Merritt Paulson is anything but the norm when it comes to previous owners of the AAA Portland Beavers. He’s young, energetic, and in the office at PGE Park daily since purchasing the Beavers and Portland Timbers, a United Soccer League team that shares the facility.
Paulson, the former Senior Director of Marketing and Business Development of NBA Entertainment, and Manager of HBO on Demand, purchased the Beavers, a San Diego Padres affiliate, on May 21st of this year, and is already aggressively working to push the Beavers and Timbers into the spotlight.
Yesterday, less than three months after purchasing the Beavers, Paulson, Portland Mayor Tom Potter, and PCL President Branch Rickey III held a press conference to announce that the 2009 AAA All-Star Game will be held in Portland. It's the first sign of positive change from the new energetic owner.
“The 2009 Triple-A All-Star Game will be a national showcase for the city of Portland, our rich baseball tradition and our outstanding fans,” said Paulson. “We are honored to be selected by Triple-A Baseball as the host city, and we are thrilled at the opportunity to showcase Portland and our wonderful ballpark during this prestigious event.”
Paulson claims to have been a lifelong Cubs fan, and is the son of Henry Paulson, the United States Treasury Secretary and former CEO of Goldman Sachs, who is a silent partner of Merritt's Shortstop LLC.
He’s also extremely passionate about community outreach. Just after purchasing the Beavers, he announced the creation of the Portland Beavers and Portland Timbers Community Fund with the vision of making the charitable fund the largest of its kind in Triple-A Baseball and United Soccer. To kick off the fund, he donated $10,000 to a local baseball little league team to help them construct a field.
He takes on a market in Portland that is the largest in the Pacific Coast League, yet has lagged behind smaller markets in attendance. The Beavers and Timbers are just now climbing out of ownership controversy and debt. Until recently, neither were profitable due to an aggressive rent schedule. Added into the mix has been a stream of talk about the addition of other major league sports to Portland, all of which have their sights on PGE Park as either an interim or permanent facility. Whether it was MLB in 2003, or now talk of MLS expansion, ownership has had to juggle interest in major league sports with the entertainment value that is offered by minor league sports.
As Paulson energetically walks around the ballpark on the way to his office overlooking an on-going Beavers game, he tries to peer through any openings to see what his new team is doing on the field that night. When we sit down, he's focused on the interview, but he's also glued to the activity on the field, leaping up at one point when the crowd roars.
In the following interview, Paulson talks about how his insight into the ownership process, how his background in the NBA and HBO assisted him in preparing for ownership, the advantages and disadvantages of playing in a large, urban facility, why a name change may be on the horizon for the Beavers, how he views the possibility of MLB or MLS in Portland, and much more. -- Maury Brown
Maury Brown for The Biz of Baseball: You spent four years examining the marketing and researching owning a professional baseball club, when did you first start considering looking into owning a team, and what did you learn out of the research on owning a team?
Merritt Paulson: Not just baseball; there were some other sports opportunities I was looking at as well for sports ownership, but the bulk of the opportunities were for minor league baseball. To me this was an unbelievably interesting business. You know, I’ve got a passion for sports. And ultimately, people can talk about the business side all they want, but it all starts with a passion for the product for many of the people in the industry. In terms of when the process started—really it was about four years ago that I realized I was going to have the opportunity within a certain level – a certain range – to make a foray into sports ownership. At that point, I started the due diligence process, along a variety of different aspect classes and different types of businesses in the industry, many of which were minor league baseball teams, but some other types of sports and agency business as well.
Bizball: Did you ever consider purchasing an NBA D-League team?
Paulson: I looked into the D-League and there were some touring properties that I looked at; and certainly Major League Soccer was something I spent a lot of time thinking about as well.
Bizball: On owning a minor league baseball club… Was it always a case of wishing to be the majority owner at the minor league level, or was there ever consideration of becoming a minority owner of a major league franchise?
Paulson: No, there is no question in my mind that you can have a positive ROI (Return on Investment) in sports ownership and have it be a good investment. But with that said, if I want to maximize my return on capital on “X” amount of money, it would be a very unique “sports” opportunity that you would recommend to somebody to invest their money - there are certainly other areas that people have historically done better in terms of returns. This was about what I have been doing on a day-to-day basis, and having a majority control position was fundamental.
Bizball: You come from an extremely interesting background with your father Henry being a minority owner. I understand he will be hand-off with ownership of the Beavers and Timbers, but what advice has he given you in regards to this endeavor?
Paulson: He had to get comfortable with the business side of it, there is no question about it, and that was a long process, but he is very much hands off. In terms of advice, he is the best source of advice that I have.
Bizball: You also have been involved in broadcasting, with time spent with HBO and NBA Entertainment, working as Senior Director of League Pass. What did you gain from NBA Entertainment that will assist you in ownership of professional sports franchises?
Paulson: I believe that David Stern – regardless of what you might think of the NBA versus other sports – is really one of the premiere sports executives there is. And he is really one of the best sports marketers there is. I was in the marketing world (NBA) and in many ways I was learning from the best; that is certainly something that I took away from it. And, the way they handle their sponsorship side of it and their partnerships; I think they do an excellent job with that! There are a number of best business practices that you pick up. I mean, clearly, any organization is not perfect – and you see there is some learning on the other side of the coin as well - but for the most part, I could not have had a better experience and I think the training was fabulous. As a matter of fact, I would go further to say that the NBA has a group called “Team Business and Operations” that basically consult all the teams in the league in terms of best practices, ticket sales, sponsorship and the way to run a team business, and that was fabulous! To the extent that I interfaced with them; it was very beneficial.
