Angels, Rangers join the big boys
AL West's top two teams among MLB's superpowers, and TV money is the reason
Two and a half years ago, in the fall of 2009, Arte Moreno believed the Los Angeles Angels had arrived. After major disappointments in 2004, 2007 and 2008, his team had finally beaten the Boston Red Sox in a playoff series, sweeping the Red Sox in the American League Division Series. The Angels then lost in six games to the eventual champion Yankees in the American League Championship Series, but Moreno did not feel intimidated by New York. The Angels had beaten the Yankees in the 2005 ALDS, and he knew this loss was simply the byproduct of his team not playing its best.
For the next two years, Moreno did not hope the Angels would remain competitive with the game's two superpowers, he expected it. Since purchasing the Angels in 2003, the Red Sox and Yankees have been his measure. When he talked about his club, it was of being in the class of Boston and New York in terms of consistency, of being in the championship conversation on Opening Day not one or two years, but every year for 10 or 15 years.
Moreno is considered by many of his players to be as competitive as they come, and he craved to be on baseball's top shelf, only to see the Angels not only fail to make the playoffs in 2010 and 2011, but to be surpassed by an unexpected rival. The Texas Rangers beat the Angels by 10 games each year, becoming the first AL team to win consecutive pennants since the Yankees in 2000 and 2001 (and the first non-Yankees team to do it in the AL since Toronto in 1992 and '93).
"I like to take a macro view. Where we are today really goes back to '09, running into Boston again, finally getting past Boston and then running into New York," Moreno said in a telephone interview. "I felt like we were moving in the right direction, felt like all we needed was to make a few moves. It didn't work that way, and it was clear that we had to really increase our efforts to get to that next level."
On the last day of the season, after the Angels had won 86 games in a year marred by too many missed opportunities, too many blown saves and not enough runs -- the Rangers outscored the Angels by 188 runs and beat them 12 of 19 times -- Moreno took Jered Weaver and Dan Haren, his two best pitchers, aside and made them a promise.
"Both of you pitched your hearts out. Both of you should've been 20-game winners," he recalled telling them. "And I'm going to go out and do everything I can to get you some offense."
A month after Moreno spoke to his team, an epic World Series concluded that saw Texas lose the championship for the second consecutive year, this one to the Cardinals, historically and hauntingly, and Rangers general manager Jon Daniels and his assistant GM Thad Levine and his staff, along with owner Nolan Ryan, met feeling conflicting emotions, the sting of losing the World Series yet a sense of regeneration.
"Trust me, it isn't a feeling you want to have, losing the World Series the way we did," Daniels said. "But I wasn't showing false toughness or bravado when I said to our guys that I expect us to have chances at this for the next 10 or 15 years. I meant it. I couldn't have been more proud by the way we've handled it. No one dwelled. We got back to work. That's why I believe it is possible."
What occurred over the following weeks sowed the seeds of a new rivalry, and the key building block of these two new potential superpowers isn't merely fighting for a division title but the billions of dollars of television revenue -- perhaps as much as $6 billion between the two teams -- that will allow the Angels and Rangers to compete annually with the Red Sox and Yankees, and especially each other. Only three times -- by Seattle in 2000, Oakland in 2001 and the Angels in 2002 (a year in which they won the World Series) -- in the 17 years since the wild card was introduced has it come from the AL West, but the Red Sox and Yankees have company, and big-time television money is the reason.
While Boston and New York were quiet this winter, the Angels dominated the offseason acquisitions market, scoring the two-time World Series-winning Albert Pujols for 10 years at $240 million (on the strength of two telephone calls, with Pujols having never met with Moreno face to face) and C.J. Wilson, who had been the Rangers' top pitcher, for five years at another $77.5 million. When the Rangers won their first pennant in 2010, season-ticket sales went from 6,000 to 16,000. Now they've soared past 20,000.
Three weeks after Christmas 2011, the Rangers won the game's top international prospect, landing 25-year-old Japanese pitcher Yu Darvish for $111.7 million, $60 million of which went to Darvish and $51.7 million for exclusive negotiating rights with his Japanese club. After unsuccessfully attempting to enter into the big time in 2000 with the 10-year, $252 million deal for free agent Alex Rodriguez, the Rangers are suddenly a major player.
Like the Red Sox and Yankees, the Angels and Rangers now circle one another at a high and very personal level reminiscent to when Boston and New York jousted so epically several years ago. The Rangers have overtaken the Angels, the team that has made the playoffs six out of the last 10 years, has averaged 91 wins a season and has dominated the division.
"They thought they were the dominant force in the West, and given their recent history had every reason to think it," said Ryan, who happens to have his number retired by both teams. "They thought they owned the West, and they did, and now we're the ones having some success. Since they won the World Series in 2002, they just reached a level that the other teams in the division just couldn't reach. They were the dominant team."
