MLB

Steinbrenner heirs plan no changes

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Bob Klapisch

Bob Klapisch covers baseball for The Record in New Jersey and worked at the New York Post and New York Daily News. The author of five books, he was recently voted a top-five columnist in the country by the Associated Press Sports Editors.

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In the 2008 offseason Hal Steinbrenner, son of the legendary Boss, was faced with his first financial litmus test: the Yankees had a chance to sign CC Sabathia, A.J. Burnett and Mark Teixeira, three superstar free agents who could take the Bombers back to the playoffs after they’d been shut out for the first time since 1993.

The cost: A staggering $435 million.

The verdict: After extracting a promise from GM Brian Cashman to hold down costs for the 2010 season, Steinbrenner green-lighted the spending orgy, mimicking his father’s spending habits.



That decision not only paved the way to the Yankees’ first world championship in nearly a decade, it also provided a glimpse of how the team would be run in the post-Boss era. In the hours after George Steinbrenner’s passing on Tuesday, senior officials were quick to assure fans that the business plan would remain unchanged.

That meant Steinbrenner’s children have no plans to sell the Yankees. And Hal, who’s been in charge of the team’s day-to-day operation for two years, would keep the payroll over $200 million.

“We’ve been running this way for the last two years,” said one member of the team’s inner circle. “Probably the only difference you’re going to see is the absence of a dynamic figure. No one can replace George in that respect.”

Without a polarizing figure, the Yankees will be run by committee, including Hal and, to a lesser extent his brother Hank, president Randy Levine, chief operating officer Lonn Trost and Cashman. Unlike past years, the hierarchy now operates in perfect synch; the feuds between the New York and Tampa factions have evaporated, as has the behind-the-scenes politics that took down Joe Torre.

Today, the Yankees are run as professionally as any team in baseball, in part because Steinbrenner created such an ambitious business model. He turned an $8.8 million investment into the richest sports franchise in the world, recently passing soccer monolith Manchester United. But as Steinbrenner’s health started declining in 2006, some employees were worried about the tax ramifications of the owner’s passing.

Once again, however, Steinbrenner and the Yankees lucked out.

Because of a lapse in federal tax laws, there are no surcharges being levied against inheritances this year. Had Steinbrenner died in 2009, his family would’ve been subject to a $500 million tax bill from the IRS. The family would’ve had no choice but to sell the team to satisfy that debt.

Free and clear of any tax burden, the Steinbrenners intend to maintain majority ownership “for generations,” said one personal familiar with the family’s thinking. They’ll continue to reap the benefits of Steinbrenner’s visionary decisions, among them his creation of the YES Network and the construction of a new Stadium.

It was the Boss who realized as early as 1993 the Yankees were being fleeced by the Madison Square Garden Network, which paid a mere $55 million a year for the broadcast rights. YES is now worth an estimated $3 billion, nearly twice as much as the team itself, recently valued by Forbes at $1.6 billion.


That puts them well ahead of the competition; the Mets are second ($824 million) followed by the Red Sox ($816 million). The next closest rival is the Dodgers, who despite their storied past and dominance in the southern California market, are worth only $694 million.

Still, despite the overwhelming advantage he held, Steinbrenner sought relief from the Yankees’ revenue sharing costs, which were estimated at 30 cents on the dollar.

The Yankees had no exemptions to speak of, so Steinbrenner plowed ahead with his new $1.4 billion ballpark. It was unthinkably expensive, but it offered the Yankees a powerful dividend. Since MLB’s 2002 collective bargaining agreement allowed teams to deduct up to 40 percent of new-stadium costs from their revenue-sharing responsibilities, the Yankees were able to divert $100 million of their costs from the revenue-sharing pool and away from the 16 lowest-revenue teams in the majors.

No wonder former New York City mayor Ed Koch said, “George was an incredible businessman. You don’t often find that in the sports world.”

Whether his sons will continue to write massive checks as they did in 2008, however, remains to be seen. It’s worth noting that after the Yankees won the World Series — and finished $25 million in the black, according to internal estimates — Hal Steinbrenner wouldn’t budge on Johnny Damon’s request for $10 million to the return to the team in 2010. The Yankees turned off the spigot at $2 million.

The younger Steinbrenner and Damon eventually spoke by phone, and politely agreed to disagree; Damon signed with the Tigers without burning any bridges.

That transaction underscored how antiseptic the Yankee environment has been without George. We’ve seen the last of the in-your-face arguments with mangers and GMs, and especially the players.

No episode captured the essence of Steinbrenner’s combativeness better than this one. It occurred in 1997, after David Wells had pitched poorly against the Expos, losing 7-2 to Pedro Martinez.

Boomer was especially upset that Darrin Fletcher’s fly ball to right in the second inning was ruled a three-run home run, after a fan reached over the wall and scooped the ball out of Paul O’Neill’s glove.

Trailing by five runs, Wells was out of the game in the ninth inning when he discovered Steinbrenner in the clubhouse.

“Hey, Boss, you need to get some security in right field,” Wells said.

Steinbrenner, seething at the way the Yankees had been embarrassed in front of a home crowd, was in no mood for Wells’ advice.

“Don’t worry about security, why don’t you worry about your pitching,” he said.

Wells, taking the bait, shot back, “if you don’t like the way I’m throwing, then just trade me.”

“I’ve tried,” Steinbrenner said, now squarely in Wells’ air-space. “But no one wants your fat ass.”

Wells told Steinbrenner to back off, “before I knock you out.”

“Go ahead, try it,” the owner said, now within an inch of Wells’ face. “You think I’m afraid of you?”

Wells realized he was in a no-win situation and wisely backed down. Not surprisingly, he and Steinbrenner quickly made up. From that day on, the two never stopped joking about who would’ve won the fight.

Tagged: Tigers, Yankees, CC Sabathia, Johnny Damon

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