Bizball: What was the deciding factor on the Portland teams? Was it opportunity, the market, or some combination of the two?
Paulson: A combination – no question about it. To me, this is one of the strongest (if not the strongest) markets in AAA baseball. It was an opportunity to take over a business that had a lot of upside left in it. I think there is no question that there is positive momentum for the Beavers and the Timbers over the last couple years; but there have been some bumps in the road. I think in terms of the ability to come in and make an impact, to create value, enhance the fan experience and to get out in the community more; there is a lot of opportunity to have an impact here.
Bizball: Portland is growing rapidly, and with that MLB and the MLS have both looked at Portland as a potential market to either expand or relocate to, with PGE Park being the considered as a permanent or interim facility. Where does this issue fit in with your plans when it came time to purchase, and is it something that is impacting matters as you move forward?
Paulson: Oh, I definitely thought a lot about that … and in my mind you know I would never classify Portland as a “minor league” city. I think the product we are putting out here is a unique product that has a lot of benefit relative to more expensive opportunities, but with that said … MLB … I don’t see as a near-term play here … who knows though, in the long term ( and maybe I am even part of that); but I think MLS actually may happen … there is at least the potential for it to happen and something we are looking at.
Bizball: Are there plans for any MLB exhibition games in PGE Park?
Paulson: I’m working on it. I’m trying to make it happen!
Bizball: Would you ever consider ownership in a Major League club, and in your time examining the market, would Portland suit MLB?
Paulson: Through the right opportunity, yes.
Bizball: Are there plans to rename the Beavers, and if so, why?
Paulson: Well, we’re looking at it. Where we’ve been, it’s been very public over the last couple of weeks just in terms of doing a lot of research with the fans and whether or not there’s confusion between our team and Oregon State. There are a lot of Beavers in the state. You know, a lot of high school teams and the Oregon State team and I think it’s important to have your own brand and your own identity. That said, does that mean we’re going to change it 100%? No. This is based on input that we’re getting. I think that at a minimum we would have a little bit of a re-brand if we kept the Beavers name with the logo and colors that are a little bit more distinct. We are trying to get the best feedback so obviously there are some time constraints. It’s a very important decision and we have to be comfortable with our findings.
Bizball: Are you doing market surveying? What has the approach to the name been?
Paulson: We’ve already had four or five thousand respond. We have been proactive and going out into the community to generate the feedback or we’ve had fans come to our website and vote as well. We’ve been doing focus groups and meeting with our fan advisory committee.
Bizball: What, in your opinion, is the role of ownership of professional sports teams in their community?
Paulson: I think sports is such a unique vehicle in terms of being able to shine light on areas of the community that could use the help. It’s something that everybody relates to. I think that players getting out and making appearances and using the media attention that follows them to really focus on areas that could use a lot of public support. That’s terrific and it’s not all about money, but certainly the fact that we started this community fund is something I’m very enthusiastic about. I think community is fundamental to having sports franchises. I think there are a lot of great examples of teams who are very community minded and civil minded. The San Diego Padres are one of those teams.
Bizball: How do you make the Beavers a destination in a market that has been ruled by the Trail Blazers, and to some extent on the baseball side of things, the Seattle Mariners?
Paulson: We're totally different, and I think it’s all good. To the extent that the Blazers are doing well and riding high, in fact, that’s great for us. This is an affordable family option where people can come and have a different kind of access and a different kind of flexibility for less money and still be able to watch sports played at an extremely, extremely high level. That is unique. Frankly, there are people who are going to prefer that. It’s a little bit of nostalgia to a time when everything wasn’t as corporate in the sports world. Not to discourage MLB or the NBA, but these teams have a real place in Portland and I embrace that.
Bizball: The Beavers are in a bit of different situation than other minor league teams in the sense that PGE Park is quite expansive in size for a minor league park, as well as the facility being located in the downtown core. What are the advantages or disadvantages of playing in PGE Park?
Paulson: Well, it’s a double-edged sword because there’s no question that it’s an advantage to have for fans to be able to make a spur of the moment decision of going to a game or not. The flip side is that you like a scenario where you are creating a stronger set of benefits to strengthen your season ticket base and we are taking a hard look at changing the way we sell season tickets. Far more benefits than negatives. I mean, most teams would kill for a downtown location like this in a city as big as Portland.
Bizball: What changes have you made since coming on as owner, and what plans are there for the future that you might be entertaining for next season and beyond?
Paulson: For one, we’ve been talking about is how we are going to add value to the season tickets. Certainly big events is something that we are looking at. Community funds is a change. I already talked about that. A number of things on the soccer side as well. I know we’re baseball focused here. There’s a lot going on. I need to caution myself to evaluate and not make quick decisions and that’s what we’re trying to do. We're excited about hosting the Triple-A All-Star Game in 2009, and looking forward to other exciting changes in the future.
Interview conducted by Maury Brown on 8/ 4/2007
Transcribed by Bill Jordan and Mike Elsen
Edited by Maury Brown