Swinging for the Fences: Jonathan Mariner Interview

Jonathan Mariner sports a shiny 1997 World Series championship ring on his right hand—a trophy from the nine years he spent  with the Florida Marlins. Mariner got into the business of professional sports by answering the fledgling baseball club’s CFO wanted ad in 1991. He went on to become executive vice president, finance, and CFO of Major League Baseball, where he oversees, among other things, the league’s central office budgeting, financial reporting and $1.5 billion leaguewide credit facility. A Harvard MBA, Mariner says his pro sports post may be high-profile, but at its core, it’s a nuts-and-bolts accounting job.

He spoke recently with the JofA about his career path, his fixation with becoming a CPA and the economics of baseball. What follow are excerpts from that conversation.

Editor's Note

“Corner Office Conversations” is an occasional series of personal talks with high-level leaders in accounting and finance. Read bonus content of this Q&A here .

JofA: What were some of the early influences that set you off on the path to Harvard Business School and into the business world?

Mariner: I grew up in Norfolk, Va., and went to public schools. My parents didn’t go to college. Norfolk is a Navy town, and they worked for the Navy. I grew up not really knowing what I wanted to do. I considered at one point being an architect—my uncle’s an architect—so I saw that and I thought that looks kind of neat. I was always good at math so I drifted toward engineering. Then I met Bill Aiken. Bill is a family friend who lives here in New York City who was one of the early leaders of the National Association of Black Accountants. And Bill was talking about the accountancy profession. He mentioned at the time, this was back in the early ’70s, there were only about 130 black CPAs in the entire country. And as a young kid looking for career options and looking for role models, I saw Bill Aiken and thought, “That’s kind of a neat profession.” I thought that would be kind of a nice way to build upon the whole math area that I really, really loved.

I spent my first two years at the Naval Academy. I ended up going there because I had a full scholarship. I had an older sister who was going to a private college, and my parents were kind of struggling, and I thought this would be a great way to take the burden off them. I got there expecting to be a management major thinking that would get me to where I wanted to be, and the biggest reason I left was I didn’t think I’d get to be a CPA soon enough, given the military obligation I would have faced had I stayed longer than two years. And so it really drove my decision to transfer to the University of Virginia and major in accounting. So I always had this fixation to be a CPA. I am a dyed-in-the-wool accountant.

JofA: What prompted you to pursue your CPA, and has it made a difference in your career?

Mariner: Strategically, I thought it would be a great place to really build my background. And I’ve never regretted it. I remember I took this one course at Harvard. There was a textbook that we used called Accounting: The Language of Business . And I thought that perfectly captured how I viewed the world of accounting. It is a language; it’s how you communicate, how you keep score in business. And I thought no matter how one pursues their career in the finance world, if you don’t know accounting, it’s very difficult to really be able to excel, in my view, in a way that can make a difference.

For all the Wall Street gurus out there, especially those starting out in their career, if you’re doing a big M&A deal, you’re going to start with some of the advanced accounting topics. How are we going to structure this merger? How does the thing look when you consolidate it? What’s on the balance sheet? What does the P&L look like? What’s the consolidated earnings per share going to be? Real sexy-sounding things from a financial point of view, but the accounting rules dictate how you do it.

JofA: One of your responsibilities is giving updates at team owners’ meetings about leaguewide finances. From 50,000 feet, how is the financial picture?

Mariner: Things are good these days. The league’s finances are fairly straightforward: we, at the league office, are similar to a cost center. We cover our costs by allocating a portion of the national TV contract revenue to our expenses. We remit the remainder of those proceeds to the clubs, which shows up on their books as one of several “national” revenue sources along with revenue from licensing of team names, logos and trademarks, et cetera.

The clubs’ finances are based on their individual local market activities—local radio, TV and cable revenue; stadium revenue from gate receipts, suites, parking and concessions; stadium signage; sponsorships, et cetera. Their bottom line is determined by offsetting these revenues by their locally incurred expenses for items such as player payroll, stadium operations, player development expenses and marketing expenses.

