SBJ/Sept. 23-29, 2013/Franchises

Payoff for the Pirates

For Bob Nutting, club’s overnight success was years in the making

Pittsburgh Pirates owner Bob Nutting
Photo by: AP IMAGES


The Pittsburgh Pirates have been the surprise story of the year in baseball, posting their first winning season in 21 years, two Sports Illustrated covers, and marked increases for both home attendance at PNC Park and ratings for game broadcasts on Root Sports.

The road back to competitiveness, however, has been anything but easy for club owner Bob Nutting. Now in his seventh year running the Pirates, Nutting has faced repeated accusations, some from former equity partners in the franchise, that he’s too cheap, too pragmatic, even “too rational” to commit to fielding a winner. But a consistent, multiyear focus on the development of young talent, augmented by opportunistic trades, has given Nutting and the Pittsburgh market the best Pirates team in a generation.

The Pirates are not the only hot-button issue on Nutting’s plate. As president and chief executive of West Virginia-based Ogden Newspapers Inc., Nutting is also serving as chairman of the Newspaper Association of America, leading the industry group precisely as the newspaper business seeks to undergo a historic transformation to a digitally focused enterprise. Nutting additionally leads a family interest in ski resorts, one that includes the Seven Springs Mountain Resort in western Pennsylvania and the recently purchased Hidden Valley Resort nearby, and is an active outdoorsman and conservationist.

Nutting, 51, spoke with staff writer Eric Fisher at PNC Park in Pittsburgh earlier this month, as the club was sitting in first place in the National League Central.

This team showed glimpses the last two years of finally achieving on-field success, but then faded. Did you think in the spring that this would finally be the year the Pirates broke through?
NUTTING:
Since 2007, we’ve been really focused on trying to build a strong organization. It started with the draft. It started with international development. Building up our facilities in the Dominican Republic and [spring training site] Bradenton [Fla.]. We’ve been trying to do that consistently. So what we’ve endeavored to do is build strength at every level of the organization. I saw that begin to impact the major league level last year. Glimpses, as you say. But glimpses, given where we’ve been as a franchise, were not ultimately satisfying. We returned to spring training this year, as we do every year, with the clear goal of restoring the excitement, restoring the pride that a historic franchise in baseball like this deserves, and that our fans deserve. So it’s very exciting to see that now playing out on the field.

Nothing is guaranteed at this point, of course, but what does October potentially look like for this team, operationally?
NUTTING:
It’s going to be new territory for us. The fan excitement is very palpable. The fans have been very active coming out and supporting this team. The energy in the ballpark has been tremendous. To see that get cranked up to the next level, to have the prospect of playoff games at PNC Park, is fantastic.

All-Star Andrew McCutchen is one of many Pirates who came up through the organization.
Photo by: PITTSBURGH PIRATES
What is the potential long-term halo effect of the on-field success this year?
NUTTING:
That’s a very good question. We have not explicitly quantified what we think that impact will be. But we certainly have been able to grow our season-ticket base. We’ve been able to grow the attendance in the ballpark, our TV ratings. And it’s my expectation we’ll continue to be able to do that next year. Obviously, it’s a small ballpark and we have some inherent limitations. And we have to be very careful, and I want to make sure we remain very careful, to be respectful of our fan base with regard to pricing. We’ve had very low ticket prices compared to the rest of baseball. But we’ve tried to be very measured, very careful about increasing prices over time. Do they need to go up? Absolutely. But we’ll try to take very measured steps. And I think that will continue irrespective of a successful finish this year.

Long term, how do you view revenue imbalance in the game, comparing a team like yours with teams like the Yankees or Dodgers?
NUTTING:
Different markets are going to have different sources of revenue and different resources to use. That’s the reality of the game today. It’s been the reality for a long time. What we’ve tried to do in Pittsburgh consistently is never allow that to be an excuse, never allow that to be a distraction, understand what our resources are and deploy them as effectively as we can. Depending on the cycle, that’s been the amateur draft, it’s been international, and currently it’s been focused on the major league club as some of those other opportunities have shut down. We’re never going to have the resources of a New York or Los Angeles. We’ll continue to focus on the resources we do have and deploying them to maximum impact.

So you see no structural impediment to this club competing on a regular basis?
NUTTING:
If we thought it couldn’t be done, if we really thought there was a structural impediment and thought it was hopeless, we wouldn’t do it. And I think we’ve proven, and other markets have proven, that while nothing is easy about it, you can show success with some resource constraints.

Player payroll was at a franchise-record level this year [$79 million]. It’s early, but do you anticipate that increasing further next year?
NUTTING:
I think that’s a fair expectation. It is too early to pick a specific number. But my expectation is, just as we have each of the last several years, that we’re going to be able to push that number upward. I would anticipate next year to be no different. Again, there will always be limitations. But continuing to move forward, I believe, gives us room inside of the payroll we have to put a very competitive club on the field. The goal has always been not to create a short-term spike but create a talent flow into the organization that makes possible a sustainable level of success.

