The Management System of The

The Management System of the

Presented by: Beer and Associates Karen Amado John Boyle Felicia Kasim Kent Lee Jeremy Litwin Justin Ribeiro Jennifer Wagner

Management 380 Professor Marty Fletcher November 27, 2000

Table of Contents 1.0 History 2.0 Management System 2.1 Planning 2.2 Organizing 2.3 Controlling 2.4 Influencing 3.0 Organizational Goals

1.0 History The Seattle Mariners were founded 23 years ago, back in 1977. The team was an expansion team, placed there by Major League Baseball, with the feeling that a budding economic and growing region needed a professional team. The team played its first 22 years in the historic Kingdom, which due to its age and structure was later torn down in early 2000. The stadium housed the team’s first game on April 6, 1977, and 9-0 loses to the then California Angels.

Any speculation that the team could draw numbers in was stomped rather justly that first game, drawing over 57,000 fans. Although the Mariners finished dead last that year, it was starting point not only for baseball in Seattle, but also for management to keep baseball in Seattle a reality.

From high priced players, to baseball operation changes, to managers that have answers to others that do not, the Seattle Mariners have seen their management both add value to the playing ability of the team, and also take it away.

Many changes have happened since, with the building of a new stadium to house a now much improved Seattle Mariners baseball club, and increased revenues across the board. It was however not until recently that the Mariners really in fact begin to find their niche, a place in the heart of fans, and a place in the heart of people’s wallets.

Revenue has seen substantial growth in the late 1990’s, with ticket sales increasing every year since 1994. Although this increased revenue from ticket sales has helped the mariners both get a new stadium and continue to keep some its franchise players, it only first posted a profit in 1999. It’s taken some 22 years to show a profit in Seattle. Making revenue in baseball is not easy, as the Seattle Mariners found out early on.

2.0 Management System The management system that the Seattle Mariners use is anything but easy to understand. With departments ranging from Legal Affairs to Baseball Operations, the Seattle Mariners have a section, and department for just about everything. Each department reports to the board of directors, yet each acts as their own small subsidy, doing what is necessary with what resources the board has given them to use. Below is a broad diagram of the management structure of the Seattle Mariners.

Board of Directors

Baseball Ballpark Corporate Finance, Legal & Communications Operations Operations Business Administration, Governmental & Sales Merchandising Affairs

While the structure looks fairly simple on a broad level, it is anything but that on a deeper level. From Vice Presidents to coordinators, from managers to the administrative assistant, the underlying working organization that is the Seattle Mariners is very complex, each part doing what is needed to be done to get not only a team onto Safeco Field, but also to get food into the stadium, fans into the seats, and shirts on those fans.

To get a better picture of the inner workings of the Seattle Mariners, we will now look into the subsystems of management, highlighting the various attributes that make the Seattle Mariners both unique to the model, but also allow it to fit the model.

Overall, we have narrowed the structure down to four sections that take significant advantage of each of the subsystems. These areas are: Baseball Operations Stadium Operations Marketing Minor League Operations

2.1 Planning The planning subsystem is a rather large part of the organization as a whole. Every section of the organization plans on one level or another, but specifically the Seattle Mariners tend to focus on the four areas previously mentioned. Planning takes place in the Seattle Mariners organization of meeting both team goals, and several individual department goals. An example would be in 1998, when the marketing department blew away its goal of 4 million in advertising sales for the yet unopened Safeco Field. Goals like these are set constantly, giving people the need or want to accomplish them, because of certain bonuses. (To be later discussed in the influencing section) Goals are broken down into departments, but one main goal remains in place, which each department strives towards. This goal is to field the best ball club possible, which requires a great amount of capital, which of course requires a great amount of planning. Take for instance the plans to build what is now Safeco field.

In July of 1999, Seattle Mariner baseball celebrated the opening of its new baseball stadium, Safeco Field. Eager players and awed fans rushed to the games and saw the Seattle Mariners play baseball outdoors for the first time in a long while. But while all the celebrations and exciting baseball were going on inside the ballpark, it became a well- kept secret just how well this operation was planned out, and how the planning aspect was a major part of the reason why the ballpark opened on time. Well-kept until now.

