By Bill Shea
Crain’s Detroit Business
Published: October 28, 2012
Charles Johnson, 79, is the San Francisco Giants’ principal owner, reportedly with a 25 percent stake in the team. That’s believed to be the largest among the team’s 32-member ownership group, San Francisco Baseball Associated LP.
But his management style is reportedly mostly hands-off, empowering the top team executives to make decisions on payroll investments and other day-to-day matters.
Forbes estimates Johnson’s worth at $4.7 billion, tied for 72nd-richest American.
His wealth originates from his chairmanship of San Mateo, Calif.-based Franklin Resources Inc., a holding company better known as Franklin Templeton Investments. The investment firm was founded by Johnson’s father in 1947, and Johnson took it over at age 24 in 1957 upon his father’s retirement and after a two-year stint in the U.S. Army.
In 1999, Johnson stepped down as Franklin Templeton’s CEO, a role now filled by his son. Many of the company’s top key management positions are family members, and the firm was grown largely by Johnson and his half-brother, Rupert.
Johnson is the firm’s largest individual shareholder, owning nearly 17 percent of Franklin Templeton stock. Its shares opened Friday morning at $129.16, and he owns 36.5 million of them.
The firm went public in the 1970s and reported net income of nearly $2 billion last year on revenue of $7.1 billion. Its filings with the U.S. Securities and Exchange Commission indicate it had $670 billion under management at the end of 2011 — quite the leap from the $2.5 million in mutual funds under Johnson’s management in 1957.
Johnson lives in a historic 98-room mansion, according to Forbes. The family interest in the Giants dates back to the mid-20th century. Johnson’s father had box seats at the Polo Grounds when the Giants still played in New York City, according to a September profile in the San Francisco Chronicle.
A New Jersey native who graduated from Yale University, Johnson became a minority owner as part of an investment group in 1992 and slowly increased his stake until becoming majority owner last year, according to several reports.
Johnson, who didn’t move to California until the 1970s as his company was growing via acquisitions, initially invested in the Giants when former Safeway Inc. Chairman and CEO Peter Magowan (grandson of Merrill Lynch co-founder Charles Merrill) put a consortium together to buy the team for $100 million in December 1992.
The group’s intent was to stave off then-owner Robert Lurie’s plan to relocate the team to Tampa. Lurie had bought the team for $8 million in 1976 and had been losing money on it because of erratic play and because of the unpopularity of Candlestick Park.
How much Johnson initially invested has never been disclosed.
Magowan stepped down as principal managing partner in 2008. His replacement was Bill Neukom, perhaps best noted as principal legal counsel for Microsoft Inc. and Bill Gates for 25 years.
Neukom retired, reportedly under pressure or orders from the team’s operating committee, in September 2011 amid media reports that there were disputes over communication about spending and revenue apportionment. He divested himself of his stake in the team.
Johnson acquired his majority ownership by buying some of Neukom’s shares, and those of other stakeholders who have died in recent years.
He reportedly is a very low-profile, hands-off owner. He wasn’t in the stands in Texas when the Giants beat the Texas Rangers two years ago to win their first World Series since 1954 — when the team was still in New York.
Johnson relies on team CEO Larry Baer, who is a minority owner, and Brian Sabean, senior vice president and general manager, to oversee day-to-day operations of the team.
“I can’t remember one time he has ever asked me, ‘Why did we make this trade?’ or ‘Why aren’t the seats filled?’ ” Baer told The Chronicle.
That doesn’t mean Johnson’s influence isn’t felt.
Being able to keep an expensive and talented roster together to make the World Series two out of the last three seasons is incredibly difficult because of the financial pressures involved, said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC.
“That takes commitment from ownership and the general manager,” he said. “The Giants, for them to come back again, in a short amount of time, that’s so difficult. A lot of owners will pay for that one-time shot, and then the team is different the next year.”
San Francisco’s Opening Day payroll this season, including prorated signing bonuses, was $131.3 million. The team added a few million more in salary with midseason trades for key starters such as second baseman Marco Scutero and right-fielder Hunter Pence.
The Giants didn’t exceed $100 million in payroll until 2011. That spending threshold has been passed by the Detroit Tigers for the past five seasons.
The Giants struggled financially, reportedly losing $100 million over seven seasons in the 1990s, in part because the team was mediocre and because fans disliked windy, decrepit Candlestick Park, which the Giants shared with football’s San Francisco 49ers. The team privately financed $357 million AT&T Park, which opened in 2000.
Forbes values the team at $643 million and estimates it had $8.8 million in operating income on revenue of $230 million last year. The team has been profitable since moving into the new stadium, and it’s enjoyed a two-year sellout streak.
The Giants ownership includes several other major names.
Among the other investors in the team are iconic venture capitalist Arthur Rock, who financed the infancy of Silicon Valley’s giants, and former Yahoo Inc. President Jeff Mallett, who also co-owns British pro soccer team Derby County along with Rochester sports entrepreneur Andy Appleby.
Sports insiders admire the team’s ability to keep egos in check.
“Sometimes when you have multiple owners and have to agree on something, it can be difficult,” Rapkoch said.
Bill Shea: (313) 446-1626; firstname.lastname@example.org. Twitter: @bill_shea19
By Bill Shea