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.
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.
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)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.
...this article is a couple months old so my apologies if you have already read this but I stumbled upon it and decided it would be worth throwing it up in case you missed it.