The first part of planning any major endeavor is stating the organizational objectives. What does the company want? In this case, what do the Seattle Mariners as an organization hope to obtain? Well, to answer that question, it is important to realize an important fact about the Kingdome, the previous baseball stadium the Mariners inhabited; it sucked. To be more specific, there were many problems with it. First of all, the Kingdome was an indoor stadium, which used Astroturf, a substitution to real grass. Secondly, it held no appeal to fans. While the Kingdome was an adequate place to watch baseball, it was one of the older ballparks in the league, and many newer ballparks, like Cleveland’s Jacobs Field and Arizona’s Coors Field, were making the Kingdome seem less than subpar. So the Mariners’ main objective was to build a new ballpark that was outdoors. They figured that if the Mariners had a new place to play, revenues would increase. Revenue increase is a good thing. Next, they had to make a few decisions. For instance, they had to decide whom they would trust to construct this stadium. First they had to choose a company that had experience in creating baseball stadiums. Given the public interest in the project, plus the sheer cost of the project, putting the future Safeco field in the inadequate hands of an amateur would not have been a splendid idea. They chose Hunt-Kiewit, a combination of Hunt and Nichols construction, and Kiewit Construction company. Another decision was deciding where the field would be built. There were two options. The first option was to implode the Kingdome, and rebuild the new stadium on the same grounds that the Kingdome lie upon. The second option was to find another plot of land on which to build the field, and implode the Kingdome after Safeco was built. Since it would have been very difficult to find a temporary location to play during the transition time of the Kingdome imploding and Safeco being constructed, on September 9, 1996, the Washington State Major League Baseball Stadium Public Facilities District selected a site south of the Kingdome for the Mariners’ new Ballpark (Ballparks).

Next, there were some planning decisions that needed to be made regarding the technical aspects of building. Firstly, the ballpark was constructed over one of the city’s major sewer lines. The Elliott Bay Interceptor, 96 inches in diameter, runs through the site where Safeco was supposed to be built. Original plans were to remove the sewer, but that would be extremely costly. Instead, an engineering analysis showed that if they carefully placed piles, which are a cost-effective means of supporting buildings in alluvial deposits, within three feet of the interceptor, and then cover the piles with a casing, then building the field there would work (DJC).

Another problem was trying to figure out how to drive a reasonable number of piles deep enough to hold up the stadium. The piles at Safeco field were therefore designed to support a load of 300 tons each, and had to be driven as deep as 90 feet to penetrate some very dense glacial deposits (DJC).

Because of Safeco Field, the Mariners posted their first profitable season in team history in 1999, but profits like these do not happen overnight. They take a lot of work, a lot of time, and a whole lot of planning. Besides such a large project as a stadium, planning also occurs in the marketing department.

In the marketing department of the Mariners organization most of the planning takes place during the off season. During this time the marketing team works on various functions such as: creating a slogan, placing advertisements, scheduling day of game promotions, giveaways, and working with sponsors for the next season. The first goal of the marketing team in the off season is to establish a budget (Short). This budget is broken up into various sections including everything from video operations game day staff and pre-game entertainment to opening night and downtown decor. Basically every marketing activity done by the Mariners has a place in the budget. In particular to this year, the marketing Budget will include expenses for the upcoming All-star game that we be hosted at Safeco Field (Bianchi).

Once the budget has been established the next planning function is to determine the team’s slogan (Short). Last year’s slogan was Sodo Mojo. Sodo is the business district Safeco Field is located in and Mojo translates into magic. Overall Sodo Mojo is the feeling people get while watching the Mariners (Bianchi ). The slogan is important because it is an intricate part of imaging of the Mariners team. The goal of the marketing department is to create a slogan that is memorable in fans' minds and to make it a part of their advertising for the year. Once the slogan is chosen it is included in radio and TV advertisements, various promotions, and it also becomes a part of the merchandise.

