Drayton McLane

April 1, 2003 by  
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Squeeze Play
by Lynn Ashby

“Do you know the hardest thing to do in sports, any sport? It’s to hit a baseball. I have asked other athletes and coaches in other sports. They agree. Michael Jordan spent a year in minor league baseball and only hit .202. If you go up to the plate and only get a hit three out of 10 times, you‘re doing great.”

Drayton McLane Jr., owner of the Houston Astros, ponders the difficulty of hitting a baseball. Indeed, even the best athletes can’t do it very often. Last year, Jeff Bagwell did not successfully hit the ball seven out of 10 times (a .291 average). This year, McLane is paying Bagwell $17 million. All told, McLane is paying his players $72 million. The average salary in major league baseball is $2.4 million a player; so when you go to a game, you are looking at a bunch of young millionaires.
All of them, every single one of them, miss far more balls than they hit. But when they hit a ball into the top seats, or, conversely, when an Astros pitcher sends the ball over the plate and that poor batter is swinging at air, there is a certain thrill that racks the metal timbers of the ballpark. “It is the unpredictability,” McLane says. “Last year, at the World Series, the San Francisco Giants were eight outs from winning the World Series. It was the sixth game. Eight outs away. They had a five run lead, and they lost it.”

McLane is sitting in his Houston office, a corner with a high ceiling in what used to be Union Station, overlooking the left field of his ballpark. A well-hit homer, hopefully by Bagwell, could land on his desk. The desk is a table with small piles of papers neatly laid out. There is no computer. On a nearby table are two baseballs and one football with a gimme cap, both from the Houston Texans.
During baseball season, he commutes to his Houston office from his home in Temple in his private plane, a 45-minute trip, usually coming with his wife, Elizabeth. (His two sons are not involved with the franchise, but both work in other McLane enterprises.) During the Astros’ home stands, the McLanes stay in a hotel apartment four blocks away. “We play 81 home games, usually six games together against two different teams. I see about 70 of them.”

In the stadium, he has an owner’s suite to entertain guests, but he prefers to mingle with the paying customers. “I sit there in the Diamond Box (a group of seats behind home plate). Section C, Row 1, for the first two or three innings, then I start wandering around, asking people how they like the game, that sort of thing. Our motto here is ‘customer service,’ and I practice it every game.” Often fans come up to him with comments – at 6 feet 3inches, McLane is easy to spot. Then at the beginning of the seventh inning, he returns to his seat for the finale.
McLane became sole owner of the Astros through a circuitous route. His grandfather started a wholesale food distribution business in the small central Texas town of Cameron in 1894, called McLane Company Incorporated. McLane’s father continued the business. Drayton Jr. was born in Cameron on July 22, 1936, attended the local high school and graduated from Baylor University in 1958 with a B.B.A. (He is now chairman of Baylor’s board of trustees.) After earning an M.A. at Michigan State University, he followed the family tradition and returned to Cameron to work for his father.

“We distributed in a radius of 100 miles, but eventually we had to move to Temple so we could be on the Interstate,” he says. The business grew until McLane Co. was distributing food in every ZIP code in the nation, including Hawaii and Alaska. By 1965, he was president of the company, which had 55,000 customers and 5,000 employees.

In the meantime, Sam Walton decided his Wal-Mart super centers should go into the food business. He contacted McLane and said, “I want you to deliver my food.” In 1990, McLane became vice chairman and a director of Wal-Mart, and the next year the two companies merged. But the corporate life was not totally satisfying, and McLane resigned five years later. “I’m an entrepreneur,” he explains, “and I wanted to go back to being an entrepreneur.” He re-entered the wholesale food distribution business and now heads up some 20 different companies including firms in Spain, Great Britain and Poland.
McLane has always been a baseball fan. Growing up, like many boys in Texas, he was a St. Louis Cardinals fan, since that was the closest major league baseball team. “My dad once took me to St. Louis to see the Cardinals, and he took me to see the Houston Buffs. I have great memories of those times,” he recalls. “When my sons were teen-agers, I took them to Chicago and Toronto to watch games so they could have the same memories of the game that I have. Baseball is all about memories.”
In the early 1990s, Robert Onstead, who at the time owned Randalls, and a gathering led by banker Ben Love known as “the Love Group,” were negotiating with Astros owner John McMullen to buy the team. Onstead knew McLane through the wholesale grocery business and asked him if he would like to join the prospective buyers. McLane said he wasn’t interested. After long but fruitless negotiations with McMullen, who was not popular in Houston, the prospective buyers finally gave up.