The two managers, Mike Scioscia and Ron Washington, came up through the Dodgers' system and their aggressive, pressurized styles are the most distinctive in the game. As the Rangers rose and the Angels aged, Washington's Rangers resembled in many ways the old Scioscia teams that shook defenses into mistakes.
During the 2010 free-agent period, Moreno made a strong, five-year offer to free agent third baseman Adrian Beltre. Beltre shopped the offer and wound up signing a six-year, $96 million deal with the Rangers. The big star of last year's postseason was Mike Napoli, who was raised in the Angels' system but was a strike away from being named World Series MVP with Texas. The year before, the Rangers won their first pennant with another former Angels player, Vladimir Guerrero, in the middle of the lineup. After consecutive pennants, the Rangers' farm director, former big league catcher Scott Servais, left Texas to join the Angels as assistant general manager under newly hired GM Jerry Dipoto.
And the biggest symbol of rivalry and vitality in Los Angeles is Pujols, who stood on the field last October with the St. Louis Cardinals celebrating at the Rangers' expense and is now in the division with the Angels, ready to face Texas 19 times this season.
"No question it's a rivalry now," the Angels' Torii Hunter said. "First they took Vlad. Then they took another one of our guys in Mike Napoli and beat us with him. We thought we were getting Beltre. They got him. Now C.J. is over here. We had our chances last year. We were right there -- until we faced them. And they're in our division, so it's all good. This is going to be a lot of fun. We've got Albert. All that's missing now is meeting them in the playoffs, too."
The on-field stakes are high, but the real foundation of the power shift is the enormous television deals that are essentially underwriting the emergence of these two powerhouse franchises and can keep both at a high financial level for years to come. The Rangers signed a 20-year contract with Fox worth roughly $3 billion that begins in 2015, while the Angels opted out of a 10-year, $500 million deal for one worth an estimated $3 billion that expires in 2030.
Three years earlier, Moreno and his baseball people chose not to match or surpass the eight-year, $160 million free-agent deal the Yankees had offered his first baseman, Mark Teixeira, but the marketplace for local television rights has shifted dramatically. The financial flexibility of the new Fox deal made it possible for Moreno to dream big about Pujols, make it happen and still be able to add players in the years to come instead of being a team of prospects with one high-priced star. After the deal was done, Moreno told the thousands of Angels fans in attendance on the day of Pujols' introduction, "Thank you, Fox, and Merry Christmas."
In turn, the Angels are now third in the AL in payroll behind New York ($205 million) and Boston ($168 million), around $140 million, nearing the highest payroll in club history. The Rangers will be at roughly $124 million in 2012, a club record.
"What the Rangers did in 2010 was a tribute to the terrific core of young talent Jon Daniels and his team put together," said Chuck Greenberg, the former Rangers partner who brokered the $3 billion TV deal but left the organization in 2011. "J.D. assembled the talent, and the result was a championship that, if not unexpected, was certainly ahead of schedule and achieved largely without financial resources. The media deal was transformational. Suddenly, the Rangers had the financial resources to match their acumen at assembling talent. It enabled the Rangers to keep the core together in 2011. It enabled the signing of Adrian Beltre. It enabled the signing of Yu Darvish. Being able to think about this as a 10- or 15-year program instead of just a nice little window is because of media. In a lot of ways, this is the real Moneyball."
Since the end of the 1994 strike
When baseball revenues in certain markets skyrocketed because of the explosion in local television revenues, the power of the American League resided in Boston and New York. As television has become more stratified in a 200-channel, 24-hour universe, programming -- especially live programming -- is more valuable than ever. No form of live programming is more vital than sports. During the Rangers-Cardinals 2011 World Series, baseball commissioner Bud Selig said the public and media were misreading baseball as a sport in decline. "Everyone, from investors to advertisers, wants to get in to this game," he said.
From a media rights standpoint, baseball is extremely valuable because of the number of programming hours -- 162 games, plus for successful franchises such as the Yankees the opportunity to replay classic games to starving fans -- and because it is played during the summer, when football, basketball and hockey are out of season.
The Yankees have always dominated baseball, but the cable television money has created a payroll gap over the last two decades unprecedented in the sport. In the mid-1990s, the Yankees and Red Sox were formidable, but the Braves, Orioles, Mets and Dodgers were also near or at the top of baseball's payroll list. By the early part of the millennium, the Red Sox and Yankees had so far distanced themselves from the rest of the game in terms of revenue generation that they were commonly nicknamed "Superpowers."