With the slogan chosen and the budget for each department approved, the next step in the planning process is to schedule and set up day of game promotions and advertising. Day of game promotions can be anything from pre-game entertainment and performers of the national anthem to managing the hydro race on the Real Networks’ screen and setting up the pre-season Mariners’ Fan Fest (Bianchi ). All of these various types of promotions are planned for and scheduled during the off-season and as complications arise during the season the Marketing team deals with them. The marketing department stays active during the season as well as in the off season to ensure that various promotions are completed successfully.

Even though most events during the season are thoroughly planned for, the Marketing department still faces some challenges in setting up promotions. One of these challenges is setting up performers in the correct area of the ballpark. Sometimes it is difficult to choose a place where they can be heard and seen effectively and they will not disrupt any other pre-game activities. Another challenge faced by the department is putting together promotions with sponsors. The challenge there is to “provide the sponsor with the correct vehicle to get their message across” (Bianchi ). Another problem faced by the department is scheduling events during the post season. During the post season there is much uncertainty as to when games will be played and at what times. This makes the scheduling of events extremely difficult and everything must be planned with very short notice. Also during this time everything must run smoothly since it is a high intensity time for the organization and if anything goes wrong the mistakes are magnified.

Basically, the Mariners marketing activities put a strong emphasis on the planning aspect of their organization. The marketing team both plans and controls how promotions are created and carried out throughout the season.

But besides planning in the off-season, planning also occurs during the season, such as in the plans for a post-season appearance. Ticketing becomes a major issue, with distribution channels to be chosen, and fairly distributing those tickets to who deserves them first. In distributing the tickets, the office grants priority first to seasonal ticket holders, second to its employees, and the last remaining 10,000 tickets will then be opened to public sale. These tickets will usually sell out in less than one hour. Mariners' fans would wait overnight in long lines just to buy one ticket and most times, many will come up empty handed. It is very tricky trying to plan something so delicate as post season ticketing, when the number of games played is unknown, and the fact that many tickets are already distributed due to long standing policy, or other contracts. In order to be a successful franchise, there is a great deal of planning that must go on. Every team starts with a simple plan; winning. If a team is winning, fans will pay money to go to games, and if attendance is high, the team will be profitable. Since winning is the overall plan, baseball operations people spend endless amounts of time planning on how to go about making a winner.

Like any company, the Mariners are always looking for ways to improve themselves. In baseball operations, that means going out and making trades and signing free agents that will help the team win. And like other companies, the Mariners must do this while staying within a predetermined budget. During each off season, Mariner’s financial advisors work along side baseball operations in determining how much money the team can spend on payroll. Once the budget is planned out, the team looks into improving the team for the next season.

While the final decision on payroll is made by the Japanese ownership group, it is the job of General Manager Pat Gillick, and team Chief Executive Officer Howard Lincoln to make the decisions on how the money is spent (Short). During the off season, the team looks at free agents who they think would be able to help the Mariners improve. Throughout the season and off seasons, baseball operations talks with other teams to try to make trades for players who might add something to the team.

During the season, many other factors are taken into consideration. From planning how many employees to have staff the stadium, to whom to pull up from the minor leagues, these types of functions are carried out every day, by many people. The structure of the organization allows people in not so high positions make critical decisions, since they have more information about the given situation then upper level management.

2.2 Organizing Being a major league baseball team means a great deal of organizing. Organizing in baseball can boil down to two main ideas: Local Remote

Locally, you have organizing of stadium operations, and local baseball operations, and other affairs. Remotely, you have organizing communications with both other teams, talking to sponsors who may not be based in Seattle, and minor league operations. Although both fall under the Organizing heading, each is very different in implementation of management.

Stadium operations have not always been a problem for the Mariners. When they were still in the Kingdom, management of stadium operations and personnel were really a matter that was dealt with by King County, since they owned the stadium, and subsequently managed it. While the Mariners kept some control, it was not until a move to Safeco field, that management of staff and field personnel came in house. Because of this, expenses in the area jumped from just over 3 million in 1998, to over 9 million in 1999.