When I came to this office six years ago, we were in the midst of renegotiating our collective bargaining agreement, our CBA, with the players association. One of the bigger challenges that we had to face back then was the fact that the business model wasn’t working. It was simply difficult for a team to make money given how we were operating. Three things came out of that CBA that really made a difference.

We moved to a model with enhanced revenue sharing, where large market clubs give more money to the clubs that don’t have as much, aren’t in as large markets.

Since we have been, unlike the NFL, unsuccessful in getting a salary cap in place, we instead were able to implement with this 2002 CBA a luxury tax or I guess it’s technically called a competitive balance tax. I call it the speed bump.

It basically says there are no spending limits, but if you spend over a certain payroll dollar amount, you pay a tax on the amount that exceeds the spending threshold. And each year that you exceed that threshold the tax rate goes up. The highest rate is 40%. So it’s a pretty high premium to pay for the extra dollars over the limit. It tended to create what we call “salary drag.” It slowed the rate of growth of payroll, which gave us a chance to improve profitability and improve our clubs’ P&Ls.

But the last thing was the most important tool and this is what I spent, during my early years here, the most time working on—our debt service rule (DSR). It’s basically a club debt limitation rule that is tied to the P&L rather than the balance sheet. The old rule was an asset-to-liabilities ratio. This rule is an EBITDA-based ratio that really puts more focus on the P&L. So in implementing that rule, one of the key roles that I was able to play with my staff was to provide the underlying framework and reporting tools for the model we have today.

We require each club to provide the commissioner’s office with a three-year forecast including a P&L, balance sheet and statement of cash flow all tied out on a forecast basis. We use these forecasts to see how clubs project whether they will be, or remain, in compliance with the DSR, how they manage their balance sheet within the debt rules and  how that affects overall industry profitability.

On the scorecard back in 2002—and Commissioner [Bud] Selig loves to talk about this with great pride now that we’ve turned the corner—our industry consolidated EBITDA was approximately negative $480 million among the 30 clubs. In fact, we only had about three clubs with positive EBITDA back then.

As of the end of 2007, we were at about $520 million positive EBITDA. So that’s a favorable swing of about $1 billion in five years.

JofA: What impact will the human growth hormone issue have on the league’s finances?

Mariner: You know it’s interesting, this has been an ongoing issue for us, and pardon my huge bias/soapbox comment here, but we think unfairly there’s been much more focus on us. Some will argue that we deserve some of what has happened, and I won’t dispute that, but human growth hormone is a problem that affects all sports.

It has been an ongoing issue for us in particular goingback to 2003. But we’ve also had record attendance every year for the last four years including last year. We like to think on a positive level it’s because our game has become more competitive—we’ve got more competitive ticket prices, more teams are in contention later into the season, so fans go to games for longer periods of time throughout the season versus saying, “My team’s out. I’m going to stop going.”

We like to think that this issue hasn’t really jaded our fans to the point that they don’t want to come. We haven’t seen it yet at the turnstile. We actually dealt with it from a testing perspective in 2003—we began testing at the minor league level in 1999— and we continue to step up the penalties for steroid use. Because we think we dealt with the bigger issue that we can control, we don’t see this as an issue going forward no more than to the extent that it will affect almost any other sport.

JofA: What are your priorities for 2008?

Mariner: A lot of the goals are internally generated. They’re more focused on operational efficiency within our own department, a shift from the more global issues that emanated from the 2002 CBA. This year we’re going to do boring stuff—we want to change the chart of accounts to provide better reporting to our operating units. We just put in, and we’re going to do more with this, an online bill pay system, where vendors submit their invoices to us electronically and they can keep track of them online. We want to pay everything electronically, reduce the amount of paper flow.

JofA: What lessons did you learn during your time with [businessman and then-Florida Marlins owner] Wayne Huizenga?

Mariner: First of all, I call myself the ultimate Wayne Huizenga apologist. I remember saying to him, “You know, Wayne, they teach at Harvard Business School what you do day to day as a CEO and entrepreneur.” In terms of his management style, his approach—it’s textbook. And here’s a guy that didn’t finish college. He is the ultimate entrepreneur and, to me, the ultimate motivator/manager. He’s extremely loyal to his people, something I’ve learned and I try to practice. He cares about the little things, especially those things that affect his customers, his clients, which is why he’s been so successful.

