Argyros Will Sell Mariners--and Buy Padres : Orange County Developer Wants to Be Near Home; Kroc Era to End in San Diego

SAN DIEGO —  The Kroc Era in San Diego baseball neared an end Thursday when it was announced that Joan Kroc had accepted an offer from Orange County developer George Argyros to purchase the San Diego Padres.

A purchase price was not announced, though Kroc was reportedly asking between $50 million and $65 million for the club her late husband Ray purchased for $12 million in 1974.

Argyros, the owner of the Seattle Mariners since 1981, must sell that franchise because of a major league rule prohibiting an individual from having an interest in more than one club.

The sale of the Padres is subject to approval of both major leagues and Commissioner Peter Ueberroth. The transaction must be approved by three-fourths of the 12 National League owners and a majority of the 14 American League owners. The process may take as long as 90 days and may not be concluded until an owners’ meeting in June.

Argyros, 50, a resident of Newport Beach, decided to make his bid for the Padres because of their proximity to both his home and his other business interests.

“My decision is related to where I spend my time and where it makes sense to have my interests,” Argyros said. “My family is my No. 1 priority. We live in Newport Beach and my businesses are in San Diego County and Orange County primarily. I couldn’t afford the time it took in Seattle. I couldn’t serve two masters.”

Argyros is involved principally in the development of apartment units and commercial office space. He was a principal shareholder in AirCal, which is being sold to American Airlines.

Negotiations between Kroc and Argyros began several weeks ago, according to Argyros. He signed an offer a few days ago and it was made final Wednesday.

Kroc had announced that the Padres were for sale in November, explaining that she wanted to be able to spend more time on charitable causes. She had inherited the club when Ray Kroc died on Jan. 14, 1984.

Beth Benes, Kroc’s attorney and the Padres’ general counsel, conducted the negotiations.

Kroc herself appeared only briefly at the beginning of the press conference, introducing Argyros and his wife Judie.

“We wanted to find a buyer committed to the team in San Diego,” she said. “At least three or four individuals were disqualified because they indicated interest in moving the franchise.”

Argyros, she said, assured her that the club would not be moved.

According to Argyros, nothing was included in the purchase agreement to prohibit the franchise from being moved.

“We’re dealing with honorable people,” he said. “I wouldn’t sell Seattle if I was interested in moving a team. I hope to win the World Series right here with the San Diego Padres.”

The Mariners, an expansion team in 1977, are Seattle’s second major league baseball team. The Pilots were an expansion team in 1969, but they left Seattle after one year for Milwaukee because the Seattle ownership was underfinanced.

In 1977, the late entertainer Danny Kaye was among a group that formed ownership of the Mariners. Argyros bought the team on Jan. 14, 1981 for $13 million.

The Mariners never finished higher than fourth in Argyros’ six years as owner. He went through five managers in that period, the latest being former Padre Manager Dick Williams.

Technically, Argyros remains the Mariners’ owner and will not take charge of the Padre operation until the sale is approved.

This became perfectly clear when Argyros was asked about the possibility of acquiring free-agent outfielder Tim Raines for the Padres. This was the first question he was asked.

“I really can’t control that because I don’t own the team,” he said. “It might take 90 days to get the transaction approved. Hopefully, we can get it done much sooner. The current owners are the owners until the franchise is sold.”

Should Argyros be approved as the Padres’ owner before he can sell the Mariners, a provision would be made to avoid conflict of interest.

“It might be necessary, in fact, to put George’s shares (of the Mariners) in a trust and prohibit any trading or dealing between the two teams,” American League President Bobby Brown said.

In the meantime, Argyros said, the Padres would be in the hands of Kroc and Ballard Smith, the club president. He said any decisions would be made by them.

Once the transaction is complete, Smith will depart as club president. He has held the position since 1979, but he has said he wants to pursue other business interests.

Argyros, who met with the front-office staff after the press conference, said no sweeping changes were planned.

“I have high regard for (Executive Vice President) Dick Freeman as well as (General Manager) Jack McKeon,” he said. “They will carry on in their current positions.”

Club executives, he said, would be given freedom to do their jobs.

“I really believe in choosing very good people,” he said. “I have a very direct relationship with my key executives, and I expect them to run the business. I get the best people, give them the support they need and then get out of the way. But I know where the buck stops.”

Argyros last made the news in November when he and William Lyon realized a $30-million gain on the sale of AirCal to American Airlines in a deal valued at $250 million.

Argyros and Lyon acquired a majority stake in AirCal in 1981, when they won a bidding war with a Miami-based conglomerate. The airline had been the last major piece of the collapsed empire of failed San Diego financier C. Arnholt Smith.

The two investors likely doubled their initial investment in the airline that was sold for $61 million in 1981.

However, it was a string of successful real estate developments in Orange County, that bankrolled Argyros’ entry into the airline industry and professional baseball.

Argyros’ real estate holdings are difficult to ascertain because his closely held Arnel Development Company and Affiliates, a Costa Mesa-based real estate development company, does not report earnings or revenue.

Arnel has developed nearly 5,000 apartment units and nearly 700,000 square feet of commercial office space, mainly in Orange County.

Additionally, Arnel is developing Metro Pointe, a 53-acre tract in Costa Mesa near South Coast Plaza. The first phase of that development includes 90,000 square feet of commercial office space and 296 apartments. The balance is expected to include hotels, mid-rise office buildings and specialty retailing.

Argyros’ success in Orange County real estate development has been a “true Horatio Alger story,” according to G.T. (Buck) Smith, president of Chapman College, Argyros’ alma mater.

“He started out with a $1,200 loan in 1962 when he one day realized that he didn’t want to work for anyone else,” Smith said.

Argyros hasn’t forgotten his alma mater, according to one associate who credited Smith with “singlehandedly rescuing that college from financial bankruptcy.”

In Seattle, city officials were viewing the pending sale of the Mariners as a good move.

“This comes as a surprise, but it’s a wonderful opportunity for our local community,” said King County Executive Tim Hill, who negotiates the Seattle Mariners’ lease to play in the Kingdome. “I have no idea whether there are potential local buyers. I view this as a great opportunity for local ownership. We want to keep baseball in Seattle.”

Before the 1986 season, Hill and Argyros negotiated a contract that would allow the Mariners to leave Seattle after 1987 if one of two conditions is not met.

Over a two-year period, the Mariners either had to sell 20,000 season tickets or a total of 2.8 million tickets to guarantee they would stay in Seattle. This season, the Mariners would either have to sell 15,600 season tickets or 1.8 million tickets to meet one of the conditions. Thus far, the team has sold 4,500 season tickets.

If it appears neither criteria would be met and Argyros wanted out, he must offer 100% of the team for sale to Seattle interests on Aug. 1. Then, if nobody met his asking price within 120 days, he could move the team.

New Seattle ownership would also abide by Argyros’ agreement. That’s why Seattle interests are hoping local ownership surfaces.

“This is a win-win situation,” said John Hough, chairman of the Mariners’ marketing task force. “George becomes a winner because he goes to San Diego and essentially accrues the benefit of being a local owner. Up here, it’s prospectively a win situation because it gives us opportunity to have solid local ownership. If we have local ownership, it will relieve a lot of anxiety in our community over whether we’ll have baseball.”

Times Staff Writers Steve Dolan and Greg Johnson contributed to this story.