Currently, stadium operations employ nearly 2000 seasonal employees, from ticket takers, to parking attendants. This does not include food services and cleanup crews, who are outsourced to other companies. But to organize 2000 seasonal employees, as well as outsourced contractors can be an organizational nightmare.

What the Mariners do is use somewhat of a virtual scheduling board. It allows seasonal stadium employees to check their schedule, by simply entering a User ID and password, and it allows them to both check, and rearrange their schedule. This cuts down on confusion and possible problems, by having the system totally virtual. It also allows the various managers to better see who is available to them at any given time. It allows for scheduling reporting, which allows for my timely reporting, and better organization of data.

Besides local stadium operations, you have the ever-increasing need of player development, which in turn requires remote organizational skills of minor league baseball teams. Minor league baseball is not big money business. Because of this, organizing minor league clubs to create great ball players becomes increasingly hard. The Seattle Mariners spent just over 8 million in 1999 on player development and scouting. The increasing cost of travel, to minor league teams that are not near major markets, is a down side, and the continual reporting of progress reports to major league teams has become increasingly less important, with teams turning to free agents more than their minor league teams.

One case in point is the Tacoma Rainiers, who may lose affiliation with the Seattle Mariners due to the proposed selling of the team. Tacoma Rainiers are awaiting on whether they will be sold or be placed on the Class A baseball league. Awaiting the results could jeopardize the Class AAA baseball at Cheney Stadium and its affiliation with the Mariners. The Rainiers will continue to have a contract with Cheney Stadium until 2005, however their contract with the Mariners will end by 2002. Therefore, if a decision will not be made in the span of two years the Rainiers will have to end their relationship with the Mariners.

It is a manager’s nightmare of losing a team so close to the club. In this case, if you lose the team, you have to organize for another team to be an affiliate. You have to change current plans, organize for players to be moved to other teams temporarily, and set up new contracts.

Another fact of organizing in baseball operations happens to trying to organize towards the given goal. It is becoming increasing hard to keep players at bay, with heightening salaries and tastes. You have to organize to keep your players happy. Whether it’s setting up a hotel, or setting up a goodwill trip, it is becoming increasingly hard to win ball games with players that want everything. To organize towards that, to market, to prepare, to get it done, has become increasingly hard. Overall, organizing in the Seattle Mariners organization can only organize its minor league operations to work on a so string budget, allowing judgment calls to be made by coaches at those teams. It’s a testament to planning, having the right people in the right positions. 2.3 Controlling Unfortunately, the one thing everyone in baseball wishes they can control, is the thing that they cannot; whether you win a game or not. Although this one thing cannot be accomplished, it can be strived to, to have a capacity to control the out come of the organization. Since this organization's goal is to both make profit, and at the same time win baseball games, it is increasingly hard to do so. All the planning that an organization can do can be all for not. In the case of the Baltimore Orioles, spending millions more than any other team to bring in the best players, spending more money on a stadium, spending even more money on bringing in the fans, yet they still could not win games. This one point, controlling the outcome, knowing that the club will make and will win games, is controlled really by one area, baseball operations.

Once baseball operations has a plan to make the team better, they need to take actions to see that these changes happen to make things go as planned. In the planning process, the team determines what is needed to make the team better. They look at what they currently have, and find where the holes are and how to fill them. Once these decisions are made, it is time to choose which available players would be best suited to fill the teams needs and go out and acquire those players.

