Colorado Baseball Management, Inc. Business Information, Profile, and History

History of Colorado Baseball Management, Inc.

Colorado Baseball Management, Inc. owns and manages the Colorado Rockies professional baseball franchise. Since its founding as an expansion team in 1993, the team's poor showing has consistently left it out of the pennant race, and it has finished at or near the bottom of its division at the end of each baseball season from the time of its inception as a ball club. The team is controlled by chief executive officer Charlie Monfort and his brother Dick Monfort. FOX Sports Networks and brewer Adolph Coors each own a 14 percent interest in the team.

Beginnings

In 1989, when professional baseball's National League announced it would expand by two teams for the 1993 season, the Colorado state legislature responded by creating the Colorado Baseball Commission to promote Denver as a viable franchise location. The commission's co-chair was Larry Varnell, a Central Bank executive and former minor league ballplayer who had sought to bring big league baseball to Denver since 1977. Varnell had witnessed several failed attempts to recruit professional baseball to Denver, especially in 1980 when oil magnate Marvin Davis came close to getting the Oakland Athletics. This attempt fell short at the last minute, however, dashing the dreams of local baseball enthusiasts.

With another chance to obtain a major league team, Varnell's commission sought to impress the major league's baseball owners, who would select the expansion sites, by getting Denver area voters to pass a 0.1 percent sales tax to finance a new baseball stadium, if major league baseball granted the franchise. The new stadium, which would be financed by both the sales tax and contributions from the private sector, was to be ready by the 1995 season. Much was riding on this show of support, but initial polls in the spring of 1990 showed voter sentiment running against the tax proposal by two-to-one. Given these poll numbers, one state representative suggested withdrawing the stadium issue from the ballot. The reasoning for this suggestion was that it would be better to rework the tax proposal to make it more acceptable to the public than to suffer defeat, which would kill Denver's chances for big-league baseball. Nevertheless, the campaign for the stadium moved forward with a fundraising drive to sway voters. Early in 1990, organizers faced difficulty in raising funds until TV-cable magnate Bill Daniels donated $100,000, which immediately sparked a slew of other donations. By election-day on August 14, 1990, the fund raising drive had raised nearly $500,000, enabling organizers to launch an effective advertising campaign. At the same time, Varnell and others warned that failure meant the end of any chance to bring professional baseball to Denver. The stadium tax passed by a comfortable margin of 54 to 46 percent, positioning the city as a serious contender for an expansion team.

On August 23, 1990, Colorado's Baseball Advisory Committee, led by Governor Roy Romer, designated the Colorado Baseball Partnership to recruit an ownership group. With passage of the stadium tax and devoted sports fans, Denver's civic leaders felt they could offer Major League Baseball everything it wanted. They also believed the franchise would have solid financial backing from real estate tycoon John Dikeou until he abruptly withdrew from the city's bid in July, just two months short of the National League's franchise application deadline. In response to this unexpected reversal, city officials launched a frantic two-week, nationwide search for new investors. By mid-August, the search yielded a new investor group, comprising members who were more conversant with professional sports ownership and management. The new investor group, known as the Colorado Baseball Partnership Ltd, received financial commitments between $80 and $100 million to pay the $95 million franchise cost.

Nevertheless, despite the new owners' experience with the sports industry, some civic leaders expressed concern over the number of out-of-town investors recruited by Governor Roy Romer's blue-ribbon commission. In searching for viable locations that could support new expansion teams, the National League sought situations that could assure strong local ownership and ties to the community. In an interview with the Orlando Sentinel published on October 28, 1990, Don Hinchley, a spokesman for the Colorado and Denver Baseball Commission, said that the city's bid would have failed without the out-of-town investor's involvement. In Hinchley's words, "No one expected the $95-million price tag, no one. The governor's commission looked locally and nationwide. It was clear that they would have to expand the net to get enough money."

The new investor group included six general partners led by businessmen John Antonucci and Michael I. Monus of Youngstown, Ohio, and lawyer and sports entrepreneur Steven E. Ehrhart of Memphis, Tennessee. Antonucci, who operated a wholesale beverage distributor in Youngstown, and Monus, the owner of Phar-Mor Inc., one the nation's leading drugstore chains in Youngstown, in 1986 had together formed the World Basketball League, a professional league for players six feet five or under. Ehrhart, a native of Colorado, was commissioner of the league and former executive director of the United States Football League before it went defunct. Together, the three partners had considerable experience in building and operating franchises, in addition to negotiating player contracts, product sponsorships, stadium leasing, and cable television deals. The other general partners included David G. Elmore, owner of a Colorado class AAA farm club of the Cleveland Indians and four other minor-league teams; Carey S. Teraji, founder of a Denver computer software firm; and New Yorker Michael Nickolus, whose several businesses encompassed television production, construction management, sports marketing companies, and a Class AA Southern League team, the Memphis Chicks.

