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New York Yankees: Organization in Transition or Case Study in Baseball Mismanagement? PDF Print E-mail
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Articles & Opinion
Written by Wayne G. McDonnell, Jr.   
Friday, 15 May 2009 00:07

YankeesEach morning, as Americans gently rub the sleep from their eyes and reach for their first cup of coffee, they are immediately presented with the sobering realities of an economy immersed in turmoil and disarray. Tales of banking failures, corrupt investment scandals and the daily plummeting of the Dow Jones Industrial Average are no longer story lines for a psychological thriller concocted by Hollywood movie executives at 20th Century Fox. Federal government bailout requests and rescue plans, massive layoffs, and the demise of the automobile industry in America have become a recurring theme woven throughout the American way of life. Companies and products that were once staples of our daily existence are now quickly becoming distant memories. Fear and uncertainty now overwhelm a country once lauded for an abundance of wealth and ample opportunities for prosperity.

As the current financial crisis infects all aspects of the economy, the sports industry has quickly learned that they are no longer immune from the fluctuations and meltdowns that have occasionally occurred on Wall Street. In times of excess and greed, the sports industry graciously became bedfellows with Corporate America on grandiose ventures pertaining to naming rights, sponsorships, advertising, club seating and luxury suites. As a result, the sports industry became infatuated with the lucrative opportunities for revenues from an audience other than the blue collar, middle class family who occasionally attended sporting events due to restrictions on disposable income. Consumers of the white collar persuasion were not only intriguing to sports executives, but desired for their price insensitivities and unquenchable thirst for an all encompassing entertainment experience. Now, as our economy sinks deeper into the abyss, countless executives have realized that the welfare of sports in America is in jeopardy each time the automobile and banking industries petition the federal government for assistance.

In the midst of chaos and despair, an iconic American sports institution’s delusional business strategies have embodied the essence of avarice. To many, the New York Yankees are the epitome of royalty in a culture where athletes are deified and hailed for their extraordinary accomplishments in sporting arenas of competition. However, they have been criticized vociferously by pundits, politicians, baseball fans and the media for their elitist behaviors and disingenuous relationship with customers from a tax bracket whose median household income falls in line with the national average. It is the opinion of some that the New York Yankees cannot and will not relate to the daily financial struggles of the common citizen. In periods of unrest, a baseball game is a well needed escape from the hardships of life. While the Yankees have built an exquisite architectural masterpiece in the middle of one of the poorest Congressional districts in the country, they have conveniently alienated generations of middle class families who have played just as important of a role in the franchise’s storied history as any ball player who has donned the pinstripes.

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While America’s national unemployment rate exceeds 8% and a dramatic deterioration in consumer spending continues, the New York Yankees must not only adapt to these dire circumstances, but their management philosophies must evolve as well. In all fairness, the New York Yankees are a multi-billion dollar global sports entity in the midst of implementing a new model of leadership in the worst economic climate since the Great Depression. A transition of this magnitude does not happen overnight even under the best of conditions. For more than three decades, the New York Yankees’ model of business was dominated by an omnipotent leader whose fascination with military strategies and domineering personality established a culture whose tenets were based on fear and insecurity. At his zenith, George Steinbrenner had an innate ability to prey on the defenseless and exhibit attitudes and behaviors that were tyrannical in nature. In certain instances, his uncontrolled ferocity would overwhelm him and an unassuming employee would become the latest casualty from a tirade that would make hardened dictators like Mussolini and Stalin blush.

In certain circles, George Steinbrenner has been vilified for creating a dysfunctional and egregious working environment for his employees. Instability, hostility and contempt were easily witnessed not only in the dugout at Yankee Stadium, but in the front office as well. George Steinbrenner never met a headline he didn’t like. Instead of airing his grievances in private with ball players, managers, and team executives, he strategically decided to use the Daily News and New York Post as his personal pulpit. Over a thirty-five year period beginning with Steinbrenner’s arrival in 1973, fifteen men have assumed the role of manager of the New York Yankees along with countless team executives and general managers. While Steinbrenner’s abrasiveness and impatience would alienate Yankee icon Yogi Berra for several years and his love-hate relationship with Billy Martin played out on the back pages of the New York tabloids, several of his endearing leadership qualities are always overlooked and even ignored.

If one were given the opportunity to objectively assess George Steinbrenner as a leader, the positives would clearly outweigh the negatives. He is a man who genuinely has an undying passion for success and whose kindness and generosity will never be fully appreciated. Not only did he singlehandedly resurrect the New York Yankees from the ashes of disarray and mediocrity, but he transformed them into a billion dollar sports and media juggernaut. Ironically, the son of a Cleveland shipbuilding magnate easily related to the plight and struggles of everyday New Yorkers. On numerous occasions, George Steinbrenner proudly boasted that the New York Yankees are a team that embodies the spirit of New York City and its citizens should be proud to call them their own. While several sports franchises simply view their uniforms as fabric and embroidery, George Steinbrenner made sure that each ball player who wore the pinstripes knew that the Yankee uniform carries great responsibility along with daily demands and expectations.

