Bailout

Steinbrenner datapoints of the day

By Felix Salmon

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.

Full post as published by Macroprudential on July 13, 2010 (boomark / email).