May 2003 Actuarial Review - Nonactuarial Pursuits of Casualty Actuaries

Nonactuarial Pursuits of Casualty Actuaries
Play Ball!
by Marty Adler
After I realized I would never play center field for the Brooklyn Dodgers, my next youthful fantasy was to own a baseball team. One of our Fellows has achieved that dream. He and his wife are part owners of three minor league teams. For one of them he is managing owner, as well as official scorer.
They had long been baseball fanatics—buying Dodgers season tickets, attending college games, and frequenting spring training venues. Later, on their annual vacation jaunts to the Grand Tetons, they attended Pioneer League games. The Pioneer League is one of the lowest rungs in the minor league ladder, with teams in Montana, Idaho, Utah, and Wyoming. They soon realized that professional baseball at its lowest levels still resembled the "grass roots" sport they had both loved in their youth. They wanted to be part of it!
The opportunity arose after attending a Milliman principals meeting in Washington, DC in 1993. An adjacent hotel held a seminar on investing in minor league baseball, which our Fellow attended.
He and his wife first attempted to purchase an interest in a Pioneer League team in Butte, Montana in 1994. Despite essentially operating the team that season, the deal eventually fell through. The next year, however, they officially became owners of the Riverside Pilots (Seattle Mariners' affiliate in the California League) and the Lethbridge (Alberta) Mounties (Pioneer League team without a major league affiliate). Those teams eventually moved and both became affiliated with the Arizona Diamondbacks. The former became the Lancaster (California) JetHawks and the latter became the Missoula (Montana) Osprey. Since our Fellow did not retire until the end of 1998, he logged a lot of frequent flier miles.
In 1999, they added a third team, the Yakima (Washington) Bears of the Northwest League. Originally affiliated with the Dodgers, the team switched to the Diamondbacks in 2001. They now have ownership interest in three of Arizona's six farm teams in the United States.
The ownership structure of each team varies. One team has only five partners, whereas another has more than 40. The constant for all three teams are the three couples that take an active role in day-to-day operations. Our Fellow and his wife manage Yakima, while the other couples, an Orange County, California land developer and his wife and their son and daughter-in-law, manage the Lancaster and Missoula teams. Those two couples previously had extensive experience in minor league baseball prior to our Fellow's involvement. They, too, had been bitten by the baseball bug and have become their closest friends over the years.
The California League team is a full-season Advanced Class A level team. This means the players normally have two to three years of professional experience and are considered major league prospects, as opposed to suspects. The Northwest League team is a short-season (78 games) Class A team. The players are usually first-year professionals drafted out of major college programs, second year players from Latin America, or were originally drafted out of high school. The Pioneer League team is a short-season advanced rookie team. The players are first-year high school or small-college draftees and very young second-year foreign players.
As managing owners, the couple's primary responsibilities are to oversee the activities of their general manager, assure adherence to their business plan, develop a positive ownership image within the community, and maintain relationships with their major league affiliate. They also serve as unpaid casual labor as the need arises, which is frequent. Our Fellow's wife is also the team's CFO.
Our Fellow became official scorer primarily because the local media was unwilling to do the job and he could not find anybody else with the necessary combination of baseball knowledge and computer skills. The duties include keeping score during the game using a computerized scoring program, handling media inquiries during the game, producing box scores for the media immediately following the game, and uploading the final game statistics to the league's "statistical agent."
The most challenging part of the job is making scoring decisions as to hits, errors, wild pitches, and passed balls. Although he has the final say, he involves the media people from the press box in the decision-making process for potentially controversial calls. While the adversely affected team will inevitably disagree with the decision, this approach makes it easier for him to explain to them the rationale for the call. So far nobody has threatened him with bodily harm.
Their most memorable and gratifying moments have come from the major league accomplishments of their former players. After all, the minor leagues exist solely to develop future major leaguers. Seeing or reading about the major league debuts of such players as Raul Ibanez, Jose Cruz Jr., Junior Spivey, Rod Barajas, Joe Mays, and Juan Pierre gives them a warm feeling, not unlike that of proud parents.
Of course, personal satisfaction has also come from two league championship teams. Wearing those championship rings allows him to fantasize about his own baseball career, which came to an abrupt halt when he faced his first curve ball at the age of twelve. "Alas, I gave up baseball to pursue the call of mathematics," said our Fellow.
One of the most humorous incidents involved a visit by Tommy Lasorda to Yakima when they were affiliated with the Dodgers. One night Tommy decided he wanted to manage the team. Given his extraordinary dimensions, finding a suitable Yakima Bears uniform was definitely a challenge. Then, during the game, Tommy was unceremoniously bowled over by a runner he was signaling to score. Afterward, they all had to act as if nothing had happened, although the sight of the Hall of Famer sprawled out in the dirt will forever be a part of our Fellow's memory.
"Our involvement in minor league baseball goes well beyond either a hobby or a business. It is an all-encompassing lifestyle (or incurable disease)," says our Fellow. "Our ultimate goal is that the teams be self-sufficient, although that has not always been the case. The phrase `return on equity' is deemed profane."
Although Mike McMurray tries to keep abreast of current events at Milliman USA, he has not been involved in any professional activities since they moved to Yakima in 2000. After 25+ years in the actuarial profession, he believes it was time for something completely different. Thankfully, when he hears the term "adverse development" now, he thinks of a demoted professional baseball player.