In addition to some local businessmen, the investor group also comprised nine limited partners, including such Colorado companies as Coors Brewing Company of Golden, Hensel Phelps Construction Company of Greeley, KOA Radio in Denver, NW Transport Service Inc. of Commerce City, and the Rocky Mountain News of Denver.

Denver Selected as Expansion Site

On July 5, 1991, the National League's twenty-six club owners unanimously approved Denver and Miami as the sites for the two expansion teams. With league president Bill White in attendance, Denver team officials immediately identified their team as the Colorado Rockies, which would join the Western Division. The long march toward expansion had been initiated by Peter Ueberroth after he became baseball commissioner in 1984. For various reasons, the process stalled until a committee of United States senators, including those from Colorado and Florida, began pressuring baseball officials and owners to expand. The concept of adding teams met initial resistance, however, from some officials and owners who were concerned that it would dilute the level of talent. Nonetheless, in 1990, the National League began the process of selecting two new teams in earnest, selecting six finalists out of applications from eighteen prospective ownership groups from ten cities. Of these, Denver and Miami won over Washington, Buffalo, and two Florida cities, St. Petersburg and Orlando. As part of the arrangement, both teams were to have minor league teams by 1992 and select 36 players each in an expansion draft. At a July 5, 1991 news conference, the Rockies ownership displayed the team logo--a high flying baseball against the backdrop of the Rocky Mountains. The team would play in Mile High Stadium, home of the Denver Broncos of the National Football League, until the new baseball stadium could be built in downtown Denver. The new stadium was to be called Coors Field after local mega-business Coors Brewing Company, which had signed a $30 million deal with the club for equity and major promotional considerations. The new stadium was slated to open for the 1995 season. The Colorado franchise also negotiated an $8.5 million agreement with the Rocky Mountain News.

In addition to public and private financing for a new stadium, other factors contributed to Denver's selection for an expansion team, including an ownership group that raised about $140 million for a franchise, the potential appeal to an eight-state area, a large television market, a rapidly growing population, and a rich tradition of major fan support for professional sports.

Ownership in Colorado Rockies Partnership Shifts

In August 1992, the Rockies owners met to reorganize their financial and ownership structure after vice-chairman Michael I. Monus was accused of embezzling funds and falsifying profits at Phar-Mor Inc. The alleged fraud compelled Monus and his father, Nathan, to give up their approximate $12.5 million interest in the team. Monus's long time partner, John Antonucci, the Rockies' chief executive officer, and his father, Jack, also surrendered a portion of their stock. While the elder Antonucci sold all of his shares for $2.5 million, the younger sold the majority of his interest for $5 million. The partnership accepted John Antonucci's word that he was not involved in any criminal activity with Monus, but it nevertheless expressed a readiness to take control of management.

Because of these events, the controlling interest in the team underwent dramatic change with four Colorado limited partnership investors--Jerry McMorris, owner of NW Transport Systems, Inc; Coors Brewing Company; Denver entrepreneur Orel Brenton; and Charles Monfort, chairman of a meat packing company--agreeing to purchase at least $15 million of the $21 million in general-partnership stock. Although John Antonucci remained as general partner and the team's CEO, under the new arrangement both he and club President Steve Ehrhart no longer exercised complete control of the team's policy and management decisions, which now rested with McMorris, Coors, Benton, and Monfort. As a result of this restructuring, the general partnership that began with the predominance of two Youngstown, Ohio, families passed to local ownership.

While these matters were transpiring, the ownership chose Tucson, Arizona, as the Rockies spring training home, signing an agreement with the Pima County Sports Authority for the club to play its spring training games at Hi Corbett Field. The club also announced its 1993 ticket prices, seating locations, and season ticket packages, while signing a five-year deal with local station KWGN-TV to become the Rockies exclusive television broadcaster. Between early June and late October 1992, the Rockies made its first draft pick (pitcher John Burker from the University of Florida), unveiled their traditional uniforms (home, away, and Sunday alternative), broke ground on the future site of Coors field, and signed Don Baylor as their first manager. By early October, the Rockies had sold nearly 25,000 tickets. On November 9, the partnership completed its acquisition of the franchise by paying the $95 million franchise cost.

In January 1993, the partnership restructured the front office, designating Jerry McMorris as chairman, president, and CEO, and Oren Benton and Charles Monfort as vice-chairmen. On April 5, the Rockies played their first regular season game at Shea Stadium, where the New York Mets' Dwight Gooden pitched a three-hit shut out.

