Reds not for sale: 'Absolutely zero chance,' says Phil Castellini, team president
In just a few months, Bob Castellini slashed player payroll at the Cincinnati Reds by 15%, enraging some fans now calling for him to sell the team.
Other changes in his business empire – a consolidation in his produce companies and the sale of his Arizona resort business – raise the question: Is Castellini mulling just that, selling off the Reds?
Who owns the Cincinnati Reds?:Here's the list
Doc:Maybe Bob Castellini should sell the Reds. What an utterly sad day for Cincinnati.
“Absolutely zero chance. The team is not being shopped. (Selling the team) is not being contemplated,” Phil Castellini, the Reds president and chief operating officer, told The Enquirer of his father’s future plans before the Reds open the 2022 season Thursday in Atlanta. He added his father and co-owners originally purchased the team to ensure it would remain locally owned.
The Castellinis and Reds officials emphasized the latest trades are part of a bigger plan to win – but were vague on the timeframe. They admit the latest trades saved the team some money but they've always insisted it’s being reinvested back into the team’s “player development pipeline.”
But after five winning seasons under 16 years of Castellini ownership and never advancing in the four times the Reds have made it to the postseason, fans are growing tired of rebuilds and non-competitive teams. Recent trades set off a new wave of social media posts by fans, calling for Castellini to sell the team.
Cincinnati Reds fans: 'A bunch of endless promises'
Chris Lawhead, a 46-year-old project manager at a local utility, is so frustrated with the Reds that he’s considering skipping the Opening Day game for the first time since he was deployed overseas in the military from 2004 to 2006. A lifelong Reds fan, Lawhead remembers working in concessions at Riverfront Stadium when he was a teenager. Now, he’s worried 2022 could be the worst season in decades with maybe fewer than 60 winning games.
On Facebook, he’s urged Castellini to sell the team.
“In 2006, Castellini said they were buying the Reds to win and anything less was unacceptable – and it’s been a bunch of endless promises ever since,” Lawhead told The Enquirer, adding he expects down years, but wants a team that can win 90-plus games a season to make it to the playoffs. “Phil Castellini talks about being patient but we’re paying a premium to watch a non-competitive team.”
The criticism comes after two seasons in which the Reds contended for a playoff spot – abruptly followed by big roster cuts. Gone since Nov. 1: Tucker Barnhart; Wade Miley; Nick Castellanos; Sonny Gray; Jesse Winker; Eugenio Suárez and Amir Garrett.
Job cuts at Castellini's companies
Castellini’s maneuvers come amid other changes to his business holdings. Early this year, produce shipper Castellini Cos. said it had cut 150 jobs as it completed a consolidation of its produce business to focus on temperature-controlled supply chain and other services. Also last year, Castellini unloaded his Arizona resort business for $85 million.
While several sports economists see the latest wave of trades as a cost-cutting move by a small-market team owner, many are intrigued by other changes elsewhere in Castellini’s business empire. He sold off his resort business and he’s made big changes at his produce distribution company – does he need money? Despite protestations, could he be looking to sell?
Reds officials told The Enquirer the team lost more than $40 million in 2020. The team lost another $2 million in 2021. Reds officials said the team has taken on additional debt to absorb the losses, but declined to specify how much.
Victor Matheson, a sports economist with the College of the Holy Cross in Worcester, Massachusetts, said Castellini could be looking to recoup some financial losses from the past couple pandemic years, playing “small money ball” by going cheap on payroll. But he noted the soaring values of MLB teams and wondered if the prospect of selling the Reds for $1 billion or more might be more enticing.
“These assets (the teams) have skyrocketed – at some point, they’re more valuable than the other asset (the business that financed the owner’s purchase of the team),” Matheson said. “All of a sudden, they’re not just a toy you can play with, they’re really valuable businesses.”
Multiple people familiar with Castellini, 80, granted anonymity to speak candidly, believe he has no intentions of selling the club despite any changes in his other businesses.
There are 19 investors listed on the team's website who hold at least one ownership share. Castellini owns the controlling share and was approved by fellow Major League Baseball owners when he bought the club in Jan. 2006. It's not clear how many shares Castellini owns, but he's believed to hold the most shares in the ownership group.
