The Player

He’s ridiculously good looking. He’s got a Harvard M.B.A. His father is the U.S. Secretary of the Treasury. Last May, Henry Merritt Paulson III bought the Portland Timbers and the Portland Beavers. And if he has his way, one of them will be m

By Jim Gullo May 19, 2009 Published in the August 2008 issue of Portland Monthly

APRIL 21. GAME 17 OF 144 SCHEDULED FOR THE SEASON, a half-hour before the first pitch of the night. Clusters of gray clouds are scudding in from the south, bringing with them a frigid wind that whips around a near-empty PGE Park, most of its green seats folded into the upright position. The digital temperature display behind the center-field wall reads 42 degrees, but by the end of the ninth inning, it will blink a bracing 38.

“This is brutal, just brutal,” says Merritt Paulson, owner and general manager of the Portland Beavers Triple-A baseball team and owner of the Portland Timbers soccer team, surveying the stadium. “You may have the distinction of attending our least-attended game ever.” He’d expected a thousand or so people through the gates by now, but by the looks of the place, the computerized ticket counters haven’t logged more than a few hundred.

No one, it seems, not even gloom-tolerant Portlanders, wants to be out in this muck.

Whether to play the game or to cancel it? Ultimately, it’s Paulson’s call to make, but tonight, with Fox Sports Northwest scheduled to broadcast the game throughout the region, a rainout is the last thing Paulson wants. Every couple of minutes, he checks the four Doppler websites he has bookmarked on his computer. His staff checks in with the KGW weather team. He delays the game once, then twice.

But like any good businessperson, Paulson does not dwell on the storm clouds overhead. A half-hour after the game’s scheduled start, he finally makes the call: Play ball.

Paulson bought the Portland Beavers in May 2007, a deal that also gave him ownership of the Portland Timbers—the United Soccer Leagues team that, like the Beavers, is but one division shy of the major leagues. Part of Paulson’s job, as it has been for all of the men who have owned the team before him, is to make sure that the Beavers, the farm team for the San Diego Padres, attract legions of loyal fans. And tonight, Paulson is getting one of the rudimentary lessons in running a successful sports franchise: No matter how good your business plan, no matter if you’ve got yourself a stadium with a $38.5 million renovation, no matter if your father is the U.S. Secretary of the Treasury and the former CEO of global investment firm Goldman Sachs, no matter if you’ve got an Ivy League degree—the devil of this particular venture often lies in details you cannot control.

And in Portland, one of those details happens to be crappy weather that can last well into June.

As the Beavers emerge from the clubhouse to warm up for the game, Paulson turns on the heels of his brown Cole Haan loafers and strides toward the stands. The time has come to promote his product: Triple-A baseball. He walks around the ballpark, shaking hands with the few season-ticket holders who braved the elements. He is smiling, his gunmetal-blue eyes meeting those of the fans, many of whom he knows by name. Each handshake is accompanied by a slight forward lean, which makes his athletic, 6-foot-3 frame feel slightly less imposing. He’s rallying the troops, creating a we’re-all-in-this-together élan.

And every person he greets smiles back, in part because Paulson’s enthusiasm is infectious, but also because Paulson seems to be what baseball fans in Portland have been waiting for for a very long time: an owner who is, for one thing, actually at the game, even on this lonely night. An owner who might be able to correct all the managerial mistakes and mishaps that have thwarted the team for two decades or more.

Tonight the Beavers are taking on the Salt Lake Bees, a farm team for the Los Angeles Angels that is going into the game with the best record (16-1) of all of Triple-A baseball’s 30 teams (and of all the Major League’s, for that matter). Fans of Portland baseball understand well the significance of this particular game: Back in 1993, the Beavers’ then-owner, Joe Buzas, unhappy with the lease terms of Civic Stadium, moved the team to Salt Lake City, where the Beavers became the Buzz. The move made Buzas, who already had a reputation as a cheapskate, a persona non grata among Rose City sports fans.

For seven summers, Portland had to do without the “Lucky Beavers,” who had called the city home since 1903 (a one-year break during World War I and a five-year absence during the 1970s excepting) and who had become a bona fide Rose City sports institution. Sure, the Single-A Bend Rockies moved their games to Portland to sate the city’s baseball cravings in the interim, but even as Portland cheered them on, everyone knew it wasn’t the same. The Rockies weren’t really our team.

