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How George Steinbrenner revolutionized sports franchise ownership

Posted by mandyf on June 17, 2012

Leading a group of investors that pooled a total of $8.7 million dollars in 1973 to purchase the New York Yankees from CBS, George M. Steinbrenner III took his first step toward becoming a man who has been called the most important sports franchise owner in sports history. People involved in the deal could certainly see that Steinbrenner was going to turn the Yankees around and make them competitive at the least, but what nobody saw at the time was how he was going to redefine the role of the owner in not only baseball, but sports as a whole.  To help understand how he did that, one needs to start at the beginning.

George Steinbrenner had owned and run many things before including a basketball team. If he had not been forced to sell his franchise to assume the reins of the family company, American Shipbuilding, it is quite possible baseball may have never crossed his radar. The way fate worked out was that he turned the family business around by helping modernize the operation which made it possible for him to explore other outlets. Horse racing was his real passion, and he owned a few thoroughbreds, but it wasn’t the same as being involved in the day to day operations of a sports franchise. When the opportunity to be the lead partner in a purchase of the New York Yankees arose, he jumped at the chance.

Steinbrenner’s consortium did not place the high bid in the quest for the Yankees, but the CBS brass making the deal felt that they were the right choice to take over and made the sale to him. Immediately Steinbrenner began transforming the team spending what money they did have available to upgrade talent. While many people think of the Yankees as having always been a cash cow, Steinbrenner’s investment team did not walk into the game with deep pockets, nor were the Yankees making much money as CBS ran the franchise into the ground. He became a great salesman in the regard that hey knew how to pitch the value of playing for the Yankees on the world’s biggest and brightest stage.

He certainly did spend some big money the likes of which had never before been seen on the likes of Catfish Hunter and Reggie Jackson, but it was not the frenzy of free spending many seem to remember it as. By making the right acquisitions and allowing super GM Gabe Paul to take care of the rest of the personnel, The Yankees were winners of the AL pennant in 1976 and World Series in 77-78. With attendance up increasing revenue and a new winning pedigree,

it became easier to bring in more big name players.

Steinbrenner did not invent free agency, in fact he wasn’t even a big advocate of it at first. He was smart enough however to see that with owners like Ray Kroc of the Padres who had vast fortunes accumulated outside of baseball who could buy whatever talent they wanted, in order to compete he was going to need what can best be described shock and awe. His approach to free agency became one in which he set the bar so high no one could react in time to outbid him. He perfected the NYC wine and dine and had no shame in calling on legends of the past to court current players to sell them on what being a Yankee meant. The whirlwind love affairs and huge sums of money for the time worked more often than not.

Steinbrenner viewed baseball to a certain degree like a Broadway play. Put big names on the marquee and wait for the house to fill up. He knew that meant spending money, but given his business outside of baseball he was comfortable with that concept whereas many of the owners clinging to the pre-free agency style of ownership could not catch up to the concept or refused to. Charlie Finley of the A’s was a prime example preferring to sell his dynasty off piece by piece rather than pay them what they may be worth on the free market. Steinbrenner along with Ray Kroc were only too happy to swoop in and pick up those pieces.

Steinbrenner eventually learned that you couldn’t actually buy a championship by buying the best players. By the time he was reinstated in baseball, he came to understand his baseball people like gene Michaels and Buck Showalter did know a little bit about what they spoke of. He also understood the value and price of talent as well as his franchise. He knew that you needed the best players to draw not only fans but other great players. Money was not enough to motivate great players to come to New York, they needed to feel like they could win as well. He understood that developing great talents was not on its own enough either as eventually you had to have the money to retain that talent you developed.

While most owners at the time were still as much hobbyist owners treating their team like a toy more than a business and pleased with whatever profits they made, Steinbrenner saw things different. He saw owning his team as a business like any other. You reinvest profits in your business to make it grow. When you sell your product you get the maximum value for it. To that end he began making moves aimed at raising revenue. Some cried foul when Steinbrenner went outside the normal ownership model to do things like signing a $500 million dollar TV deal with MSG network which he even stated was undervalued, but better than the lousy deal baseball had in place for teams. He sold exclusive advertising rights at the stadium for money unlike any team had ever seen. He leveraged the Yankee logo and name to where it became one of the most desired brands for businesses to pay for the right to associate themselves with which no team had done before.

What it all resulted in was such a huge influx of revenue that when the MSG deal expired he could launch his own regional television network, YES, which further increased profits making it impossible for any team at the time to compete dollar for dollar. He then reinvested that in what would be his final major move in his vision which was building the new Yankee Stadium which is already considered by many to be one of the finest sporting venues on the planet.

George Steinbrenner is credited for laying down the groundwork for the way sports owners today operate. Nobody explored much less went down the avenues he did which are now the common goals of all sports franchises. While some casual fans say George Steinbrenner was bad for baseball, many players, fellow owners, and analysts praise him as a great visionary and in some regards as the man took baseball to level of success it enjoys today.

Karl Ravech and George Will point out that you cannot fault Steinbrenner for reinvesting in his team and making them a winning product just because no other owner at the time he entered the league saw the need to do so. They point out you cannot fault him for taking a system like free agency and finding a way to play that market better than anyone else ever has. They along with Bud Selig also point out that had Steinbrenner not operated in the manner he did that led to revenue sharing and changes in the business model of baseball, that baseball would not be expanding like it is, and that it may in fact only be a 26 team sport as a pair of teams may have been contracted and another pair may never have existed.

Former owners and current owners like Boston’s John Henry held a deep respect and admiration for Steinbrenner as many expressed on the day of his passing not only for his business sense in transforming his team and the game as a whole, but for being a man that even in a competitively charged atmosphere, that he was a gentleman throughout it all. The press may have never portrayed him as such, but those who knew him personally knew the real man behind the press. It is their words and praise for his business model that speak volumes as to what impact he had on the game, and how he changed sports ownership in all sports as we know it today as Dallas Cowboys owner Jerry Jones testified to as well.


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