In terms of free agency, the Mariners spend the off season looking at the players who are available, and decide if they want that player. If it is decided that a player would help the team, baseball operations looks into what it would take to sign that player. The biggest issue in any free agent signing is money. A team must decide if a player is worth the amount they are asking, or in other words, will the team be better off giving him the money. Take for example the case of Alex Rodriguez. It is believed league wide that he will sign somewhere for about $20 million a year for about ten years (Mariners Want A- Rod, But Keep Options Open). This being the likely number, the team looks to its finance department to determine if over the next ten years, the Mariners will make $200 million more with Rodriguez than without him. If a player takes up too much payroll by themselves, then the team will likely be worse in the long run because they cannot invest the money needed to have enough quality players to stay competitive. If and when the decision is made to pursue a free agent, front office people such as Gillick and Lincoln set up meetings with the players and their agents to try to come to a contract agreement.

In addition to free agency, teams often look to trades to try to better them selves. Trades usually occur when a team is well stocked in one area, and lacking in another. For the Mariners, the area they have well covered is pitching, but they are a little lacking in offense. It is baseball operations job to look at this and find a way to turn the excess in pitching into a better overall team, and they can do this by trading. The GM (Gillick) looks around at other teams and finds some that are looking for pitching, and have some hitters to spare. Then, if a deal can be worked out, both teams will be meeting that goal of bettering themselves. Another reason for a trade is that player's contract is going to expire soon, and the team fears if they do not move the player, they will lose him for nothing when the contract runs out. This was the case last winter for the Mariners with Ken Griffey Jr. Last November, Griffey said that he would not resign with the Mariners after the 2000 season, and that he wished to be traded. Since Griffey was under contract for the 2000 season, the Mariners had the choice of letting him play out the last year and leave, or trying to trade him so they get something in return. As everyone in this city remembers, they traded him to Cincinnati for Brett Tomko, Mike Cameron, and other minor leaguers. No one in baseball would tell you the Mariners got a full value for Griffey, often considered the best in the game, but they did succeed in getting some good players who look to help the club down the road. It is through both trades and signing free agents that the Mariners make their plans of success in to reality.

2.4 Influencing Influencing has been a part of baseball for sometime. Influencing in the front office has however not been. That has since changed from the American pastime of the 1950’s, to the marketing driven teams of today. Influencing takes place in every aspect of the organization, from stadium operations to baseball operations, to marketing, to legal affairs. Stadium operations have an interesting influencing technique; offer free stuff to seasonal employees. With turnover rates around the league for seasonal employees topping 60%, the Seattle Mariners offer incentives to their seasonal employees that instead of costing the team more money, is actually saving the team money and time in training. These include things such as four free tickets a month, free ferry and bus passes and anything that they give the crowd, they get also.

Incentives such as these are a perfect example of how influencing can be used in an organization to keep staff happy, in the Mariners case, seasonal employees. Influencing staff to work better, and to stay with the club is crucial to keeping the raising costs of training down to a minimum.

This however is not the only section of the club that uses influencing in everyday operations. Baseball operations also use it to convince players, coaches and others within the framework of fielding a team. From offering bonuses based on player performance, to offering contract extensions, baseball operations are typically about influencing players to performance highs.

But even outside the club, influencing people to attend games is a crucial part to achieving goals. The Mariners’ organization relies on its income from sponsors and fans and influencing these groups is essential for the existence of the organization. It means that the management of the organization has to develop a very attractive business plan that creates a foundation on how to attract fans and sponsors. The Mariners’ influencing aspects can be divided into four main categories: advertising and media, players and official operations, non-profit activities, and infrastructure. The Mariners use television, radio, billboards, and Internet as their primary advertising media. In 1999, Mariners had spent the total of $ 6,956,000.00 for combination of television, radio, billboards, and Internet advertising channels. If we compare in the amount that Mariners had spent in 1995, $ 2,819,000.00, the amount that Mariners spent in 1999 had increased about 150%. This fact shows us that advertising is a very important aspect to attract fans and sponsors. The most recent Mariners news is planning to add an additional Japanese player. After a successful season with Kazuhiro Sasaki, the Mariners are bidding on another Japanese superstar. This strategy is a very smart move. In this strategy, the Mariners are trying to capture the Asian fans. The Mariners have been the most famous American baseball team in Japan and they have been successfully closed a million dollar contract with Japanese television for the right to broadcast live games when Kazuhiro Sasaki is pitching.

