The Business of Pirating

After years of rebuilding the team, the Pirates’ success in 2013 helps Pittsburgh to reframe its own transformation on a national stage.

Photo by Dave Arrigo, courtesy of the Pittsburgh Pirates
 

 

Baseball is a game. A history-saturated team such as the Pittsburgh Pirates offers memories to pass across the generations. Baseball is a business. A carefully calibrated, focus-grouped product for mass consumption such as the Pittsburgh Pirates is an operation that must make money in and from the community it serves.

The mythology of baseball, potent as it is, tends to obscure the fact that the game, the pastime, is and always has been built upon the foundations of profit — “putting a product on the field,” as General Manager Neal Huntington puts it.

For the Pittsburgh Pirates, the saga of 20 faltering years and now one glorious winning season are not merely important storylines. They’re crucial data points in the success of a community business venture more than a century old.

Today, the Pirates are a business reaping the benefits of years of rebuilding and tasting a success the club has not known for quite a while. For the front-office team, led by Huntington and President Frank Coonelly, the thrills and high points of 2013 — and the hope they infuse into the franchise — begin to validate a plan that launched in 2007 and wound its way through several faltering seasons amid grumbling from fans over missteps and business strategy.

“We had to rebuild everything from within. And that takes time before the fruits of our labors show up on the major-league field,” Coonelly says. “I freely admit that I wish it would have gone quicker.”

Whatever the pace, something different was clearly afoot in 2013 after the strong starts and dashed hopes of the 2011 and 2012 seasons — for the Pirates and for the city and region, too.

 

ON THE FIELD.  Six years of building the farm system, implementing sabermetrics and requesting patience from fans paid off this past season when the Pirates fielded a talented, multifaceted team that was clearly a product of their development programs.

So many of the marquee players — Andrew McCutchen, Neil Walker, Pedro Alvarez, Starling Marte and Jordy Mercer among them — were products of internal development. Huntington long has said that the Pirates wouldn’t build a team on a strategy of trading or buying for success. His latest roster was evidence of that. As valuable as some acquisitions proved to be — Russell Martin, Mark Melancon, Francisco Liriano, Marlon Byrd — this team in many fundamental respects was homegrown.

Phase one, says Huntington, who arrived in 2007, was identifying talent and instituting more effective systems to grow it. The next three years were consumed with “talent accumulation and development.” That’s the part that spurred some Pittsburghers to call for blood in 2011 and 2012.

“It wasn’t as quick as we hoped, but I think it was in a realistic timeframe,” Huntington says. “To look at a kid at 16 or 18 or 21 . . . and project what that person’s going to become five years down the road is extremely challenging.”

A key acquisition in late 2010 helped put the Pirates on the track to doing better business this past season: the hiring of manager Clint Hurdle. “He might have been the perfect man for the job,” Huntington says.

“You need a field manager who is a constant in the clubhouse and can be relied upon by the players,” Coonelly says. “It’s critical that somebody who is leading that group of men understands them and cares about them. Clint Hurdle has a remarkable ability to demonstrate to his players that he cares about them.”

Hurdle, for his part, sees his role as not only leading the team on the field but also helping the business overall. “When I walked in here, I said to the people who sell season tickets, ‘How hard is your job?’ They just looked at me like, ‘Are you serious? It’s really hard,’” he says. “One of my goals is to make their job easier.”

And the notion that the Pirates as a small-market team will never be able to spend the cash to build a dynasty? Coonelly scoffs: “We said at the beginning: No one was going to use market size as an excuse or as a crutch.”

The seed for the next step was planted during spring training in 2012, when the Pirates and McCutchen announced a six-year, $51.5 million deal that now looks business-savvy — an MVP-caliber face of a franchise locked up financially through 2018, with a club option to extend his contract for an additional year. Homegrowns such as Walker and Alvarez could follow in similar financially prudent moves, though the Pirates’ management team prefers to avoid talking about crystal-ball transactions. Wintertime brings salary arbitration, steps toward the 2014 roster and more immediate docket items.

“We’re not here for a short term, not here for a flip,” says Bob Nutting, the Pirates’ chairman and principal owner. “We’re here for the long haul . . . I think those are core principles of ownership.”

 

IN THE BALLPARK.  Walk out of PNC Park after a Pirates game, and odds are good that a ballpark employee will tell you to have a nice evening and come back soon. This is unusual in major-league baseball, and it’s not a coincidence. It’s part of a philosophy: making the Pirates a successful business means focusing on customer service and involving everyone. That means ensuring PNC Park “is always viewed as a cool place to come and spend an evening,” Coonelly says.

Strip away the fact that they’re a baseball team, and the Pittsburgh Pirates are an entertainment option struggling for distinctiveness in a dizzying landscape of consumer choices. A brand has to encourage its most loyal followers to equate Pirates baseball with family, fun and an escape from daily life.