Above: Nutting talks to the team at spring training. Below: Nutting and GM Neal Huntington made late moves to boost the club’s postseason hopes.
Photos by: PITTSBURGH PIRATES
The Pirates just made high-profile acquisitions of Justin Morneau and Marlon Byrd. Were these kind of stretch-drive deals possible even as recently as last year?
NUTTING:
They were strong additions. We did go into this year with the expectation both publicly and internally that we were going to maximize our budget and our payroll early. So these acquisitions were really stretches for us [financially] because it wasn’t part of the plan going in. But I felt very strongly, and I know [general manager] Neal [Huntington] felt very strongly and [president] Frank [Coonelly] felt very strongly that we had a unique opportunity and that if there was a chance to positively
impact the club, we should do it.

Beyond the budget allocation, what is your sense of the kind of statement those deals made to the marketplace?
NUTTING:
I would hope we would never do something like that to make a statement as opposed to having a real impact upon the club. Making a statement was not the goal, but what we have seen is a reconfirmation with our fans that we are indeed serious and that we are in this to win and be as competitive as we can. Frankly, I think we saw some of that in the clubhouse as well. There was understanding, I think, that the front office did what they were supposed to do, and did everything that we could within the rational, and slightly irrational, limits to win.

Looking back to when you first arrived, and with the benefit of hindsight, how significant were the challenges you inherited?
NUTTING:
I had a pretty clear understanding the challenges were indeed significant. Baseball is hard. Baseball in a smaller market is not easier. And we did not have a lot of those building blocks in place. But we did what, I think, was an honest recognition and assessment that we had huge challenges, that they were long-term challenges, and that we needed to be committed to put long-term plans and solutions in place. There is nothing about building an academy in the Dominican Republic, for example, that made the major league club better that year, or the next year, or the next year after that. You can now start to see the flow of talent coming out of the Dominican, directly out of the academy, guys like [outfielder] Starling Marte, having a real impact at the major league level, and now can see the strength inside our farm system. But we knew up front those kinds of things were not going to be short-term impacts. You had to have faith that we, and Neal, were going to have time to see these pieces roll out, and be willing to stay the course. And arguably, it was a tough course at times to stay on. But if you don’t have a long-enough term horizon, that’s when you have huge challenges in baseball, period, and certainly in a market like Pittsburgh. You’ve got to have perseverance to stick through some of the challenges along the way. Neal has done that. The team has done that. Frank has done that. And I think it’s one of the contributors of the success we’ve had this year.

You mention perseverance. How difficult was it to hear accusations, from press, fans, and even former partners, that you were too rational, too measured an executive to ever field a winner?
NUTTING:
I understand that criticism. I respect and understand that perspective. But we have had and still have a belief that we are moving in a direction that can show real success on the field here in Pittsburgh. Having that belief and confidence in the program, in the plan, and frankly, in the people is what helps an organization and frankly helps me roll through some of those darker times.

Were you at some of those darker points leaning on other owners or Commissioner Selig for support?
NUTTING:
Commissioner Selig absolutely has been a good supporter of the club and has absolutely been a tremendous supporter of me personally. His reassurance that we’re moving in the right direction was helpful.

Outside of owners meetings, how often are you in contact with other team owners?
NUTTING:
It’s a very supportive community. We’re obviously competitors on the field, but there’s a lot of commonality in terms of the challenges we face.

Locally, what is the Pirates’ relationship like with the Steelers and Penguins?
NUTTING:
We have a great relationship with the Steelers and the Rooneys. I reached out to Dan Rooney recently, just to remind him how much I’ve appreciated the example he and his whole family have set in terms of having high character, being committed to the community, and having long-term, absolute integrity. The Rooneys have done a tremendous job. And I’m separating them out from the Penguins simply because they’ve been here for so long and they’ve made a long-term commitment to excellence in that franchise, and a long-term commitment to the community. We just broke ground recently on a joint project on a development on the land in between our stadiums. We just announced an office tower that is a collaborative venture between the two clubs.

If there end up being shared dates in October, how do you see that working out in terms of parking and infrastructure?
NUTTING:
I think what we have is a great relationship. Dennis DaPra, who is our general manager of PNC Park, has had a long, excellent relationship with Mark Hart [Steelers director of planning and development]. And I have complete confidence that the coordination between us is going to go fine.

What is the big untapped opportunity still out there for the Pirates?
NUTTING:
PNC Park is a jewel of a ballpark. As we move past 10 years in the ballpark, it’s time for us to step back and look at how we refresh the experience. How do we make sure it stays dynamic and fresh? Whether it’s some of the premium seating areas, whether it’s the food, whether it’s ticket operations, I think over the next five years, as we think about the level of experience, the level of options, I think that’s the next big opportunity for us.