As the Reds lowered player payroll, Castellini has continued to resist cash calls – asking investors for an extra infusion of cash – from stakeholders in the ownership group.
Reds trade talent, some fans urge Castellini to go too
Reds officials say their strategy is about avoiding the rotational win-now and rebuilding cycles, building more organizational depth that can win this season and contend regularly in the years to come. They urged fans to buy their tickets and see for themselves.
“The motivation is and has been about winning. And establishing sustainability,” Bob Castellini said in a March 24 Q&A on the Reds’ website with team-employed radio broadcaster Tommy Thrall. “But winning in the playoffs has got to be our primary focus – short term and long term. The trades were about moving players to maximize return, aiming for the best talent and highest upside possible.”
Trading fan-favorite players is a new shift under Castellini. He didn't sign off on trades involving Todd Frazier, Billy Hamilton or Aroldis Chapman until those players were past their peak value.
The diminished returns for some of the Reds' 2014-15 trades may have prolonged their rebuild process. These latest moves were geared toward trading players closer to their peak value. Winker was an All-Star last year. Gray was on a team-friendly contract considering the cost of starting pitching on the free-agent market.
"We depend more on our fans as an income generation than most teams because we’re smaller as far as getting the media money and some of the other things that come along with more population," Castellini said in a March 2021 interview with The Enquirer's Paul Daugherty, referencing the team's local TV deal.
"You can’t spend what is valued," Castellini said last year. "For instance, if you buy a home and it goes way up in price, does that mean you sell it or increase your mortgage? Absolutely not."
In the 16 seasons since Castellini bought the team, he said there's been money distributed to owners once. BAMTech, a streaming and technology company that originated from Major League Baseball Advanced Media, sold to Disney for more than $1.5 billion in 2017, which reportedly netted each MLB team more than $50 million.
Castellini said last year about 30-35% of the monies from the BAMTech sale were distributed to the ownership group and the rest were put into the team.
"In 16 years, this is the first time we ever paid anything out," Castellini said. "In an over 16-year period, what we paid out was less than a 1% return for a 16-year period."
How the COVID-19 pandemic upended the Cincinnati Reds
When the Reds were in the midst of a six-year playoff drought, they were set to enter the 2020 season with a franchise-record payroll near $150 million. They signed infielder Mike Moustakas and Castellanos to four-year, $64 million contracts, the largest free-agent signings in club history, along with Miley (two years, $15 million) and outfielder Shogo Akiyama (three years, $21 million).
The Reds spent more money in free agency during the 2019-20 offseason than they did in the previous decade combined, highlighting the urgency to end the playoff drought and build a World Series contender.
Then everything shifted once the pandemic hit. They expected increased attendance to help offset their increase in payroll, but it turned into a 60-game season without fans. The Reds reached the playoffs for the first time since 2013 under an expanded postseason format, but the loss of ticket revenue affected all 30 Major League teams. Players were paid prorated salaries for the shortened season and owners had a major drop in revenues.
Atlanta, owned by Liberty Media, reported $178 million in revenue in 2020, down from $476 million in 2019. Chicago Cubs owner Tom Ricketts infamously told ESPN the “scale of losses around the league is biblical.”
Most, if not all, teams experienced layoffs and furloughs throughout 2020. The Cubs reportedly laid off more than 100 employees. The New York Yankees reportedly furloughed about 60 people on their player development staff because the minor-league season was canceled. The Reds didn’t avoid furloughs or layoffs, either, announcing pay cuts and furloughs for 25% of their employees, but they did pay minor-league staff despite the canceled season.
The Reds’ big financial push, however, stopped in its tracks after the 2020 season. The team traded closer Raisel Iglesias for a minor leaguer in a salary dump and cut reliever Archie Bradley, which may have cost the club in the 2021 playoff race as the bullpen ranked among the league's worst.
After finishing last season with a payroll near $130 million, the Reds signaled more payroll cuts when they traded Barnhart on the first day of the offseason. General Manager Nick Krall said in a press release the club must "align our payroll to our resources."
