Felix Salmon

Steinbrenner datapoints of the day

By Felix Salmon
July 13, 2010

What is the financial legacy of George Steinbrenner? Certainly he’s built a hugely valuable franchise: he bought the Yankees for $10 million in 1973, and they’re now worth just over $1 billion, $1.6 billion, according to Forbes, with Steinbrenner personally worth slightly more than that, some $1.15 billion. That’s a lot more money than he could have made if he just stuck with shipbuilding, and it’s proof of how profitable it can be to overpay for talent.

Steinbrenner also professionalized the business of sports teams, not only in terms of paying lots of money for free agents, but also in terms of financial sophistication when it came to things like setting up the YES Network in league with Goldman Sachs and Providence Equity Partners. He also proved adept at extracting large amounts of money from the the public sector: this breakdown, for instance, puts the total cost of Yankee Stadium at $2.3 billion, of which only $670 million was paid by the Yankees, while taxpayers ultimately ended up on the hook for $1.19 billion.

The new Yankee Stadium was also ahead of the curve in terms of reducing the number of seats while massively jacking up the price of entry, taking the cost of going to a Yankees game out of the reach of many of the most fervent fans who live in the shadow of the stadium (although they’re welcome, of course, to watch all the games on YES). When Steinbrenner first bought the Yankees, the owners of sports teams tended to be very wealthy. He was instrumental in making the players very wealthy as well. And now the crowd is getting much wealthier too. I guess rich people tend to cluster together.

4 comments so far | RSS Comments RSS

Thank you for pointing out the looting of public coffers that defines the building of sports stadiums.

Here in DC we have RFK stadium, which is a perfectly useful venue designed for both baseball and football. It was tossed aside in favor of massive projects to finance two separate other stadiums for the Washington Nationals and the Redskins. Considering a football team has eight home games per year and that Washington baseball interest is low, this has been a collossal waste.

Why is it that sports stadiums are given such a short life when other large buildings can be used for centuries?

Posted by DanHess | Report as abusive

Why all the complaining about publicly financed stadiums? They create jobs! Like for people who sell tickets and over-priced salty, sugary, fatty foods, and souvenirs, ushers, and parking lot attendants. All minimum wage jobs that are usually not performed by high school students. And probably don’t come with health insurance, or any kind of retirement assistance (not that the pay will allow any of them to put aside money for retirement). And then there’s the second order jobs it creates, like the people who work in restaurants and hotels. They’re surely making enough to live on without any kind of government assistance. OK, so they’re not. But who cares, there’s a new stadium!

Dan, the short life of stadiums has nothing to do with how long they last, it’s all about the teams wanting to generate more revenue from private boxes. The cities build new stadiums (to create all those great jobs that generate virtually no tax revenue) so the teams can generate extra ticket revenue by selling over-priced suites, which typically comes from tax deductible purchases by businesses, who use the private suites to entertain clients (like wealthy investors and legislators). Developers benefit because they get to build multi-billion dollar projects with guaranteed profits, and no responsibility for what those stadiums do to the neighborhood.

Living in southern California, I am happy that the LA area governments have not caved in to private interests and financed a billion dollar+ stadium that would be used 10 times a year. I just hope they can continue to hold out.

Posted by OnTheTimes | Report as abusive

My blue collar brother-in-law was a 20-year holder of Pittsburgh Steeler season tickets until a decade or so ago. Today, that kind of fan is largely priced out of the market even for single-game tickets, if they can be had at all. Corporations are holding an increasing number of these tickets, as well as all of the suites/boxes, in order to entertain corporate clients and executives.

I wonder what this trend is doing for professional sports in America. An average fan today can rarely if ever see a game in person, as we increasingly enrich the owners and players. At some point I imagine this model has to come crashing down as the sports become more and more separated from the fan base.

Posted by Curmudgeon | Report as abusive

So sports teams are run by billionaires, making athletes millionaires, to sell tickets only millionaires or fanatics can afford… the way of sports has definitely been lost. Even the Olympics, for all their bluster over amateur athletes blahblahblah can really only be attended by the wealthy or the guy who says ‘I don’t care what it costs, I want to be in this moment.’ It’s a shame that something that should belong to all has been given ownership by the few, but that’s capitalism eh? Everything has a price…

Posted by CDNrebel | Report as abusive

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