2. The Padres can also draw on L.A. companies for corporate infrastructure support. While the L.A. companies might not have anyone of their bigwigs go to the games, they can still pay for club seating, luxury boxes, etc. and still help out the Padres. I imagine something similar exists with the Milwaukee Brewers and some businesses in Chicago.

quote:

Regardless of whether Portland is ready for MLB, the far greater obstacles are:

1. Is MLB ready for any new markets period; and
2. Is there the political will to get the stadium.

These, IMHO, are bigger questions than whether or not the large, growing, and massively underserved Portland sports market is financially capable of handling an MLB franchise.

Well, the coming recession will tell us all we need to know about MLB and whether or not it truly desires any new markets. As for political will, couldn't tell you.

There was an editorial in today's Bizjournal about the Beavers (and tangentially, MLB2PDX). Here are a few snippets:

quote:

Friday, April 4, 2008
Editorial
Beavers remain a tough sell
Portland Business Journal

....

Club executives anticipate average attendance of 6,000 per game, up more than 10 percent from last year. While that's reason for optimism, attendance is still down considerably from 2003, and Portland ranks a mediocre 20th out of the 33 Triple-A baseball teams across the country.

Ranked by size of metro area, Portland is the third-largest media market in the country without a Major League Baseball team. The size of the city, combined with comparatively dismal attendance, point to the difficulty of selling baseball in Portland.

I'm not sure how we went from 1st to 3rd... probably because they split off Riverside from the LA market, along with some other market that is impossible for MLB due to proximity to another MLB team.

As far as the other stuff about market size and selling MLB in general, well, it's an ill-informed argument from people haven't looked at the irrelevance of AAA attendance and the success of MLB in similar sized markets.

quote:

Last season, the Timbers set an attendance record, and Paulson has booked the 2009 Triple-A All-Star game for PGE Park. The Beavers have new throwback uniforms and a host of innovative and interesting promotions.

The fact remains, however, that Beavers baseball is still an afterthought, not a prime attraction. Smaller cities such as Norfolk, Va., Rochester, N.Y., and Fresno, Calif., draw many more fans.

Paulson's energy and business acumen may ultimately pay off, but it will take persistence and time if Portland is to become a real baseball city.

Rochester? Give me a break. A "real" baseball city? Ever check the stats on TV ratings for the Mariners in the Portland market, how fast MLB exhibitions sell out here, how many fans make the trek to Safeco? Aren't those better indicators of Portland as a(n MLB) baseball market?

That being said, I am growing in my belief that AAA attendance over the next few years is going to matter in order generate INTERNAL, LOCAL momentum for MLB2PDX. The executives at MLB won't care one iota, but locally, a rabid AAA following will provide political cover in order to help fund a new stadium.

Down to 3rd because the Bush Administration "reclassified" the Portland market as having Salem NOT belong to it. That was all part of that administration's plan to redistribute urban grants to places more likely to vote for th errrrrrrrrrrrrr places not as urban as the biggest cities.

I think Sacramento grew, as well. Haven't seen the latest numbers.

quote:

Originally posted by Paul Schmidt:
Down to 3rd because the Bush Administration "reclassified" the Portland market as having Salem NOT belong to it. That was all part of that administration's plan to redistribute urban grants to places more likely to vote for th errrrrrrrrrrrrr places not as urban as the biggest cities.

I think Sacramento grew, as well. Haven't seen the latest numbers.

I have. They came out last week (see attachment if interested).

These are MSA's only, not CSA's. As we discussed in here over recent years, Salem (400k) and Longview (100k) (both within an hour of PDX and clearly integrated with PDX) are not/no longer included in a CSA with Portland... in fact, Portland and Miami were the only large MSA's I could find that were not part of a CSA.

As you can see, Portland is the 2nd largest metro without MLB because Riverside/San Bernadino (clearly part of the LA market) are considered a separate MSA.

Copy_of_CBSA-EST2007-01.xls (28 KB, 4 downloads) 2007 population estimates (metros over 1m), and # of big 4 franchises in each

A few comments about these estimates:

1. Portland is clearly continuing to grow at a steady rate that is well above the national average.

2. If MLB is considering an expansion in 7-10 years, San Antonio and Portland look to be the obvious demographic choices (over 3 million population within an hour drive and no big 4 sports competition within the metro area other than the NBA). Unless Vegas can keep up its breakneck pace for the next 10 years (which I highly doubt, considering their collapsing housing market), no other metros match up (Charlotte/Raleigh have 3 franchises, Orlando/Tampa have 4).

3. Unless they start reversing course, some of the midwest metros (PIT, CLE, etc.) and (I hate to say it) New Orleans, will eventually be unable to support all of their franchises.

4. The NBA has plenty of good options available for expansion or relocation, whether they want to big (replace the Sonics, Anaheim, SJ, etc.) or small. The question is, do they want to or not?

Link

In terms of "media markets" (as opposed to MSA's from the census bureau), Portland is the 3rd largest without MLB behind Sacramento and Orlando, both of whom are highly unlikely to get MLB because of their proximity to to the Giants, A's, and Rays.

What is interesting is that if you go purely by the media market argument, there are five markets smaller than Portland with MLB, and ten markets smaller than Portland with more than one Big 4 (with apologies to soccer fans, someday you'll probably overtake hockey) franchise. 'nuff said.