Rockies' Owners in Action in the 1990s

Nevertheless, from the beginning the Rockies set attendance records on their home turf, immediately quieting all criticism surrounding Denver's selection for big league baseball. On April 9, 1993, the Rockies hosted their first game against Montreal at Mile High Stadium. Before a record setting crowd of 80,227, Eric Young hit a homerun to lead off the bottom of the first, helping the team to win 11 to 4. By May 9, attendance had already reached one million in just seventeen home dates. By June 20, it cracked two million; by July 28, the Rockies surpassed three million; and by September 17, the club passed the 4 million mark, breaking the single-season attendance record. On concluding their inaugural season on October 3, the Rockies had scored the most wins by a National League expansion team.

Throughout the remainder of the 1990s, the partnership was able to survive Oren Benton's bankruptcy and prospered as a fan-focused baseball club. The team concerned itself with building the franchise, drafting and trading players, playing before sell-out crowds, and competing in the National League's Western Division. On April 26, 1995, the Rockies inaugurated Coors Field with a dramatic win over New York after Dante Bachette hit a three-run homer in the 14th inning. To cater to the fans, the new Coors Field offered an array of upscale items, including an onsite microbrewery, specialty coffees, and local branded foods as well as traditional ballpark fare. The sports venue also provided a playground and food court for children. Also in 1995, the team won the wild card in their division, their first and, to date, only post-season appearance. They lost, however, in the first round of the playoffs to the Atlanta Braves.

In 1996, the Colorado Rockies and its owners denied charges that they ostracized and defrauded Stephen Kurtz, a Denver accountant who owned a minor interest in the franchise. Kurtz, who helped start the Colorado Rockies at the urging of Governor Roy Romer, claimed in a lawsuit that he was denied the same privileges given to the other owners, that he was owed nearly $25,000, and that the club's general owners misallocated over $2 million. The defendants in the suit included Colorado Rockies Baseball Club Ltd.; Jerry McMorris, club president and principal investor; Colorado Baseball 1993, the team's general partnership; and Colorado Baseball Management Inc. The defendants filed a counterclaim, contending that Kurtz was consistently granted all lawful rights and obligations due to him stemming from his nonvoting economic interest in the team.

In 1999, the Colorado Rockies once again topped the major leagues in attendance, drawing 3,481,065 to Coors Field. The team had won the attendance race every season since the franchise started in 1993.

Rockies Lose Momentum in the 2000s

In 2004, an alliance emerged between Australian born media mogul Rupert Murdock and Charlie Monfort, the majority owner of the Colorado Rockies. In July, the two signed a deal, providing that Murdock's Fox Sports invest $20 million for a 14 percent limited partnership stake in the Rockies. The cash infusion rescued the team's owners from having to cover the team's capital needs for a second year running. At the same time, Murdock's investment represented a sweetheart valuation, indicating a franchise valuation of only $142 million, which was less than half of what investment specialists in the sports industry estimated the team to be worth. Forbes magazine, which published annual valuations of major league baseball franchises, valued the Rockies at almost $300 million in 2004. Murdock therefore got about 50 cents on the dollar for a share of the team. As part of the deal, Murdock also agreed to spend $200 million over ten years to broadcast up to 150 Rockies games each season on Fox Sports Net Rocky Mountain, which was battling a rival network, Altitude, for local sports broadcasting rights and revenue.

Despite the Murdock deal, as the summer of 2005 approached, it was questionable whether the owners under the principal control of the Monfort brothers had enough capital to operate a successful major league team. Both Charlie Monfort with a 27 percent stake in the team and his brother Dick, with 19 percent, had emerged in the lead ownership roles after others had either sold their stakes or were ousted or discredited. The ownership had suffered major loses in the previous four years with the team's lackluster performance on the field and declining attendance. Much of the difficulty stemmed from poor personnel decisions and ill-fated signings. In 2005, as the Monforts looked to the club's future, it seemed apparent that they would have to decide whether to elevate their financial ambitions to put the team back on a competitive footing or to sell their majority stake to deep-pocketed investors, who could plow major resources into the franchise.

Principal Competitors: Colorado Avalanche; Colorado Rapids; Denver Broncos; Denver Nuggets.

Chronology

• Key Dates:
• 1989: Major League Baseball announces it will expand by two teams.
• 1990: Colorado Baseball Partnership is designated to recruit a new ownership group.
• 1991: The National League designates Denver as an expansion team.
• 1992: Ownership group restructures.
• 1992: Ownership group acquires the Rockies franchise.
• 1993: The Rockies play their inaugural season.
• 1993: The Rockies set fan attendance records.
• 1995: The Rockies open Coors Field.
• 2004: Charlie Monfort and Rupert Murdock sign an investment and broadcasting deal.