When Moreno talks about reaching the "next level," it is the consistency of Boston and New York to which he refers. In the 17 seasons between 1995 and 2011, either the Yankees or Red Sox have advanced to the playoffs every year. During that time, the Yankees won five championships, appeared in seven World Series and advanced to the playoffs 16 of 17 years. The Red Sox during the same period made the playoffs nine times and won two World Series titles after having not won since 1918. The two have both appeared in the playoffs eight times and faced one another in the ALCS three times.
Winning was only part of becoming a Superpower. Boston and New York dominated the free-agent and international markets: Curt Schilling went to Boston; Randy Johnson to New York; Jose Contreras turned down the Red Sox to join the Yankees, while Boston paid $102 million in total for Daisuke Matsuzaka. The Red Sox and Yankees had captured the imagination of big league players craving the big stage and the best chances to win a championship.
Both teams enjoyed historical pedigree and enormous, loyal fan bases, but each distanced itself from the rest of the game by exploiting the potential of its lucrative media rights. By owning a third of the YES Network, the Yankees are cutting out the middle man of a regional sports network, such as Fox. The windfall is enormous. YES is estimated to run at a 60 percent profit margin, according to analysis by Fortune Magazine. The advent of team-owned regional sports networks such as the YES Network and New England Sports Network (NESN) has been the equivalent of building a house on an oil reserve. When Mark Cuban, the billionaire owner of the Dallas Mavericks, considered buying the Dodgers, he said the attraction of the franchise was media rights. Echoing Cuban's prediction, the Dodgers sold to a group including basketball legend Magic Johnson for $2 billion, a sale price that didn't even include all the Dodger Stadium parking lots.
Since 2002, neither Boston nor New York has dropped under $130 million in payroll. For the past six years, the Yankees have been over $200 million and Boston over $165 million, but over the past three years certain key events have shifted the narrative west.
The Angels exercised a five-year opt-out clause of their 10-year, $500 million television deal in favor of a new deal with Fox. After losing on Teixeira and Carl Crawford to the Yankees and Red Sox, respectively, star power made the Pujols deal attractive -- Moreno described him as the equivalent of "the finest bottle of champagne" -- but he was even more attractive because the price escalators in the contract coincide with the key years of Pujols' contract increases.
"When I bought the team, we were losing $20 million a year," Moreno said. "People think we were working on a television deal to sign Albert. We weren't. We had been working on this for years. We had a good working relationship with Fox the previous five years. We spent a lot of time educating ourselves about what a TV deal should look like by comparison with other teams. We were very aggressive. Let me say this: When I bought the Angels, I said we were a Major League team with a little league TV deal. We were 26th of the 30 clubs in media revenues."
A "sleeping giant"
Greenberg always referred to the Rangers as a "sleeping giant." For years, he said he believed Major League Baseball franchises in general to be undervalued, and in no case was that more apparent than with the Rangers. Since arriving from Washington in 1972, the Rangers before 2010 had never won a playoff series. He had heard all of the reasons why baseball couldn't work in Texas, from the heat to disinterest in baseball once the Dallas Cowboys began training camp to free agents not wanting to play there to Texas forever being football country.
Greenberg also knew that the Dallas Fort-Worth area was the fourth-largest television market in the country, behind Chicago and ahead of Philadelphia. Dallas was also something else: It was the largest single-team television market in baseball. That made the team incredibly valuable.
During 2009 and 2010, while the Rangers were in bankruptcy and Greenberg and Ryan were trying to purchase the franchise, two events changed the fortunes of the franchise, and the television marketplace. The first was the Houston Astros and Houston Rockets splintering off from Fox to create their own joint television network with Comcast, in a similar vein to NESN, which broadcasts the Red Sox and Boston Bruins. Losing the Houston market made Dallas even more vital to Fox, which was in danger of not having live sports programming in the two biggest cities in Texas should the Rangers and Dallas Stars form a television partnership, or if Cuban were successful in buying the Rangers out of bankruptcy and forming his own television network.
"It was a big-market franchise that no one regarded as a big-market franchise," Greenberg said. "I remember stepping out of the gate at Rangers Ballpark that faces Cowboys Stadium and thinking, 'That doesn't look like a small market.' There was huge unrealized potential, which carries a certain amount of torque and dynamism that you don't get in a more established market."
The second event created ownership stability. Ryan and Greenberg were awarded the team, and the Ryan imprimatur provided instant credibility to baseball fans. Fans identified with Ryan. They now had their leader, and Ryan -- because the deal Greenberg cut contained escalator clauses over several years, including equity options in Fox -- would not be presiding over a club without the financial resources to realize his vision.