But at the same time he gives his managers the autonomy to get the job done. He allowed people on the Marlins staff to make mistakes. He didn’t want to see it twice or three times, but his approach was, “You mess up—hey it didn’t work. We tried.”

Those are things that I learned from him that I still carry today and that I pass along to others as well.

JofA: What advice would you give young CPAs interested in becoming CFOs?

Mariner: I think the accounting background, the CPA background, is critical. I’ll put it this way—an MBA coming into this job couldn’t be anywhere near as effective as someone who has been a CPA, because at the very end of the day, it’s an accounting-driven job. The things that I deal with, that club CFOs deal with—for example, selling the Washington Nationals and keeping track of how we account for the sale on our books and how it impacted the individual clubs that ultimately owned that franchise—all of those are nuts-and-bolts accounting issues.

But having the broader business background, an MBA in addition to a CPA, I think is a plus because there is a business element to what we do in professional sports.

JofA: You were Major League Baseball’s first African-American senior vice president. Talk about how that was significant for you.

Mariner: Interesting—it wasn’t—partly because I had grown up in a world where you could almost always attach “the first” or “only” or “one of the few” to my title. At the end of the day, you have to produce. Perhaps the expectations are higher, but I’m used to learning pretty fast anyway. And so being the first is something I didn’t really focus on. No matter why you’re here, you have to get it done. 

Bonus Interview Questions

JofA: Talk about your transition from serving as vice president of finance and administration for the Greater Miami Convention and Visitors Bureau to the business of sports. What skills translated between those two industries?

Mariner: The convention and visitors bureau was something of a turnaround situation, and so it presented a huge challenge professionally. By the time I left it was a very, very financially sound, stable, profitable operation. Not just because of me, but I played a key role in getting us there. When I interviewed with the Marlins for the very first time, it was clear to me, as a startup operation, they needed and could use a lot of the skills that I had developed.  

In doing the previous turnaround, I literally wrote the chart of accounts and set up the accounting system and all the basic, boring things—payroll systems and all that stuff—things that the Marlins needed as a startup franchise. And I think they saw and I clearly saw that they could have gotten a lot of big name CFOs, but they need someone to get in there, roll up their sleeves and get the financial department off the ground. And that was something that I was able to bring to them.

Because the CVB was a quasi-public entity—it was private but it received some funding from the county government—the meetings were all public and it was a very, very media-driven environment. So, that was good training for being in the fishbowl world of professional sports.

JofA: Is the business of sports a good career option for finance professionals?

Mariner: The short answer is not necessarily. I don’t want to discourage people from pursuing it. And I say that for one key reason. It is not the high-finance world that people may perceive it to be. It’s high-profile, not high-finance. Day to day, at the team level especially, it is closing the books each month, paying the bills, it’s doing the budgets. It’s not rocket science, but the pace and the pressures of a long season are intense.

So, if someone’s got this huge, high-finance idea, don’t expect anything quite that exciting. For the solid, hard-core accountants and those that are coming out of the world of public accountancy, it’s a great opportunity.

JofA: How much progress has been made on the goal of closing the gap between rich teams and less rich teams?

Mariner: Overall, we have seen significant movement in closing the gap. How much you spend is not necessarily, anymore, the real bellwether to how well you’re going to do. Last year Colorado and Arizona were two of the lower spending clubs in terms of payroll that went further into the playoffs than other clubs that spent substantially more.

So the gap is smaller but, more importantly, the way clubs spend money given the tools—the luxury tax and debt-service rule put in place with the 2002 collective bargaining agreement—really put the brakes on the “Wow, let’s just spend, spend, spend” mentality without regard to the financial consequences, in favor of “Let’s spend more smartly.”

And so now small clubs have a much better chance to compete on the field. Our catch phrase is competitive balance. The Cubs and Indians are projected to make it to the World Series this year. The Indians aren’t a big spending club, and the Cubs have never been either.



Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.