How did the New York Yankees become the richest baseball club in Major League Baseball?
Wednesday, April 7th, 2010 at
2:09 pm
The New York Yankees are the richest baseball club in Major League Baseball and possibly the richest ball club in the world. The team is world millions of dollars and they pay the players very well and are currently building a New Yankee Stadium costing millions and millions of dollars.
How did the New York Yankees become the richest baseball club in Major League Baseball and what is their success to being financally secured ball club?
Tagged with: baseball club • major league baseball • new yankee stadium • new york yankees
Filed under: Cities
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Being located in New York City certainly helps, but historically the Yankees have made some fantastic business decisons over the years. Steinbrenner bought the team for $10 million from CBS in 1973. The team is now valued at 1.2 billion dollars.
The Yankees generate more income than any other sports franchise in America. Here are the figures for 2006:
REVENUE:
Ticket sales = $117 million (4.178 million tickets @ $28 avg)
YES Network TV/radio rights = $60 million
Major League TV and licensing = $30 million
Concessions = $10 million
Sponsorships and advertising = $30 million
Premium seating = $27 million
Local radio = $13 million
Catering = $5 million
Other = $10 million
TOTAL = $302 million
OPERATING COSTS:
Player salaries = $195 million
Major League revenue-sharing fees = $70 million
Major League luxury tax = $25 million
Stadium operations = $20 million
Travel and training = $20 million
TOTAL = $330 million
2006 TOTAL = $28 million loss
HOW IT WORKS:
Yankees management plays two games. The first is the day-to-day running of the team. Fifty-one thousand fans pay an average of $28 to come to 81 home games, where they suck down sodas and hot dogs for $4.50 each, generating half the team’s sales. The other half comes from $140 million in ad deals and media rights. The largest expense is player costs, which run about $200 million a year, and then there’s league revenue sharing and the costs of flying the team around the country. But eking out a marginal profit on operations is hardly the aim. The bigger game they’re playing is maximizing the value of the team itself. No need to worry about last year’s $28 million loss, when its value rose $200 million, to $1.2 billion. “Like a piece of property in New York City, it’s really not an annual profit-and-loss-based business,” says Joseph Perello, former vice-president of business development. The Yankees—read Steinbrenner—also own more than a third of the YES network, which broadcasts Yankees games to 8.7 million subscribers. The network’s revenues top a quarter billion and its profit margin is 60 percent. Though a completely separate business from the Yankees, YES’s value is directly tied to how much interest people have in the team, making a $200 million payroll a very easy decision.
By purchasing a related business – a cable network like YES – they rake in ever more profits. A very smart move by Steinbrenner and staff.
They also run a tight ship – the Yankees staff is a mere 200 in New York, including the players and the Staten Island farm team. Most stadium staffers are contracted out.
More good news: The Yankees will get a break on their revenue sharing bill when they open their $800 million team-financed new stadium in 2009. Teams can deduct stadium operations expenses including construction costs from the revenues eligible to be shared with low revenue teams.
They are called the "Evil Empire" by other clubs (usually Boston) but they are the model franchise that all other MLB teams should copy.
they’re located in new york city….one of the richest and biggest cities in America.
they got tons of fans, which means more revenue, ad, tv time, more fans around the world……..all that adds up to $$$$$$$$$$$$$
1) They’re located in New York City, the largest city in the U.S.
2) George Steinbrenner is their owner… he has an endless supply of money and isn’t afraid to trade away cheap prospects for expensive superstars
they live in a very urban area.
they have a lot of fans and revenue.
they have poularity overseas in Japan
but they still can win a world series,
hahaha
simple, in 1918 or 1919, they gave 100,000$ to the boston red sox and got babe ruth, babe ruth through the 20s hit more homeruns in a season then most teams combined for, led the yankees to greatness, drew fans, other greats wanted to play for a team that has great history, team value increases as the years pass, players keep wanting to play in the pinstripes, be part of history, and fans keep coming to watch history,
yes, playing in new york is part of it, but not all of it