Baseball Seeking Ways To Cope With Recession

Like just about every business leader in America, the owners of Major League Baseball teams are looking for new ways to survive during the economic downturn. Arizona Diamondbacks CEO Derrick Hall talks to host Robert Smith. The youngest chief executive in the majors, Hall is seen as the leader of a new generation of fan-first CEOs.

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ROBERT SMITH, host:

There is a baseball team that can provide some guidance to all those cash-strapped clubs: the Arizona Diamondbacks. In the Phoenix area, job creation is way down. Foreclosures are rampant. Yet the Diamondbacks still have plenty of folks signing up for season tickets.

Derrick Hall has been the team's president since 2006, and he has a pretty simple plan. Keep player salaries low, and treat fans to an affordable, enjoyable experience. For some teams, that's pretty radical thinking.

I asked Hall about why the game is more susceptible to an economic downturn now than in years past.

Mr. DERRICK HALL (Chief Operating Officer, Arizona Diamondbacks): With our TV deals now, so many of our games, if not all of them, are on television. So if you're giving somebody the option of staying at home with a brand new, beautiful, hi-def TV flat screen and have a real good seat in the house right behind the pitcher or the catcher, yeah, it sometimes does compete with you. But it's important for all of us to have those TV deals so that we can paint the picture, show how exciting it is in person, and invite people to come out to the ballpark.

SMITH: And these days, people are probably paying for that TV on credit and are a little bit worried about their finances. Is that keeping them from the ballparks?

Mr. HALL: You know, I think in some markets, it will. In ours, I don't think so. We're actually in the lowest per-capita income of all the 30 markets, believe it or not. But you know, our season-ticket renewal rate was around 83 percent, which is a very good number, especially when you compare it to some of the other cities and teams that were in the 50s and 60s. So we're just going to have to get real creative, make sure that we have affordable options, and that we do a lot in the form of group sales and group discounts.

SMITH: Do you come out and say, we know times are hard, and we're there for you? Is that…

Mr. HALL: Oh, absolutely. Yeah, yeah. There's no sugar-coating here. We know times are tough. We certainly don't want you to get a hit in the wallet when you come to our ballpark. You can even bring your own food, is one of the messages that we've sent.

You know, we created a new section this year, which is all you can eat. And you know, for $25, you know, a person can have a great seat on the suite level and can have all the food that he or she could eat. So yeah, we do recognize it. We communicate that with our fans, and we're trying to help them get through this and still receive entertainment.

SMITH: All you can eat, huh? You have no idea how much Cracker Jack I can put away.

(Soundbite of laughter)

Mr. HALL: It's all yours.

SMITH: Well, have you heard from fans, season-ticket holders who have had their homes foreclosed or worried about being able to pay for tickets this year?

Mr. HALL: Very little, to be honest. We had a few that would call us and say, look, I can't afford my season tickets anymore, and it breaks my heart because I've been in the same seat since day one, where we've then gotten back to them and said, look, what if we can help find you a partner or two and let you split the season up? And they were thrilled, and we've been able to help them. It's just going the extra mile.

You know, we have certain acronyms that we live by. One fan at a time. We don't leave a voicemail, phone call or e-mail unanswered. When you talk about fan experience, you're talking about affordability, cleanliness, safety, family-friendly entertainment, and that's really what we have.

SMITH: I know the club wasn't always in great shape. After you won the World Series in 2001, the next year, the team almost collapsed under the financial strain of paying all those great players.

Mr. HALL: Correct.

SMITH: So what did you have to change?

Mr. HALL: Well, we had to change quite a bit. The financial situation that we were in, in fact, it's remarkable that we're still alive. We lost $353 million in our first seven years.

That was because of the amount of money that we were paying our superstars. And the way that we were doing that was really backloading those contracts and deferring their payments through later years, even past their playing days. You know, there's payment schedules for the next, say, five years for a player that hasn't been with us since, say, 2003.

So there was a price to pay for that championship. I wouldn't trade it in for anything, but that's just - it put us in a very tight situation. But then again, we're operating the way we think we should. We're being fiscally responsible, and we think this the model that other teams are going to follow suit on, as well.

SMITH: Not to embarrass you, but you are the youngest CEO of any of the baseball clubs. You're 40 years old, right?

Mr. HALL: Yes. Correct.

SMITH: And some people have said you'd make a great commissioner for Major League Baseball some day. Is that a job that interests you?

Mr. HALL: That's - you did embarrass me, yeah. I think anybody that works in this game and that loves this game would be honored to even be mentioned as a possible candidate one day. I've certainly got my eyes set on the job here and the task at hand. I love this franchise. I love our fans and our employees.

We've built a great culture, and you know, if I'm ever called upon for another duty to help out Major League Baseball, the way I feel about this sport and what it's done for me and my family, I would certainly listen. But I have no intention of going anywhere but to and from my office for the next several years.

SMITH: Derrick Hall is the CEO of the Arizona Diamondbacks. He's joined us from the studios of member station KJZZ in Tempe, Arizona. Mr. Hall, thanks a lot.

Mr. HALL: Thank you. It was a pleasure being here.

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