Appreciating a dedicated ownerBy
While Yankee blogs were all atwitter this weekend discussing the Steinbrenner brothers article in this quarter’s edition of The Times’ Play magazine, a different story with New York parallels caught my eye.
Joe Nocera, one of the paper’s top business columnists, explores the idea of the Bad Owner. Using two basketball owners — our Knicks’ own James Dolan and the Los Angeles Clippers owners Donald Sterling — as examples, Nocera explores how sports franchise owners get rich without really trying. Outside of real estate, he says, it really is the easiest way to free money.
“To own a franchise in any of the three major sports — football, baseball or basketball — is to enter a club in which it is nearly impossible to come away a financial loser,” he writes.
Nocera’s premise is a sound one: Each sports league has a limited number of franchises and significant barriers to entry. Namely, an interested buyer or group of investors has to come up with a lot of money and find a franchise owner who wants to cash out. Meanwhile, league officials — whether David Stern is behind the helm or Bud Selig is steering the ship — are always trying to improve the league’s image, and teams will rise to the top.
More important to a team’s bottom line than even success is geography and media market. “Certainly a good owner can do things that add value to a franchise. But far more important is whether the team is in a big media market and plays in a stadium with modern, high-priced luxury boxes,” Nocera writes.
Sterling bought the Clippers for $13.5 million in 1984. The team has been terrible since then, and now Nocera figures Sterling could command in excess of $400 million. In New York, the value of the Knicks continues to increase, and as the team struggles and more potential investors make noises about buying the team, the value of the franchise will climb even further. They don’t win on the court, but they win where it counts for the Dolans.
Baseball, of course, has its fair share of bad owners. Some — Peter Angelos comes to mind — seemingly want to win but are too meddlesome; others — Nocera cites Carl Pohlad of the Twins — don’t care to spend an iota of their own copious amounts of money to churn a better product on the field. Yet, when Carl Pohlad or his heirs decide to sell the Twins, they will more than recoup their initial $36 million investment in the team. Why bother working to win if simply owning the team is an obscene money-maker?
Enter the Steinbrenners. As Jonathan Mahler’s article notes, the Yankees have indeed been an obscene money-making venture just like any sports franchise. King George bought the team in 1973 for a pittance: approximately $10 million. Now, the team is valued at around $1 billion with a $300 million cable franchise a part of its global entertainment network. With a new stadium with those high-priced luxury suites in the world’s biggest media market, the Yankees are a money-printing machine.
As tough as it is to embrace the Steinbrenners, then, as tough as it is to overlook George’s shortcomings and his blatantly illegal activities, it’s tough to ignore the impact the family has had on the team. The Steinbrenners have a burning desire to win; mostly, as Mahler intimates, it stems from some tough love issues the men in the family seem to have with their respective fathers.
No matter though; the fans benefit from the owners’ desire to win. The Yanks would still be a very profitable franchise if the team was merely okay. The team would still be worth nearly $1 billion if they won every few years instead of every year.
In a way though, the Yankees are in a unique position in the game. Because they are so successful both on the field and on paper, because they have owners who are willing to invest and spend to win, they have emerged as the leader in baseball. For better or worse, the Yankees, through their revenue sharing contributions, are funding their opponents. They set the bar for player salaries; they set the bar for coaching salaries; they, much to the dismay of everyone else in the game, can set the agenda.
But as I look south from Yankee Stadium to Madison Square Garden and watch the 18-42 Knicks slump away another season, I wouldn’t want it any other way in the Bronx.