After a very beneficial and successful season with Sasaki, the Mariners are bidding on Ichiro Suzuki, a Japanese superstar for around $ 13 million. From this fact, we can analyze that the profit that the Mariners made last season with a Japanese player, was extremely beneficial for both financial and performance reasons.

Another strategy the Mariners are looking at is trying to persuade Alex Rodriguez to renew his contract. As we know it is very important for the publicity of a sports team to have a superstar. By having Rodriguez as a part of the Mariner’s it is an attention getter for baseball fans. To put is simply, having him as a part of the team increases the Mariner’s popularity overall. Acquiring and keeping superstar players is very important for the organization in both financial and performance reasons.

As we move along, we have to remember the official aspects as well. Baseball team managers play a very important role in a sport team. The Mariners are also doing a great job by renewing manager Lou Piniella for another three year contract. Piniella has been successful this year by taking the Mariners to the playoffs. Fans and supporters are completely happy with this decision to renew his contract because they believe that Piniella will continue to be a successful manager and give the Mariners their best hope of reaching the World Series.

Mariners Care, a non-profit foundation, is an organization that involves in youth development programs. Involvement of players, officials, and sponsors is very beneficial to attract youth fans and “untouched” segments. “Untouched” segments are segment that has not been covered by advertising channels and the media. By reaching out to the youth in this way the Mariners organization can appeal to a broader fan base which, would not be possible through media efforts alone.

Building Safeco Field, which carried a price tag of over $200 million, is start pay off for the Mariners. Ticket revenues have increased from $40 million to $52 million, marketing and merchandising from $2.9 million to $5.2 million, and concessions and parking nearly doubled, from $4.97 million in 1998 to $9.5 million.

From this fact, upgrading the infrastructure is also an essential element to attract fans and sponsors. With the new ballpark, fans are more likely to come to the game instead watching it in front of their televisions. The construction of the new ballpark has ultimately has lead to the increased investments from sponsors. Sponsors are also likely to spend more money for their advertising expenses because the sponsors believe that their advertising will be seen by millions of people, both fans that come to the ballpark and fans that watch in front of their television.

3.0 Organizational Goals The two main objectives of any major league team, the Mariners included, are winning, and making profits. While they are two different goals, they are interrelated in that a team cannon win without money, and they will not make profits if they are not winning.

The major shift in baseball since the early 1980’s has seen two player strikes, and skyrocketing salaries. Baseball management has taken a 360 turn, with increased marketing and increased pricing, in response to increasing costs. In a booming economic period, the Mariners are now just showing signs of profit, and with that are beginning to win games. The key to making profit in baseball however is not winning games. This shift in baseball ownership philosophy has seen both its ups and downs across the league. Very few teams make any profit in (as few as 8 teams in 1999 speculated Forbes Magazine), and the increased cost of so many factors leads teams to attempt reorganization, or ax operations.

The Seattle Mariners have however stuck with their original goals, striving towards winning baseball games and making profits. Over time, their operations have increased, as well as their overall costs. But this jump in expenses has seen an increase the effects of smart management. They have started to turn a profit, management is handling the club very well since its move into the new stadium. Marketing goals in advertisement revenue are increasing at record rates, and the team is beginning to draw a steady stream of supporters, and with that a higher per game ticket profit. Works Cited Ballpark.com www.ballparks.com/baseball/american/seabpk.htm. Date cited November 26, 2000 Bianchi, John. Promotions Coordinator for the Seattle Mariners. Interview via email on Novemeber 21, 2000. DJC.com www.djc.com/special/safeco/10053876. Date cited: Novemeber 26, 2000 DJC.com www.djc.com/special/safeco/10053880. Date cited: Novemeber 26, 2000 The Seattle Times; “Mariners Want A-Rod, But Keep Options Open.” November 12, 2000. D5. Short, Marianne. Vice President Human Resources for the Seattle Mariners. Interviewed on Novemeber 18, 2000.