Good riddance, Buzas. Perhaps that’s the message being delivered to Paulson by a middle-aged season-ticket holder ascending the stairs. “Hey Merritt, look what I found,” the man says, proffering a rectangular scrap: a ticket from a 1993 Beavers game signed by Buzas himself.

The Beavers lose tonight, 9 to 4. Pitcher Shawn Estes, who played in the big leagues between 1995 and 2006, is rocked by a grand-slam homer in the sixth by the Angels’ top prospect, Brandon Wood. Nonetheless, two weeks later the Padres call up Estes to join their roster. The same day, the pitcher packs his bags and flies south.

One day after signing Estes, the Padres tap Jody Gerut, the Beavers’ best hitter, who had a .308 average after 27 games in Portland. Which brings up another factor beyond Paulson’s control: As with all Triple-A clubs, the Beavers’ major league affiliate team controls the roster—players come and go at the whim of Padres management. In the NBA, where Paulson worked as the entertainment division’s senior director of marketing and business development for five years, star players served to build excitement and fan bases. “This is the antithesis of the NBA,” Paulson says. “You just can’t market the individual in Triple-A.”

Can Merritt Paulson get people to come out to the ballpark and convince the city to love its 105-year-old baseball team so much that they buy season tickets? He’s banking that he can—by being the public face of the Beavers and by billing them as a community product that “makes the city a better place for families to be.” If he succeeds in building both the Beavers’ and Timbers’ fan bases, in making their games must-see events, he may turn Portland into what he believes it can be: “a great sports city.”

The aluminum bat chimes as Paulson laces a pitch over second base. It’s another night in April, a slightly warmer one, and Paulson is taking batting practice on the field after the game has ended and the fans have left the park. “That was a little high; bring it down,” he admonishes groundskeeper Jesse Smith, who is tossing pitches. Ding! Paulson pops the next one up to left. “That was a little inside.” Then he gets a pitch he likes and drives it to deep center, where it takes two bounces and stops on the warning track. “If that had been to left, it would have been out of here,” Paulson says, a smile on his face.

“Merritt was a good Little League shortstop. We took him to his first Cubs game at Wrigley Field when he was about 5.” Written in an e-mail, this is all that U.S. Secretary of the Treasury Henry Merritt Paulson Jr. says when queried about his son’s athletic abilities. (The elder Paulson is a minority—but silent—partner in Shortstop LLC, the holding company that Merritt founded in order to purchase the Beavers and the Timbers.) Merritt doesn’t hesitate to clarify his father’s comment. “I was an All-Star shortstop the last three years I played Little League.”

Even if you didn’t know that Merritt Paulson came from such a high-profile family, or that he grew up in Barrington Hills, Illinois, a wealthy suburb of Chicago, you’d probably peg him as more of an East Coast type. He prefers slacks, pressed pastel dress shirts, and loafers, but then, he’s been here only a little over a year.

About a week after the teams’ purchase was finalized, in late May 2007, Paulson moved to Portland for good. As he had done during the weeks and months leading up to the deal, he took the Jet Blue flight from New York City. And as usual, he flew coach and secured a seat in an exit row, which he says is the only area spacious enough to accommodate his long legs. Before he moved out West, Paulson made his home on Manhattan’s Upper West Side, where he and his wife, Heather, rented a 900-square-foot, two-bedroom apartment. After looking at some 20 properties in the Portland area, they bought a three-bedroom house in Lake Oswego.

Only about half of the owners in the 16-team Triple-A Pacific Coast League (PCL) to which the Beavers belong live in the city or town where their franchise plays. But Paulson has always believed in the value of local ownership. “You have to be able to truly understand the market,” he says. “You need to be eating it, drinking it, and breathing it. How can you do that if you’re an absentee owner?”

Branch Rickey III, the president of the PCL—and the grandson of Branch Rickey, the baseball executive who broke baseball’s color line by signing Jackie Robinson to the Brooklyn Dodgers—says that “the heart and soul of a franchise is its ownership,” and not the city in which it plays. “Ownership is everything,” he says. “If there’s one problem owners run into, it’s running a franchise they have no genuine personal interest in.”

