 |
(Photo: Al Bello/Getty Images) |
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.
 |
WORST WAY TO MAKE MONEY: Membership in Major League Baseball The Yanks hand over $100 million a year to MLB ($70 million revenue sharing, $25 million luxury tax).
|
Annual Revenue: $302 million (with $28 million in losses).
Sources of Revenue: Stadium tickets: $117 million (4.2 million tickets at an average of $28 each); 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.
Annual Overhead 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.
Best Way to Make Money: Buy a related business—a cable network like YES—and rake in your profits there. And 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.
New Yorkonomics: Owning the most storied franchise in all of sports provides benefits, like international fame and World Series rings, that go far beyond the bottom line. My guess is that as the number of billionaires proliferates, the price of the Yankees will continue to rise. Expect to see the team’s future owners lose more and more in the quest to be at the head of another pin-striped victory parade.
Email
Print
Eight Year-End Films Vie for Oscar Contention
Sondheim and Lansbury on a Lifetime in Theater
The Black Keys Release Their Hip-hop Debut 
How the BQE Became an Artistic Muse
On Great Jones Street, Shopping Is Art 
Classic Fare, Old-world Charm at Le Caprice
Buy a Brownstone for Less Than $1 Million
Fifty of the City's Tastiest Soups
Reasons to Love New York 2009
New York Politicians Refuse to Quit
A-Rod Has Babe Ruth in His Sights
McCain Yields to the Party's Pressure