“McMullen was so difficult to deal with,” McLane says, “but I thought that I might try to do this on my own.” After four months of talks, in November of 1992, the sale was clinched, and McLane stood as the sole owner of the Astros. The cost: $117 million. He refuses to put a price on the club today. It was an iffy business deal and still is.
He says he lost money on the team last year. He won’t say how much he ran in the red, but he has revealed in the past that the Astros lost around $11 million in the 2001 season, which put his total losses at $164 million. Many owners of sports franchises have several different businesses and are accused of cooking the books to show their teams are losing money. McLane stoutly denies he does this. “Every company I have stands alone, but my losses with the Astros would have been even greater if I charged the franchise for the use of the plane and the Houston apartment. I don’t. Also, sometimes one or more of my executives in my other operations will do some work for the Astros, but I don’t put those expenses on the franchise’s books.” He pays himself “a very small salary” as CEO.

Not all of the money involved in the team is his money. Minute Maid Park was funded with $180 million in rental car and hotel taxes. McLane put in another $80 million and pays an annual lease to the Harris County-Houston Sports Authority of $7.2 million. “It’s one of the highest rents in baseball,” says the tenant. Still, he says that Houston needed a new ballpark. The Astrodome was great in its time, McLane feels; but while the old split sports idea of football-baseball in one stadium sounded like a good idea, it didn’t work anywhere.
“ Baseball is meant to be played outdoors and downtown.” And downtown is where the action is, or will be. Surrounding the ballpark are cranes and empty parking lots with “For Sale” signs. “We see construction everywhere,” says McLane. “There is a new hotel going up across the street, and the convention center hotel would not be under construction if it were not for this ballpark. There are 162,000 people working downtown, and we want them to come here after work. This stadium has been good for the Astros and good for Houston. In five or 10 years, the way things are going, this will be the heart of the city.” He doesn’t own any property in the area, although he says half the real estate agents in town tried to sell him some.

Now in his 11th year as chairman and chief executive officer of the Astros, McLane is happy with the situation. The Astros have won the National League Central division in four of the last six seasons. In the last 10 years, only the Atlanta Braves have had a better win-loss record in the National League. The Astros have a ballpark that McLane feels is one of the two best in major league baseball. (Wrigley Field being the other although it lacks several amenities that Minute Maid Park has, including a retractable roof.) The year before McLane took over the franchise, 1.2 million fans attended. By 2000, the first season in what was then Enron Field, the total jumped to 3.1 million, then slipped to 2.9 million in 2001 and 2.5 million last season. The Astros also have brand-new facilities for spring training in Florida and run what many consider the best minor league operation in baseball.

There have been a few bumps in the road. With the fall of Enron, McLane wanted “to move away from its tarnished image. It cost me $2.1 million to get back the naming rights.” There was the parting of ways with the popular Larry Dierker as manager. “Dierker was ready to move on. He was worn down,” McLane says. “He still loves the Astros, and it’s mutual.” Then there is the wear and tear on McLane himself. “When I first bought the team I thought I’d spend about 10 percent of my time on the franchise and just let other people who knew more about baseball than I did run the operation. It didn’t work out that way. We’ve had labor problems, contract talks, the economy. Today, I spend 40 percent of my time just on the Astros.”
He still has two goals which he constantly strives to achieve. “First, I want us to be champions. The Astros have been around since 1962 and still have not won a World Series. Second, I want to use the franchise to make a positive difference in the community. One reason I accepted the bid from Minute Maid for naming rights was because they expressed a genuine desire to become more involved in Houston. And they are. Minute Maid committed to spending $100,000 annually on youth baseball in Houston, including improving youth ball fields; and the company will do this every year for the next 28 years.”
A firm Baptist, McLane has almost an obsession with community involvement. The back of his business card reads: “Our Mission – Through the strength of the National Pastime, we will enhance the quality of life in our community through educational, health and spiritual endeavors.” There is the Astros in Action Foundation, community development projects, a Grand Slam for Youth program and a brochure that invites, “We welcome charitable donations requests.” All told, the Astros have 3,000 different community projects under way. “And,” McLane adds, “we’ve got Gene Pemberton, the first full-time chaplain for any major league baseball franchise.”

Any surprises in getting into major league baseball from a background of hauling cabbages to Waco? “As a businessman, I was surprised as to how intense baseball is. You play 162 games. If you win 63 percent, you are a winner. It is so competitive, which is why we pay these enormous salaries. It is so complex. It is so unpredictable.”

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