How to become a billionaire
Steve Martin used to offer his step-by-step plan for becoming a millionaire. “First,” he would say, “you get a million dollars.”
In April of 2000, former Wal-Mart CEO David Glass bought the Kansas City Royals for $96 million. Even at the time, that was considered an outrageously low price for a major league baseball team — it was reportedly not even the highest bid on the table. But that whole Royals sale was odd. It went back to an extraordinary man named Ewing Kauffman.
Kauffman was a self-made billionaire, a natural salesman who was often called a modern Horatio Alger* (he even won the Horatio Alger Award in 1967). He began his pharmaceutical company, Marion Laboratories, with $4,500 he had saved after getting out of the Navy. He brought along four friends he trusted implicitly. At first, he ran Marion (his middle name) out of the basement of his Kansas City house. And he sold like crazy. Four decades later, when Marion merged with Dow, it made more than 300 of his employees millionaires. Kauffman was particularly proud of that.
*Horatio Alger wrote stories about young boys who started with nothing and then made a name for themselves. He wrote A LOT of these stories, more than 100, with titles like “Fame or Fortune; or The Progress of Richard Hunter” and “Sink or Swim; or, Harry Raymond’s Resolve” and “The Odds Against Him; or, Carl Crawford’s Experience.” The last of these ended with Crawford playing out his contract with the Dodgers.
Kauffman was deeply loyal to his hometown. By the mid-1960s, he started the Kauffman Foundation which is still thriving and is dedicated to improving local education, helping local people start businesses and leading Kansas City’s efforts to grow and develop.
In the late 1960s, Kauffman was approached by a group asking if he would be willing to put up $4 million for an expansion baseball team for Kansas City. The town was reeling from the loss of the Athletics to Oakland; the whole experience of dealing with mercurial and off-kilter owner Charlie Finley and then watching him take the team away had given Kansas City something of an inferiority complex.
“I’m not a great baseball fan,” he told reporters. “But I think Kansas City ought to have a team. And I think I have a good chance of getting the franchise.”
He was right — there were other people who wanted to buy the team for Kansas City but they didn’t have really the money. Kauffman was chosen unanimously by the American League. If not for him, there almost certainly would not have been a Kansas City Royals.
The point here isn’t about Ewing Kauffman as an owner … but he was about as good an owner as a town can get. He was, as he said, not a particularly passionate baseball fan but he still came up with numerous innovative ideas such as the Baseball Academy (where the Royals brought in talented but raw athletes and taught them them baseball) and the Royal Lancers (a group of local businessmen who would be out there selling season tickets).
Kauffman was also the driving force behind the building of Royals Stadium (now Kauffman Stadium but that happened after he died … he didn’t want it named for himself), which set a new standard of excellence for baseball stadiums and helped make Kansas City the architectural home of baseball for the next few decades.
He spent money but spent responsibly (until the end of his life when the Royals, in an effort to get Kauffman one more World Series, made numerous bad signings). He had a keen eye for talent and in 1981 made a protege, John Schuerholz, the youngest GM in baseball.
The Royals, with only a handful of exceptions, were good pretty much his entire tenure as owner.
But perhaps his most lasting impact on Kansas City was his succession plan, one that virtually guaranteed the Royals would stay in town. This was an obsession for Kauffman. He had tried to bring in partners who would keep the team in town, but that didn’t work.
So, he came up with this intricate and impossibly generous plan. When Kauffman died in August of 1993, the Royals were automatically moved into a trust run by local businesses. They would run the team until it was sold — and there were two requirements for anyone who wanted to buy the Royals:
1. They had to pay a “fair price” (with all the money going to local charities)
2. They had to keep the team in Kansas City.
The second part made things a lot tougher than Kauffman probably hoped. Kansas City always had the small-market blues. But in the mid-to-late 1990s, with money skyrocketing and the Yankees dominating, Kansas City baseball was viewed by many people as a dead end. A few local groups poked their heads out to see if they might be able to get the team with a little money and many promises. But none proved to have much staying power.
“If people in Kansas City don’t want baseball in Kansas City,” Royals president Mike Herman said at a news conference, “what can we do? If we can’t find local buyers, we are permitted to move the team. It’s something we don’t want to do.”