"People were thirsty. I thought the low expectations helped to measure what the opportunity was," Greenberg said. "I spent a lot of time just hanging out in the community. People didn't know who I was. They didn't know why I was asking these questions, and everyone gave me reasons why the Rangers could never succeed at a significant level.
"And then they would speak of a great childhood memory about baseball. They loved baseball, but they didn't think it was safe to care. We wanted them to know we were in it for the long haul, and even more importantly that this franchise belonged to them. Ranger fans didn't want to invest a lot of their hearts into the Rangers because they thought it was going to make them feel like saps, waiting to be taken. We wanted them to feel like they were part of a movement, that it was safe to go into the water."
Daniels cautioned against the mentality that television money would inherently propel the Rangers, as numerous examples exist of high-payroll, on-field disasters. Daniels said he believes in the Rangers internal decision to resist leaping into free agency wantonly, while at the same time crediting ownership with going after Beltre and Darvish three years before the big money from Fox arrives.
"They could've sat back and waited and let us just try to hold on and figure it out, but they didn't do that, and that's big," Daniels said. "By doing that, we could have lost the momentum of going to the World Series twice. Now, we have a good mix. We went out and got Joe Nathan to actually get younger. I know that sounds stupid, considering he's 37 years old, but it allowed us to bring in Neftali Feliz as a 22-year-old starter. These are the types of decisions that are going to allow us to maintain what we have. We don't want to lead the league in payroll. Trust me."
Arte Moreno wanted the next level
Moreno fired general manager Tony Reagins after four seasons at the end of last season and sent himself and team president John Carpino in search of a new GM. They first canvassed a number of teams for permission to talk to their executives and, by Moreno's recollection, flew to interview front-office personnel of perhaps a dozen teams, settling on Dipoto, a former big league pitcher. Dipoto had been an assistant in Arizona and Colorado and worked with the Red Sox, winning a World Series ring in 2004, but had never run his own shop. A day after the World Series, the Angels announced Dipoto as their new GM. Dipoto immediately presented Moreno with Plan A: He wanted Pujols and Wilson.
Moreno was of the mind that Pujols would remain in St. Louis, but Dipoto's conversations with Pujols' agent, Dan Lozano, suggested otherwise.
"Jerry was speaking to his agent. I thought, 'Well, you can wish and you can dream,'" Moreno said. "Then I got involved and spoke with Dan, and I asked, 'Can I speak with the player?' and Dan said, 'When?' and I said, 'Tonight.'"
Moreno also asked his wife, Carole, to hop on the telephone and Moreno recalls her saying, "We're going to get on the phone with Albert Pujols?"
"I'm a fan as well," Moreno said. "So I felt like a little kid."
Negotiations moved quickly. A key to the deal was Pujols agreeing to backload his contract, some of which coincided with escalators in the Fox deal. Moreno was less worried about the size of the deal, because in 2017, when the current Fox extension expires and the new deal kicks in, Pujols will be the only current Angels player under contract.
"We were not overly exposed after 2013 and we had $50 million rolling off of the payroll," Moreno said. "I felt like we were in a perfect position to do this."
Moreno told Pujols the two would be "partners." The contract was for 10 years, but that didn't include an additional 10-year personal services contract with the club for when Pujols retires. When both contracts end, Pujols may potentially have spent more time with the Angels than he did with the Cardinals.
With a week remaining in spring training
The new superpowers begin to circle. "They've dominated the division for a decade. You can talk about 'decline' but they still won 86 games," Daniels said of the Angels last year. "They've got [Chris] Iannetta, [Mark] Trumbo, [Kendrys] Morales and two huge pieces. I have a lot of respect for them."
After two pennants and an opportunity for a third, the surge of energy for baseball in Texas is palpable. "Sponsors are excited. Fans are excited. Season tickets are up again," Ryan said. "I don't know what the ceiling is for baseball here, but I don't think we've reached it yet. It's a good time to be associated with the Texas Rangers."
Moreno says he is "ready to get the season started, so people won't be asking me so many questions about the offseason, and the color of my shoes." In other words, it is time to get down to business. Pujols, facing Texas for the first time since beating it in the World Series, hits a long home run against the Rangers. A week previous, Wilson publicly tweets the cell number of his former battery mate, Napoli -- a prank Napoli and the rest of the Rangers did not find particularly funny. The spring buzz throughout Arizona is that the Angels are stacked.
"This is going to be a thrill. It's an honor to be part of this," Dipoto said. "I remember when I was in Boston and the way the energy in the room escalated when it was Red Sox-Yankees. The Texas Rangers are the team to beat. Our job is to catch them. Every team in the league is trying to catch the leaders. We want to catch them and surpass them. We've put ourselves in position to do it in the offseason, now let's apply it to a 162-game season. Let's not forget: They're the ones holding the trophy."
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