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January 21, 2012

Transcript from media scrum with Rangers owner Bob Simpson

Here is the majority of what Bob Simpson had to say Friday night about the state of the Rangers' finances. He spoke for about 20 minutes to various reporters. My recorder had more than 16 minutes of it. The following transcript omits a few questions but contains what I consider to be the really good stuff, and there's a ton of it.

Were there any tough questions you had to ask about pursuing Yu Darvish?

"Not really. It was an odds assessment. What are the odds that this works so that I can move it from speculation to more of a crude idea? In my business there’s wildcatting and there’s producing. The wildcatters really don’t do well. We specialize in buying producing properties to build our company. I try to find the lowest risk available. Then you say, `Does this fit?' And they had to convince me and Ray [Davis]."

How much faith do you have in the Rangers’ front office?

"I believe them and trust them. They’ve done a lot of work. But it goes back to the theory of are you in a sports organization to try to second-guess them. We don’t do that.

"You’re much better off getting real people that know what they’re doing rather than calling plays behind them. If you think you can improve your management personally as an owner, you need to get somebody else and not try to do it yourself.

That’s where I disagree with the owners that are so proactive and involved technically. It’s like, knock yourself out if that’s fun for you. That’s in hobby area. Here you get the very best people and support them. We were fortunate in that we had such superb staff when we bought the thing that we’re not reinventing anything."

How do you balance spending with generating revenue by, say, increasing ticket prices?

"What I would tell the fans is, yeah, we’re writing checks to make this stuff happen. At some point, it’s got to sustain itself, and we understand that.

"It’s the old chicken-egg question. Winning comes first, and then support comes. We can’t ask fans to come to every game when you’re losing and help you increase your revenues. You’re trying to take it to a new, sustainable level, where it really is a dynasty franchise like the Cowboys achieved. In the off years, and inevitably you’ll have some, the fan base is still strong. That’s never happened, that I believe, and I’ve been a fan since ’72. Some years it got so bad that I didn’t come to a game. Watching people lose is not healthy."

But spending to win isn’t a healthy model, is it?

"The one thing we know for sure is money can’t buy it. Silly guys get in with big egos and a lot of money and just make a mess. I don’t believe that is going on here. You’ve got thoughtful spending behind superb management. That’s a different model."

How much does the new TV contract in 2015 allow the team to be creative with deals now?

"What I would say about the TV contract is the years ’12, ’13 and ’14, we don’t have it. Those are the years that we’re prepared to put in some capital. This will be the most significant year because we’re having to catch up with some unfunded liabilities that we inherited, in the area, as an example, of deferred compensation.

"Everybody thinks that if you go to the World Series, you’re like killing ‘em financially. We’re actually running at a deficit still, but payroll has gone from $57 million to maybe $125 million this year. That’s $70 million. When ticket sales are $70 million, you can’t expect it to be covered quickly. It’ll need further increases in ticket prices, and this TV increment for revenue, and a winning team. Then we’ll have a sustainable model.

"But people who invest in a baseball franchise are, in our case on the financial side, looking for ultimate appreciation of the value of the team. We’re not looking to take money out. We also are putting in money now.

"I want the fans to understand that we’re committed. We’re putting money in it and not taking any money out. If we have to raise ticket prices, we’re all partners in this thing together, and financially we have to get it sustainable. But we’re in the fifth biggest market for baseball. We deserve to be in the top five teams every year. That should be sustainable, and that’s our analysis."

Is the 2012 payroll maxed out after the Darvish signing?

"It depends on what happens. We’re going to have to generate more revenues to push higher. We might, but we’ll see. You’re in a phase now where you’re trying to see what can this market be and what can this sports franchise do, because it’s never been optimized. Call it a grand experiment financially, but we’re in that and we understand that takes capital. The fans are enjoying our investments, but we’re going to grow this thing to where it’s sustainable at a championship level. That’s our goal.

"As you have key players reach free agency, it gets more complicated. You really need to probably take it a little higher over time. But are you going to do that? We’ll find out. Our strategy is to win and bring in the fans and then to drive a sustainable model."

What’s a ballpark figure of what the deficit is?

"I’m not sure that’s as relevant. I’m not sure that’s a discussion point. That has been a deficit, but it’s so intertwined with all the capital expenditures and other stuff — buying out [Chuck] Greenberg, for example. There’s been somewhat of an operational deficit, but revenues when we get to our TV contract will take care of that. Our goal financially, at least, is to have a balanced budget by 2015. But you get back to the philosophy of sometimes you do capital improvements before you have revenues. We’re in that phase, which would include significant personnel. You just have to make sure you don’t have bad capital improvements that are bad assets."

Is Prince Fielder in play or, as Jon Daniels said, is it unlikely?

"I think it is. He is, given our set of cards, too pricey. If that were to change, I guess they would look at it harder. Right now, he’s priced himself out of what we can do.

"The strategy was to get Yu. It’s a complicated strategy, but we did it and now we’re satisfied. If we get something on top of that, great, but not something that wrecks our financial discipline or incrementally is not worth near the dollars. Fielder would have to come into that analysis.

"We’ve got guys, frankly, like Josh Hamilton, that I would love to see re-signed. My personal preference, at this moment, would be to re-sign him instead of having Fielder. But we could all debate that. The organization has its feelings. Everybody dreams about having both. Sometimes you can’t have both at some level. If they came around to something we’d do, we’d look at him. But we don’t think it’s likely."

-- Jeff Wilson


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Blah blah blah we're going to have to raise ticket and concession prices to afford our hot new prospect Yu Darvish.

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