Their 2022 Opening Day payroll sits around $110 million, which ranks 21st in MLB, according to FanGraphs.com's estimates, and is about $38 million under the MLB average. Payroll briefly dipped below $95 million this offseason after the Reds' flurry of trades following the lockout, but they signed four Major League free agents to one-year contracts, including left fielder Tommy Pham to a $7.5 million deal.
The Reds don’t have a guaranteed contract on their books past the 2023 season when the team holds club options for Moustakas and Joey Votto, adding to speculation the Reds could be positioning themselves for an ownership change.
Cincinnati Reds fans call for Bob Castellini to sell the team
Castellini, who’s faced plenty of criticism during his tenure, got a fresh batch of calls by fans urging him to sell as the cuts came in. The Enquirer's Daugherty also openly suggested selling the team. On March 15, there were a handful of Reds fans who stood outside of Great American Ball Park with signs urging Castellini to sell his interest in the team.
"Fire Sale for the Cincinnati Reds organization!! Might I suggest we sell the team? Yes. Bob Castellini, you sir are a failure. Go make your millions at your food place and give us our baseball team back. $80 Million over three days down the tubes. Ridiculous,” AJ Quatkemeyer, a manager of a jewelry store and Crestview Hills resident, posted on March 14 with an image of team mascot Mr. Redlegs holding a sign saying "Sell the team, Bob."
More fans agreed.
A group of Reds fans raised more than $4,000 on GoFundMe to pay for a digital billboard asking Bob Castellini to sell, drawing 177 donations, according to the fundraising website. An organizer of the fundraiser wrote on the website "in a perfect world, the owner of our beloved Cincinnati Reds would actually be a fan of the team and do something, anything really, to help put a winning product on the field."
The Reds are starting on the road for the first time since 1990 after the first week of the season was postponed because of the lockout. Tickets for the Reds' home opener Tuesday remain available a week before the game, something Phil Castellini said he couldn't remember happening so close to Opening Day.
What the experts say about Cincinnati Reds ownership, future
Sports economists see the changes by Bob Castellini as a bid to save money or reinvest it elsewhere in the club.
“The worst thing right now is to be a middling team – if I’m not confident I can make a run at the World Series, what’s the difference between winning 70 or 75 games?” asked Rod Paul, a professor of sport management and analytics with Syracuse University. He noted teams have been pummeled by the pandemic in 2020 and attendance was still off by a third in 2021 placing a huge strain on finances.
Experts were divided over whether cutting the cost of the Reds’ roster might be part of plan to sell the team.
“Other owners have had fire sales and not sold,” said Rodney Fort, a sports management professor at the University of Michigan.
Andrew Zimbalist, a sports economist with Smith College in Northampton, Massachusetts, said getting out of pricey contracts with expensive players and having a roster of young talent might be a way of making a team appealing to a buyer.
“If I’m thinking of buying a team that’s not the best, I want as clean a slate as possible… with good, young players and no long-term contracts,” he said.
Bob Castellini juggles Cincinnati Reds, vegetables
The changes at the Reds come after Bob Castellini has made some big changes in his business empire.
Castellini cut his college education short to help save his dad’s flagging business. Eventually, he took it over and helped grow it to become one of the largest produce distributors east of the Mississippi River, supplying fruits and vegetables to supermarkets and restaurants alike.
So what’s going on with that? Well, lately the whole supply chain crisis that erupted after the COVID-19 pandemic hit.
In a bid to contain food inflation, major supermarkets such as Kroger and others have squeezed suppliers – sometimes even cutting middlemen out.
Officials with the Castellini Cos. say they’ve shifted some of their activities toward more specialized functions. The company is doing more repackaging of produce, so converting large crates of loose vegetables into crates of pint packages of veggies. The company is also shipping more fruits and vegetables with a growing fleet of refrigerated trucks.
Gone are the companies’ ripening operations – it no longer ripens bananas or tomatoes in storage facilities.
Last fall, Castellini Cos. was ranked the 12th-largest private business on the 2021 Deloitte Cincinnati USA 100 with revenues of $950 million and 2,219 employees during the latest year. That was down from $1.5 billion in sales and 3,100 employees from the 2019 ranking.
While the Castellini Cos. revenues have declined and cut jobs with the changes, company officials say the businesses remain profitable.