Rickey will tell you that plenty of seasoned businesspeople, and for that matter, plenty of rich people, have tried their hand at owning a Triple-A ball club and failed. Profit margins can be narrow, and running a successful team—one for which game attendance, support from local businesses, support from local politicians (and, thus, return on investment) all go up—requires the kind of hands-on, day-to-day management and cost control that many owners haven’t been all that inclined to undertake. Paulson, Rickey says, isn’t one of them.

IN 2001, it seemed that Portland—and the Beavers—had found the ideal owners: Marshall Glickman, who is the son of Trail Blazers founder Harry Glickman, and who worked in the Blazers’ front office from 1989 to 1995 (eventually becoming team president); and Mark Gardiner, a successful sports-facility consultant and former finance manager for the City of Portland. That was the year that the two bought the Albuquerque Dukes and brought them home as the Portland Beavers.

Back in 1998, the pair formed Portland Family Entertainment (PFE) with an eye toward revamping the crumbling Civic Stadium and building a business around minor league sports. In a backroom deal decried by those who prefer openness in their civic leadership, Glickman and Gardiner convinced then-Mayor Vera Katz to dedicate some $33 million in city funds to renovate the facility.

But this shady how-it-came-to-be story was largely forgotten during Civic Stadium’s big reveal: Renamed PGE Park, it was a beaut. Skyboxes replaced some of the old bleachers, the scoreboard was hand-operated, local beer was served, and the whole arena had a retro feel that harked back to the good ol’ days of baseball. Attendance spiked.

As part of the package deal, Portland Family Entertainment also reestablished the Timbers, which had been the city’s Major League Soccer team in the 1970s; convinced New York-based pension fund TIAA-CREF to invest $23.5 million in the company; and persuaded a group of Portland bigwigs to invest some $6 million in PFE as limited partners. But PFE’s apparent success turned out to be nothing more than a paper-thin veneer. Glickman and Gardiner were paying themselves exorbitant salaries, costs were out of control, and revenues were much lower than what the company had projected. And while PFE was able to get a stadium renovated—no small feat—the company proved less than capable of actually running it. Infamously, PGE Park ran out of hot dogs on opening night.

In 2004, 10 days before the first pitch of the season, the Pacific Coast League rescinded the Beavers franchise for “defaulting on its obligations.” In other words, PFE couldn’t pay the stadium rent. The team immediately became the property of the PCL, which owned it for a little over a year and pinch-hit on management decisions. The next owner on deck was Abe Alizadeh, a Sacramento-based real estate developer who bought the team in 2006. While attendance grew under Alizadeh and the other managers who helped advise him on the sporting aspect of his portfolio (“I love baseball,” he remarked in the local press, to explain the purchase), Alizadeh stayed put in California and attended fewer than 10 Timbers and Beavers games as owner. He clearly was in it to clean up the mess, get the organizations on solid financial footing, and ready them for sale.

Since around 2003, Paulson had been “assessing a variety of ownership opportunities” that ran the gamut from buying a Major League Soccer franchise to running an NBA development league. When the Portland opportunity came up, he immediately dropped the two other deals that were on the table. It didn’t take long for him to see the possibilities: Under the terms of the deal, Paulson would become owner not only of the Beavers, but also of the Timbers. He would take over the lease for all events at PGE Park—Beavers and Timbers games as well as Portland State University football and special events like the Oregon State University (OSU) Beavers preseason baseball games against the University of Georgia Bulldogs (which, even in February, drew more than 30,000 fans to the ballpark over a three-game series). He’d have himself a great stadium near downtown Portland, he’d have a team with a venerable history, and he’d be the owner of a soccer team in a soccer-crazed town.

After six months of due diligence, Paulson also came to view the city as “a sleeping giant,” meaning a market in which the Beavers should have had strong brand recognition—and one in which more people should have been showing up to the stadium for games. “My goal is not to criticize prior ownership,” Paulson says, “but everyone in sports will agree that [the Beavers franchise] underperformed.”

And there was the allure of Portland itself. “Heather and I are big outdoors people,” he says. Both are avid skiers, so much so that Paulson asked Heather to marry him at Colorado’s Arapahoe Basin, halfway down Pallavicini, a double-black-diamond run.

Paulson’s purchase price was reported by local media as $16 million, though a confidentiality agreement bars Paulson from either confirming or denying the accuracy of the figure.