Nutting chats with manager Clint Hurdle in 2011, Hurdle’s first season with the Pirates.
Photo by: AP IMAGES
Based on life cycles of prior stadia, you’re actually approaching middle age in this ballpark.
NUTTING:
Absolutely. There are areas in the ballpark that were appropriately and smartly designed for when the ballpark opened [in 2001], but in retrospect now you would probably do differently. The way people interact now is different. The way people interact with a suite product is different. We need different opportunities for individuals to take smaller suites, smaller options, more social interaction.

That’s been a big wave across the industry, particularly as more common standing areas grow in popularity.
NUTTING:
Yes. And we’ve made some incremental changes in the ballpark already, things like the Bowtie Bar [on the main concourse in the ballpark’s right-field corner]. But as we think about what to do over time with the premium and suite areas, every ballpark built in that era has more inventory than you would build today. So what are the right transitions? We have a real opportunity to make some meaningful improvements.

What is your sense of how the transition to a new commissioner might play out?
NUTTING:
I don’t have any real thought beyond that Bud will be missed. I think he has done a truly remarkable job in a difficult series of times. If you look at what happened in Kohler, Wis. [site of contentious owners meetings in 1993], up through to labor peace, up through the explosion of the PED issue. It’s going to take some time to chronicle the series of successes baseball has had under his leadership. And the next commissioner will step into: one, a sport that is in good shape and has continued real opportunity; two, will have some very big shoes to fill.

Where do you like to watch Pirates away games?
NUTTING:
I love watching games at home [in Wheeling, W.Va.] with my wife, Leslie, and three daughters. Watching games at home is fun, but I also love watching with my dad [Ogden, also in Wheeling]. He’s a longtime fanatic, so whether it’s up here, or at home, it’s great.

How much do you travel with the team?
NUTTING:
I enjoy it and try to do several trips a year. It’s a good opportunity to see various ballparks, and we’ll try to pick several each year. I don’t always travel with the team, of course, because I have other responsibilities here. But I do it, frankly because it’s fun. And I love watching the team play.

Away from the diamond: Nutting’s thoughts
on his resort properties, newspapers


You just added another resort property to your portfolio. How do you allocate your time among your various interests, and has it changed based on what’s happening now with the Pirates?
NUTTING:
It changes all the time. It’s a constantly dynamic situation for me. But fundamentally, my role is to make sure each of the businesses, and the organization as a whole, have a clear direction, clear vision, clear goals and then have really excellent people in place who are in absolute alignment with those goals and that vision. And then my job is to provide them with the tools and resources to get the job done, and to have them be held accountable. Having somebody like a Frank Coonelly here in Pittsburgh or an Eric Mauck, who runs our resort company, helps allow us to have pretty diverse interests.

What was the thinking behind the Hidden Valley acquisition particularly? Were you looking to increase the profile of the resort operations? Or was this deal more opportunistic?
NUTTING:
It was opportunistic. Hidden Valley is a natural fit with Seven Springs. There is a tremendous opportunity to market the two resorts together to drive more economic impact. Taking the two resorts together to the Baltimore and Washington markets, I think we can have a much bigger impact.

On the newspaper side, we’ve obviously been going through a historic schism as the industry moves from print to digital. How do you see that evolving?
NUTTING:
I am very enthusiastic about newspapers overall and being in that role [as Newspaper Association of America chairman]. I’ve been very fortunate to see newspapers in multiple markets of all different sizes. As digital becomes more and more important as a distribution channel, I think what really matters at the end of the day is unique and excellent content, and more coverage of local communities, coverage of local governments, coverage of local high school sports, and so on. Nobody is in a better position to thrive in that transformation than newspapers, assuming they embrace that role. Many of the best operators understand that, and are doing it. Readership and reach for many newspapers is actually greater than it was five years ago. And even with the shift to digital, many print products are still strong. So I’m pretty bullish on newspapers. And I’m really excited about the new investment coming into the industry. To get a [Amazon founder and CEO] Jeff Bezos recognizing the value and unique brand and content position of The Washington Post is great. [Boston Red Sox owner] John Henry is a smart, smart investor and operator. For him to see and take advantage of the value opportunity in The Boston Globe and take advantage of it is also great. These are smart people who are making investments in a business that I think has a real future as it embraces the digital transformation.

Given your relationship with John Henry, did you have conversations with him about the Globe prior to his deal?
NUTTING:
I reached out to him afterwards, but not before for a variety of reasons.

We’ve seen papers go in a lot of different directions on paywalls. Some have implemented them, some have resisted, some have tried metering-based systems, and some have had paywalls only to remove them. What is your sense of paywalls?
NUTTING:
It’s clear there’s no single solution the industry has coalesced around. People are looking at a variety of alternatives. The common theme that matters is that more and more, the industry and our customers recognize that unique content is valuable, and at some point it needs to be valued and paid for in order to continue to generate that content.
                                                                                                                                  — Eric Fisher


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