Royals owner John Sherman thinks long term, sees progress amid pandemic’s pandemonium
As they navigated the final details of purchasing the Royals last November for $1 billion, John Sherman and his ownership group somehow hadn’t anticipated a pandemic on the horizon. He wishes somebody would have told him, he says with a laugh.
But while the circumstances made for a chaotic season and harsh business realities, he expresses no regrets about what he stresses is a long-term investment.
Besides, he knew taking on a new challenge like this means you don’t get to dictate the script so much as you control what you can control and brace to respond nimbly to the unforeseen.
He learned that after launching Inergy L.P. in 2001 shortly before the Sept. 11 attacks shocked the nation with numerous ripples, including the disruption of his young and fragile business. Suffice to say it recovered, in 2013 merging with Crestwood to create a “combined enterprise value of $8 billion,” according to a news release at the time.
That reservoir of experience and perspective, combined with the collective wisdom of members of the ownership group, underscored their approach to the unprecedented last few months.
The span was marked by what had to be staggering financial losses. At the same time, unlike many other franchises, the Royals made telling decisions to continue paying minor-league players despite their season being canceled while issuing pay cuts at senior levels rather than instituting layoffs or furloughs.
“You don’t want to under-react, but you don’t want to overreact,” he said. “You want to be decisive but you need to be thoughtful. And the main thing is not to panic.”
That voice of reason prevails as he looks back at his first season in the owner’s suite at Kauffman Stadium, where he typically hosted other investors looking out at empty stands and a team that finished 26-34.
It gnaws at him, of course, that there was no Opening Day with a packed house on a beautiful spring afternoon. But ...
“We’ll get there again,” he said. “I think that’s what you have to think about.”
In the meantime, an empty stadium was a disorienting way to observe. But Sherman, who previously was a minority owner of the Indians in Cleveland, eventually got used to the view as part owner, part fan.
“If you’re not a baseball fan, you shouldn’t be doing this because there’s other ways to, um, make a living,” he said with a laugh, later adding that when you’re a fan “one side of your brain engages. When you’re an owner, both sides of your brain engage.
“So you still have the passion and the heart of a fan, but you’re also thinking analytically and performance-wise.”
In that spirit, he reflected on the ups and downs of the season, starting with what he was proud of. That included what he called a resolute organizational culture “built up over a long period of time” under the stewardship of general manager Dayton Moore.
“I was very impressed by the way people conducted themselves,” Sherman said, meaning on and off the field and adding that it was more confirmation than surprise.
At spring training, he was taken with new manager Mike Matheny and the way he commanded a room of 68 roster candidates and interacted with his players. That, too, was reaffirmed the last few months, during which he believes Matheny’s leadership shined in the team’s rebound from a 3-10 start. He saw a roster of capable players believe they are getting closer to competing for a championship.
Along those lines, Sherman was impressed with rookie pitchers Brady Singer and Kris Bubic and a resurgent bullpen. And he specifically cited Whit Merrifield, whom he considers underappreciated, the terrific season of Sal Perez and the marvel of Adalberto Mondesi’s rebound after virtually a season-long funk.
“That’s a talent that, if (Mondesi) fully realizes it, will be pretty special in the years ahead,” he said.
Among his regrets about this season was that Alex Gordon didn’t get a much-deserved retirement sendoff from 35,000 people on a Sunday afternoon. But like Moore, Sherman suggested that will be made up for in some form in the future.
Sherman also believes the Royals got better during the draft (headlined by No. 4 overall draft pick Asa Lacy, a left-handed pitcher) and in the ensuing undrafted free-agent period that potentially was more pivotal than ever with the draft reduced from 40 rounds to five.
With those free-agent signing bonuses limited to $20,000, the Royals promptly announced seven signings with five ranked in the post-draft top 20. All things being equal financially, their success was at least in part because of the message the Royals had sent that they were looking out for their minor-leaguers.
As for his broader sense of where they stand now, Sherman didn’t point to any specific issues. But he noted his disappointment with their start (though recalling several players were out with injuries or COVID) and ultimate finish.
“So the team is making progress,” he said. “But I think it’s a reminder that we’re not where we want to be yet.”
Reflecting the ethos of a man known for his broader sense of civic investment and responsibility, Sherman also wanted to offer a statement on the contentious negotiations between Major League Baseball and the players’ association before they settled on the 60-game regular season and revamped playoff format.
“The way that played out in public, I think we need to be better than that as a league,” he said. “That’s a two-way street there, but I think all of us need to be better, particularly at a time when our fans were dealing with a global pandemic and an economic crisis. I just didn’t think it played very well.”
Still, baseball played out well in many other ways. MLB is into its playoffs now and, Sherman noted, is “delivering some enjoyment and normalcy to our fans during these remarkable times.” Despite finishing fourth in the American League Central, the Royals ranked sixth among local market ratings in Major League Baseball to remain in baseball’s top 10 among local markets for an eighth straight year.
“So that’s also reaffirming that our fans are engaged in staying connected to the team,” he said.
Even that distanced connection appeared in jeopardy early in the season after outbreaks among the Miami Marlins and St. Louis Cardinals caused numerous postponements and left baseball at a crossroads in terms of how to successfully continue.
In its own way, that moment bears a resemblance to the precarious place in which the NFL stands this week: An outbreak among the Tennessee Titans and positive tests on both teams caused the Chiefs’ game against the New England Patriots game to be moved from Sunday to Monday.
While Sherman said he hadn’t considered the parallel, his thoughts on what baseball did then might easily be applied to the NFL.
Those outbreaks, he said, “were definitely a wake-up call, and I think everybody hunkered down and just got more disciplined about what were some very good protocols,” he said. “We also learned some things, obviously, as you go along.”
Referring directly to the Royals, who had eight players test positive as of July 22 but none thereafter, Sherman said he was proud of how the tone was set by Moore, Matheny and athletic trainer Nick Kenney, and that “the players themselves really stepped up and held each other accountable.”
When it comes to accounting for the financial consequences of the pandemic, Sherman pointed to losing gate, food and beverage and game-day merchandising revenues but noted local television and radio revenues and certain sponsorship dollars.
And, hey, they brought in another investor: Shortly after he signed his 10-year, approximately $500 million contract extension, Chiefs quarterback Patrick Mahomes made what Sherman has called “a cash investment in Royal Blue Equity, just like the rest of us.”
Mahomes told Sherman he was investing because Kansas City had embraced him and he was “interested in doubling down on Kansas City.” While Mahomes has shared some observations about this team, Sherman added with a laugh, “He’s really consumed by his day job right now. But … we’d love to have him down to Surprise (Arizona, for spring training) and maybe get him involved when he’s got some time in the spring.”
Of course, the ongoing pandemic leaves questions even now about spring training 2021.
“We have to be ready to pivot in a couple of different directions,” Sherman said, “depending on what the next (few months) hold.”
Something he already knew but that also was reaffirmed by the last few months, crazy months that he reminds himself are only a short phase of a long-term investment.