4192jc's Blog

10 million is what George Steinbrenner paid for the New YorkYankees in 1973. In April of 2008 the New York Yankees were appraised at 1.306 billion. The projected revenue from their new stadium is supposed to be sky rocketing as I write this comment. The new stadium, The $1.3 billion stadium, will provide the Yankees' organization with a substantial monetary boost, "... as it is expected to double the team's stadium revenue." Added luxury boxes that will be more costly than the old stadium, plus an expected boost in attendance, and, therefore, concessions will add to the team's overall bankroll. Plus, The Yankees will also generate more money from leasing out the stadium for events like concerts and other various events.

"The new Yankee Stadium will change the economics of all baseball," says Robert Boland, a sports agent and a professor at New York University's Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, according to an August article from CrainsNewYorkBusiness.com. The article projects the Yankees 2009 seat and suite revenues to be approximately 312 million dollars.   

According to CrainsNewYorkBusiness.com, "the new revenues will be so large that Hank and Hal Steinbrenner's team-which has lost money every year since 2004, according to Forbes-could easily push its payroll much higher than the $200 million level that for years has vastly exceeded the figure for any other team." The Yankees had an estimated revenue total of 327 million dollars this past year and this figure is expected to at least double when the Yankees enter into the new stadium in 2009.

The Yankees are making sure to protect their investment as well. Recently, at the end of October, the Yankees and the Dallas Cowboys, partnered with Goldman Sachs Group and private equity firm CIC Partners to create Legends Hospitality Management. This new company will concentrate it's focus on concessions, (estimated in the new stadium at 30 million profit for 2009), merchandising and providing quality luxury and value to patrons of both the Yankees' and the Cowboys' new billion-dollar stadiums. And, The Yankees will continue to make money from their lucrative deal with the YES Network, and through merchandising.

And there is one last item to factor into all of this revenue that will be created  by the Yankees being in a new Yankee Stadium: The Yankees do not and will not sell naming rights to the Stadium but they will sell naming rights to parts of the new Yankee Stadium.  Bank of America is already in agreement to pay the Yankees for naming rights to ... "something".  You may buy that hot dog and beer at the Bank of America food court or enter into the new stadium through the Bank of America gate in 2009.

These figures and estimated totals go far to realizing and understanding why the Yankees can easily invest close to a half of a billion over the next four to eight years in dollars during this year's Hot Stove League. Then understand that at this point, after signing C C Sabathia, A J Burnett and Mark Teixeira that the New York Yankees have thus far reduced their estimated outlay in payroll for 2009 by about 7 to 9 million. Plus, they still have the potential to jettison Hideki Matsui, (13 mil) & Nick Swisher (5.3 mil).  The present payroll, without Andy Pettitte, (whose 10 mil offer may be suddenly removed), is at, (using COTS as the basis for 2009 salaries and assuming the following players are all signed or will be signed for about 500,000: Miranda, Traber, Cabrera, Ransom, Geise, Hughes, Duncan, Aceves, Joba & Coke), approximately 190.5 million. That is decidely less than their payroll for 2008. If anything, so far, the Yankees are showing better money management than any team in MLB.

Baseball is a business. It has always been a business for a very long time now. The name of the game is Capitalism and the Yankees play the game better than any other organization out there. There is the game on the field, that is great and wonderful and better than any other game ever created, and, then there is the "game" that is played out in the corporate boardrooms with dollars and cents. The Yankees had gotten away from this combination of sound corporate strategy and good common baseball sense. George Steinbrenner had begun to insist upon certain name players being signed to carry the Yankees onto additional glories, that they had recently achieved through the 1990's, which resulted with some not so good baseball decisions. His ego once again had betrayed him and he overuled his baseball people a tad too many times. (Most grave was replacing Tino Martinez with Jason Giambi.) Now this 2008 offseason with Hal Steinbrenner and Brian Cashman leading the way, and with the realization that the Yankees had just shed some 88 million dollars from the Yankees' yearly salary obligations, and, the further realization of the estimated cash cow stadium generating outrageous additonal revenues, the Yankees invested heavily in the free agent market. Two of the signings, I predict, will be very successful. C C Sabathia will provide the Yankees, finally, with a left handed stopper in their rotation, a true ace. Mark Teixiera will provide much needed protection for Alex Rodriguez in the offensive lineup and will save additonal games with the fact that he actually has a glove on his hand and can use it when he takes the field for the defense. Jason Giambi will not be missed and nary a tear shall be shed. The jury is out on A J Burentt. Can he stay healthy? Can he be dominant every three out of five times he takes the mound? That is just 60% of the time that the Yankees need from him to be good.  Or will he revert to the injury plagued pitcher who can't harness his "stuff" for anything better than a tad over .500 win/loss percentage?

The game is still played on the field and there are still many very good competitive teams that the Yankees will face in 2009. The Red Sox, the Angels, and, yes, even the Devil Rays among just a few of the teams.  I see the Indians rebounding from a poor 2008 and providing possible competition once again for the Yankees in a developing rivalry. The games always have to be played out. All nine, and some times more, innings need to be played to completion and then, and only then, will the better team have won for that day. The goal is to be the better team approximately 58 to 60 per cent of the time so that the team can make the playoffs and then roll the very high stakes dice to make it to the World Series. The Yankees have enhanced their chances greatly this off season through the maximization of their revenues to invest heavily in their on field product. The Yankees are among the vanguard of all the financially succesful franchises in sports.  The Yankees are internationally known and are a name brand product. They make money and they will continue to make money now that they are recreating themselves in the old pinstripe image and style. And then once that money is made, they will re-invest that money in the product that makes the brand so well known and successful: the team that takes the field as the New York Yankees. If this team fails to be successful, if this team fails to produce, at a high  level of success then the brand itself, the New York Yankees corporation itself, will begin to falter. (Remember the CBS years?) Therefore, they must always continue to be a force in the free agent market but they must be a wise force and not the ego driven misguided force that they have so recently been in the market place. The Yankees have positioned themselves well. Young Hal has managed his time in New York well by learning the business, along with Brian Cashman, and they are heading the Yankees into the brave new world of the corporate sports world very well armed. Hate them if you must but understand and realize they are successful for a reason and their brand is known for a reason: That over all they are a very successfully run enterprise that wins in the long run.


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