Purdy: Bill Neukom out as S.F. Giants honcho

With the Giants sliding out of the playoff picture after a frustrating summer, it should be no surprise that a personnel shake-up is at hand. The shock is where the shake-up will start: at the top.

The Giants confirmed Wednesday night what this newspaper had reported earlier in the day — that Bill Neukom, the Giants’ managing general partner and chief executive officer, will not return in that role for the 2012 season.

Neukom “will retire from his position effective Dec. 31,” the team said in a news release.

Larry Baer, currently the Giants’ president and chief operating officer, will assume CEO duties, while Neukom will be chairman emeritus in 2012, according to the team.

The team was planning to announce the change after the end of the season.

The sources say that Neukom has been asked to step aside by the 10-member Executive Committee of the Giants’ ownership group. The action is believed to be the fallout from a series of disagreements with the committee during Neukom’s three-year stewardship of the team.

The Giants, who plan to hold a news conference Thursday, might try to spin this as some sort of organizational restructuring in which Neukom and his trademark bow tie will be voluntarily assuming another position with the organization.

But make no mistake, the move is not Neukom’s idea. And the announcement has to be considered a stunner and a bit puzzling.

Neukom’s relatively brief CEO tenure with the Giants featured a 2010 world championship, but he apparently made some financial decisions that alienated key members of the ownership group.

It wasn’t necessarily that Neukom authorized his baseball people to spend $22 million on a new contract for first baseman Aubrey Huff, or decided to add millions of dollars more to the payroll by trading for New York Mets outfielder Carlos Beltran in July. It was that the Executive Committee believed Neukom, as part of his fiduciary duties, should have consulted with them about his major decisions. Instead, the Executive Committee members were infuriated when they sometimes learned of Neukom’s decisions through news reports.

The deteriorating situation with Neukom was kept out of the public eye, but word of it has been leaking out over the past month. The Giants’ ownership structure features 32 people known as “principal partners.” The true power, however, lies with the Executive Committee, consisting of owners with the most monetary investment in the team. The committee appoints the Giants’ managing general partner, who is the frontman for the franchise and has authority over day-to-day franchise activities.

Neukom’s falling-out with the Executive Committee, the baseball sources said, began over how to spend the additional millions of dollars that flowed into team coffers after the World Series championship. For example, one source says that since October, the Giants’ merchandising revenue alone has increased by $1.5 million to $2 million per month over previous years. Ticket sales also boomed. The Giants have effectively sold out every game this season.

Neukom, it is said, believed that this was his money to spend as he saw fit — and he did so, increasing payroll and buying new technology for the baseball department, among other expenditures. Instead, the Executive Committee wanted the money to be put in a “rainy-day fund” for use in leaner times.

Tension between that committee and Neukom built over the past year but supposedly came to a head in recent weeks with the request that he step down. Neukom is expected to remain a minor investor-owner in the team.

Also, while Baer will serve as CEO, another member of the executive committee could possibly assume the managing general partner position. Likely candidates would include Franklin Templeton Chairman Charles Johnson, former Yahoo President Jeffrey Mallett and petrochemical multimillionaire William Chang. All are Bay Area residents.

Fans, of course, will care more about how the 69-year-old Neukom’s absence as CEO will affect the Giants’ baseball operations. After obtaining the job after the 2008 season, Neukom famously introduced a philosophy and written manual called “The Giants Way,” an organizationwide approach to developing baseball talent and setting standards for the franchise’s business division.

The Giants subsequently hit the baseball jackpot in 2010 by winning their only World Series title since moving to San Francisco in 1958 — although there is a debate about whether “The Giants Way” was as much of a factor as the hard work of general manager Brian Sabean and his baseball staff. They assembled a brilliant pitching staff and patchwork lineup that manager Bruce Bochy steered to a championship. Neukom waded into the clubhouse champagne-spraying celebrations along with the players, clearly enjoying the party.

He should have. Neukom was the first Giants’ principal owner to guide the franchise to a championship since Horace Stoneham in 1954, when the franchise was in New York. Neukom joined the Giants’ ownership consortium in 1995. Thirteen years later, he replaced Peter Magowan, who had been CEO of the Giants since 1993.

Magowan, of course, made his own awkward exit. He took flak for not being more diligent in policing the Giants’ steroid issues that exploded in a scandal involving slugger Barry Bonds. But Magowan was criticized primarily for authorizing several exorbitant player contracts, including a $126 million deal given to pitcher Barry Zito. When Magowan stepped down, he denied that he had been forced out and instead announced his “retirement” effective at the end of the 2008 season, when Neukom took over.

Now it will be Baer’s turn and yet another new Giants’ era will begin — although probably without any drastic upheaval. Baer has been with the Giants since 1992 and helped lead the effort to construct the team’s ballpark in China Basin. Baer and Sabean, whose contract runs through the 2012 season, obviously have a long-standing relationship.

The Giants’ stance regarding territorial rights to the South Bay is also not likely to change because Baer has been at the forefront of trying to keep the A’s from pursuing a new ballpark in San Jose.

Major League Baseball, however, must approve the Giants’ ownership moves and the A’s issue could be part of that dialogue.

Neukom has been noticeably under the radar the past few weeks. He was scheduled to appear last week at a sports law seminar at Santa Clara University but canceled at the last minute because of “an unexpected conflict,” according to seminar organizers.

Contact Mark Purdy at mpurdy@mercurynews.com or 408-920-5092.