While the team was rebuilding, Coonelly says, the organization demanded excellence in all other aspects of the business. The message: “Don’t wait until the baseball comes around. Let’s make sure we’re ready for them when they come.” The goal: “to create that bond between the city and the team, even when the team wasn’t winning.”

The Pirates’ competition isn’t only other pro sports in Pittsburgh. It’s wherever the southwestern Pennsylvania “entertainment dollar” might be spent: restaurants, movies and theaters, even amusement parks. Even more challenging: In an era of high-definition, big-screen TVs, the Pirates also must persuade fans that watching the game on their couches isn’t the best option. Bars, T-shirt and hot-dog bazookas, and big-screen entertainment add up to what Coonelly calls, in the best business parlance, “exciting things to do at the ballpark for each of our segments.”

Nutting, who also is president and CEO of Ogden Newspapers Inc., sees parallels between the newspaper and baseball businesses: Both are “longstanding, iconic brands that people depend on,” and both are long-term institutions within communities that require trust to succeed.

Both, too, are “organizations that are never really owned by the owners,” Nutting says. When it comes to the Pirates, “The most important stakeholders are the fans.”

Nutting also has put energy into relaunching and refocusing Pirates Charities, including investing in “Miracle League” programs for special-needs children and Fields for Kids efforts to improve baseball and softball fields around the region. It’s part of a notion that “baseball can be the glue” for efforts that otherwise might not happen, he says.

“It is the kind of thing that is only built over time,” Nutting says of the team, which has been operating as a local business since 1887. “You can’t re-create it in Tampa or Miami or Phoenix. It takes 120 years to build 120 years of history.”

 

IN THE COMMUNITY.  The on-field success of 2013 rippled beyond the team’s own economics. The business of Pittsburgh writ large benefited as well.

It was evident before home games on both sides of the Clemente Bridge and as far as Market Square, where businesses such as Primanti Bros. and the Original Oyster House were packed with people in Pirates gear. And the North Shore? Around Federal Street and General Robinson Street, bars and stores crackled with life hours before game time.

VisitPittsburgh, the city’s tourism office, worked with the Pirates to devise a direct spending figure for every game that included the cost of game tickets, parking and food and beverages — not only those bought inside the stadium but all around it. This formula showed that Pirates games pumped $199 million in direct spending into the local economy from Opening Day to the Oct. 1 Wild Card game.

That breaks down to about $2.5 million of revenue for each regular-season game and about $4.3 million per game for the Wild Card and each home playoff game. And the cost per consumer is a figure that the Pirates publicly try to keep low: In September, they announced their average ticket price would merely rise from $17.21 in 2013 to $18.32 in 2014, remaining among Major League Baseball’s lowest.

“There’s no question that the Pittsburgh Pirates are an economic driver for Allegheny County and surrounding areas,” says VisitPittsburgh CEO Craig Davis. “This year, with their continued success all through the season, they drew more and more people.

“There’s something about a successful city that has winning football and baseball,” Davis says. “People tend to be envious of that.”

Consider this for a ripple effect: Many of those attending Pirates games came from out of town, and some are members of organizations that, say, are deciding where to have their next conventions. That’s one way the buzz benefits Pittsburgh economically.

“We had this incredible national opportunity with what happened to the Pirates,” says Bill Flanagan, executive vice president of the Allegheny Conference and host of “Our Region’s Business” on WPXI-TV.

“It was not just a Pittsburgh story; it was one of the biggest stories in the United States through the fall. We really used it as an opportunity to reframe Pittsburgh’s transformation story.”

 

THE BUSINESS OF TOMORROW.  It’s said that nothing succeeds like success. Fundamentally, that’s the case with the Pirates, riding the crest of a special season and planning on, hoping for, counting on more to come.

“It makes them a much healthier business. It gives them the flexibility, which they didn’t have for many years, to keep talent. They can make better business decisions because they’re not as financially constrained,” Flanagan says.

“You have to give them a lot of credit for the strategy they used to improve the business of the Pirates. What it’s now positioned them to do is maintain a competitive team, at least for the foreseeable future.”

In the end, though, a team will be judged by its players — how well they play, but also how well they bond with their city. That bond is stronger than it has been since the 1979 “We Are Family” team of Willie Stargell and Dave Parker.

“As good as those early ’90s teams were, and as much as the community relations people tried, Barry Bonds was not fan-friendly,” says Greg Brown, the Pirates’ veteran play-by-play announcer. “And now you have Andrew McCutchen as the face of the franchise. Couldn’t be more different.”

So no more of the Allegheny Conference’s news releases about “21 Great Things That Have Happened in Pittsburgh Since the Pirates Had a Winning Season.” As the marketers know, winning creates the kind of organic buzz that money can’t buy. Thanks to the 2013 Pirates, Pittsburgh is ever more part of a national conversation. And that, above all else, is good for business.