PAULSON’S OFFICE is in Suite 32 at PGE Park—one of the corporate skyboxes that were installed during Civic Stadium’s renovation. The floor-to-ceiling windows roll up, garage-door-style, giving guests access to a balcony that contains a dozen stadium seats. The furniture is modest: Costco-quality rolling leather chairs, shelves constructed of cheap pressboard. From his desk, Paulson has a sweeping view of the field; of SW 18th Avenue, where MAX light-rail trains glide by every so often; of downtown Portland’s buildings; and of Mount Hood. When he’s not making the rounds through the stadium during a game, saying hello to, say, a member of “Team Ketchup,” which is charged with keeping the hot dog condiment stations stocked and clean, he spends the evenings here.

Engage Paulson in a conversation about the Beavers, and it doesn’t take long for him to slip into business-ese. He tends to use phrases like “return on investment,” “profit maximization,” and “market potential.” The deal he brokered with Fox Sports Northwest in December 2007 was designed to better all of those things. For the 2008 season, the network agreed to broadcast 20 Beavers games and 5 Timbers games to the 3.4 million households throughout the Northwest, including Montana and Alaska. (During the two years prior to that, Fox broadcast only a single Beavers game and a single Timbers game per season.)

Unlike many Triple-A owners for whom baseball is a side project, one of many holdings, projects, and ventures, Paulson considers the Beavers, the Timbers, and PGE Park the whole of his business. He works six days a week, 12 to 14 hours per day.

When he arrived, one of the first things he set out to accomplish was to repair any lingering rifts between the Beavers and those who would be responsible for the team’s future: the city (which lost a significant amount of money after PFE fell behind on the rent), the business community (some of whom still had concerns about supporting the team), and the fans (who needed to know that the Beavers were here to stay).

Paulson began by introducing himself to season-ticket holders and thanking them for their support. He hobnobbed with city council members, Mayor Tom Potter, Senator Ron Wyden, and Gov. Ted Kulongoski, as well as the leadership of the Port of Portland, Metro, and Portland General Electric. He met with local nonprofits like Self Enhancement Inc and the Boys and Girls Clubs of America.

Most people gush about him. When asked which Beavers owner is the best in recent memory, Maury Brown, local sports pundit and president of the Business of Sports Network, answers immediately: “Merritt Paulson.”

Paulson has a knack for getting what he wants. He persuaded the city to spend $1 million to install a better artificial surface at PGE Park, and in August 2007, four months after acquiring his new job, he held a press conference with Mayor Potter and PCL president Rickey at which he announced that Portland would host the 2009 Triple-A All-Star Game. A Cricket Wireless sign on the outfield wall counts down to game day on July 15, 2009.

Which is not to say that Paulson didn’t have anything to learn about his new home. Hoping to eliminate the confusion that often arises between the Triple-A team and the OSU Beaver—who, as everyone in the Beaver State knows, won the College World Series in both 2006 and 2007—Paulson considered changing his team’s name. The Beavers’ website offered a selection of potential new names for fans to vote on, including the Wet Sox, the Green Sox, the Thorns (for the Rose City), and the eventual second-place winner, the Sockeyes. Paulson even walked through the stadium, asking fans if they’d consider another name for the team, and the fans overwhelmingly chose … the Beavers.

The lesson? “You can never know a city through due diligence alone,” he says. “It’s funny—for such a progressive city, there’s a resistance to change. I understand that.”

ALREADY, Paulson is talking about moving the Beavers. Not to another town, but perhaps across town, to Lents Park at SE 92nd Avenue and Holgate Boulevard. The idea on the table is to build a stadium dedicated to Triple-A baseball alone. PGE Park, it turns out, poses problems as the Beavers’ sole venue: At 19,600 seats, it’s too darn big for Triple-A baseball, which attracts only 10,000 or so on a very good night. “You need an intimate, baseball-specific stadium,” Paulson says. And while it’s a point of civic pride that PGE Park is located near downtown, right on the MAX line, there’s also a dearth of parking in the surrounding neighborhood, which is inconvenient for many of the Beavers spectators who come from Washington County (roughly 20 percent), those from Clackamas County (25 percent), and those who travel here from Vancouver, Washington, and beyond.

Plus, Paulson is the sort who can’t help but envision ways his company could do things bigger and better. You know, major league.