“I’m still hopeful everything will work out here,” David Glass himself said in his role as Royals chairman of the board. “But at some point in time, the Royals have to stay in Kansas City based on merit. I don’t want to get to the point where we’re confronted by that.”
See, in those days Glass insisted he was NOT going to buy the team.
The most interesting character to emerge during the Royals’ search for an owner — and, man, that would have been a great reality TV show — was a charismatic lawyer named Miles Prentice. He had been trying for years to buy a baseball team, and he showed up in Kansas City wearing a suit and a baseball cap. He put together this massive ownership group that included local celebrities such as Buck O’Neil and golfer Tom Watson and Ewing Kauffman’s daughter-in law Nancy. He talked to every local business club in town. After a while, he started showing up at Royals games and griping about hitters who swung at the first pitch.
His eventual bid of $75 million was actually accepted by the Royals board, the one led by David Glass. But it was promptly rejected by MLB in a 29-1 vote deeply influenced by baseball commissioner Bud Selig. The public reason it was rejected was because Prentice’s group was too large and unwieldy. And that might have been true.
But privately, everyone knew: Selig wanted his friend David Glass to buy the team.
People all over baseball wanted Glass to buy the team. He was, after all, the CEO of Wal-Mart. He was a voracious baseball fan. He, like Kauffman, was a Midwestern rags-to-riches story (“If the whole thing ends up with David Glass owning the club, it would be like never having lost Mr. Kauffman,” Royals GM and longtime Kauffman friend Herk Robinson said). Also, Glass had made a name for himself as a true hardliner during the owner-player war in the mid-1990s.
Almost immediately after Prentice was rejected, David Glass decided that he did want to buy the Royals after all. Things moved quickly from there. Glass announced that was considering a bid in late November. He retired as Wal-Mart CEO in mid-January. He led the charge to give Bud Selig more power in late January. He sold two million shares of Wal-Mart stock to raise the necessary cash.
Facundo Bacardi, yes the great, great grandson of the Bacardi family, put in a bid to buy the Royals in late February.
Miles Prentice refused to go away and upped his bid to $120 million.
The board of directors (with Glass having resigned from the board) chose Glass’ $96 million bid in mid March.
The owners unanimously approved Glass as the new Royals owner on April 18.
And now, less than 20 years later, it looks like Glass is going to sell the team to a group led by Kansas City businessman John Sherman … for more than a billion dollars.
It used to buy you bought a lottery ticket to win enough money to buy a baseball team.
Now, buying the baseball team IS the lottery ticket.
What has David Glass done to raise the value of his team ten-fold? Not much. Looking over his entire record, well, he was a dreadful owner in his first few years, when he made misstep after misstep in a cynical effort to cut everything to the bone. There is horror story after horror story from those early days — the time the Royals wouldn’t spend a measly $25,000 for special uniforms on Salute the Negro Leagues day, the time they canceled the Royals banquet because it cost too much money, the time they wouldn’t put down an extra million dollars in order to keep Carlos Beltran, and so on and so on and so on.
In 2006, with things at rock bottom, David Glass (and his son, team president Dan) made their best decision: They hired Dayton Moore to be the team’s general manager. Now, it’s true that Moore’s baseball record with Kansas City is mixed — the team is terrible again. But he brought a vision, a sense of purpose and a dignity to the Royals. Moore brought in a bunch of good baseball people. He insisted that the team spend money on scouting and development. And when the window cracked open, Moore was allowed by the Glass family to aggressively push through — the Royals went to back-to-back World Series, winning it all in 2015.
Then the window shut hard and the Royals are terrible again. They are 24th in the league in team payroll and 27th in attendance, and the future looks pretty shaky.
Only now, this team is worth more than a billion dollars.
This is worth remembering when considering players’ salaries: David Glass was hardly a groundbreaking or innovative owner. He wasn’t Mike Trout or Albert Pujols. He was a successful businessman who bought a team at exactly the right time. Which answers the question: How do you become a billionaire?
First, you get $96 million. Then you buy a baseball team. Then you wait. It works every time.