Though in this case, the major league ambitions he has don’t pertain to baseball—to the chagrin of some sports fans. “You need to have a pretty successful Triple-A franchise to attract Major League Baseball,” Paulson says. “I often start out talks asking how many of you would like to have Major League Baseball in Portland. People put up their hands. And then I ask how many are season-ticket holders to the Beavers, and the hands go down.”

There’s also the fact that Major League Soccer (MLS) has come a-calling. MLS Commissioner Don Garber has visited not just once, but three times, and he’s been wowed by the rabid, painted, screaming, joyful, and often drunken soccer cheering-section that is the Timbers Army, a distinctly Portland phenomenon that didn’t spring from the mind of some marketing guru but rose up organically from the city’s soccer fans themselves. During the opening Timbers game of the season, nearly 11,000 people came out to watch the team play the Puerto Rico Islanders, and to say so long to Jim Serrill, aka Timber Jim, who had finally grown weary of rappelling from the roof with a buzzing chain saw and slicing the ends off of large logs. True, the Timbers play only about 18 home games each year to the Beavers’ 72, but the Timbers outdraw the Beavers in average attendance per game.

Numbers like that impress Major League Soccer, which has named Portland as one of nine cities that might be ripe for an expansion team come 2011. But as MLS examines the most likely markets for new soccer teams and assesses each city’s enthusiasm for the idea (read: willingness to put up the dollars needed to support a major league franchise), the organization also has made it clear that PGE Park would need to be retrofitted for soccer games. It wants seats along each of the sidelines. That wraparound, baseball-friendly configuration just won’t do. Meaning the Beavers would have to go.

In the meantime, there is still a city to be wooed to the ballpark, a brand to build, baseball to be played. Trust to be restored. “The key tenet in any business is ‘Know thy customer,’ and in this case, the customer is the community,” Paulson says.

To that end, Paulson created the Portland Beavers & Portland Timbers Community Fund this year, which will give $100,000 in profits to charities like Portland City United Soccer Club and the Boy Scouts. And at the end of each Sunday baseball game, the kids are invited down to run bases. They line up behind home plate, and when Paulson gives the signal, they circle the diamond: first base, second base, third base. Some slide, some laugh, some raise their arms like airplane wings. Paulson gives them high fives when they hit home.

IT’S THE END of June now, a cloudless night, 70 degrees. It’s the 78th game of the season, and the Beavers are about to take on the Colorado Springs Sky Sox. Tonight also happens to be Miller Lite Thursday, more commonly known as Thirsty Thursday, when Miller Lite goes for $2 and microbrews go for $3.50—25 cents cheaper than a bottle of water. Baseball fans are out in droves, many of them 20-somethings who are here to watch some baseball, sure, but also to watch each other, which is fine with Paulson.

He mentions a study he read that showed that more than half of minor league baseball fans don’t know the final score of the game, or even who won, when they leave the ballpark. In other words, minor league ball isn’t about winning and losing so much as the simple pleasure of hanging out at a baseball game at a great ballpark. “We’re marketing the experience, the promotions, and the team,” Paulson says.

Over the course of the season, as the temperature climbs, so does attendance. At the end of May, the Beavers were ranked 13th in attendance out of 16 Pacific Coast League teams, with an average of just under 4,000 fans per game. By the end of June, that average had reached 4,660 per game, and the team’s rank had risen to 12th.

Tonight’s attendance hit 9,973, but by the seventh-inning stretch, a lot of people are already gone for the night, which is also fine with Paulson. At $8 or $9 per ticket, a family can head home early to get the kids to bed without feeling like they didn’t get their money’s worth.

But those who do stick around to watch the game—like the chunky 10-year-old kid who’s been sucking down Sprite all night and the two middle schoolers who can’t stop singing We want a pitcher, not a belly itcher—are lucky. In the ninth inning, the Beavers are down by two runs, but instead of folding up camp, the team rallies. With a runner on base, catcher Nick Hundley hits one over the Miller Lite sign, tying the game. That means bonus baseball: extra innings.

In the top of the 10th, the Sky Sox fail to deliver. And then the Beavers take charge: Chip Ambres singles and steals second. Brian Myrow draws a walk. And here comes Hundley again, lacing one up the middle. A Sky Sox player jumps, misses. The ball flies toward the scoreboard. By then, Ambres is home. The fans are out of their seats.

And Paulson is still here, too. He’s leaning over the balcony, cheering for his team.