As streaks of gray dominate the old lion’s mane, the bombastic personality that defined George Steinbrenner has all but disappeared. His ferocious roar that once echoed loudly throughout the corridors of Yankee Stadium and Major League Baseball has subsided to an occasional purr. Instead, our infrequent contact with George Steinbrenner has come in the form of a handful of carefully crafted sentences by Howard Rubenstein. It’s no secret that illness has beset the old lion and that he is in the twilight of his life. However, before he made his exit off of the Broadway stage, George Steinbrenner astutely surrounded the New York Yankees with family, lawyers, politicians, and individuals with business acumen who can lead this franchise for years to come.

Even though the Steinbrenner family is still firmly in charge of the New York Yankees, the organization is learning how to adapt and perform under an entirely new model of management. It could be said that the New York Yankees are now strategically divided into four business factions instead of the infamous “New York and “Tampa” contingents. Almost organically, each business faction has produced a spokesperson who has ultimately assumed full responsibility for the success or failure of that particular operation. Chief Operating Officer Lonn Trost has become the renowned expert on all matters pertaining to the new Yankee Stadium. President Randy Levine has become the Yankees’ ambassador and bulldog when it comes to thorny issues involving politics or extending the Yankees’ brand. Senior Vice President and General Manager Brian Cashman has finally achieved the autonomy he so desperately desired when it comes to evaluating talent and establishing himself as the primary architect of the major league roster. The newly appointed heir to the Yankee kingdom, Managing General Partner and Co-Chairperson Hal Steinbrenner, carries the heavy burden and enormous responsibility of overseeing the Yankees’ global enterprises. Last, but certainly not least, General Partner and Co-Chairperson Hank Steinbrenner actively contributes his thoughts and opinions on player personnel decisions and isn’t afraid to engage in a spirited exchange with competitors who do not share his fondness for the way the Yankees conduct business. In the current circle of reserved executives that are leading the Yankees, Hank Steinbrenner is the brash, outspoken maverick that people can easily relate to because of the similarities to his father.

During his prolific reign as “The Boss,” George Steinbrenner encountered countless challenges and opposition for his controversial views and unorthodox ways of running the Yankees. However, he really never had to address the vast and complex financial difficulties that the current leadership group is combating on a daily basis. Their management style is in stark contrast to what defined the Yankees under George Steinbrenner’s regime. While a Hank Steinbrenner comment or quote might occasionally make news or illicit a chuckle, nothing will ever compare to what his father had said or did. The strategies that are being implemented by the new leaders are more cerebral and calculated. At times, they can come across as being cold and sarcastic. These individuals rely heavily on data accumulation and countless analyses instead of gut instinct and raw emotion. To some, the new leaders of the New York Yankees are an eclectic group of baseball deficient executives who conduct business in a secretive manner at the expense of the average consumer. To others, they are a confederation of lawyers and business professionals who implement methodical tactics and strategies to accomplish prescribed goals.

On top of the enormous responsibilities associated with the construction and pricing of a new ball park, the current Yankee leadership group is being publicly assaulted and lambasted for creating a caste system within the granite and limestone walls of the new stadium. If one were to walk through the spacious and immaculate concourses of the new ball park, you can instantly tell where you belong and where you are not wanted. You are promptly reminded by security guards and ushers that you cannot access certain escalators, elevators and restaurants because of your status in the society that the Yankees have created within the new ball park. The blue collar, middle class fans are relegated to the grandstand and bleachers where they still pay exorbitant prices for the simplest of comfort foods normally served at the ball park. When Jack Norworth penned “buy me some peanuts and cracker jack” in his century old baseball anthem “Take Me Out to the Ball Game,” no one ever realized that American currency involving Alexander Hamilton and Andrew Jackson would be involved in a cash transaction for caramel covered popcorn and nuts.

Today, the New York Yankees have gone to great lengths to market and price their products as luxury items for customers with a taste for extravagance. These highly sought after individuals spend their weekends at palatial summer homes in the Hamptons rather than economically affordable motels along the Jersey shore. They arrive at the ball park in limousines or German engineered automobiles by Mercedes-Benz instead of the overcrowded subways or buses. Their preferred delicacies usually involve culinary delights and beverages served at the finest restaurants in New York City. A mere hot dog and beer is simply unacceptable for someone who socializes in the upper echelon of society. Filet mignon and martinis are minimum requirements for a dining experience at the ball park.

As millions of Americans reluctantly accept responsibility for “living beyond their means” and come to terms with the repercussions of their actions, the sports industry is just as culpable as the person who secured a mortgage from a lender to purchase a home they couldn’t conceivably afford. The stealth acquisition of wealth with minimal effort or considerable thought became a frequently utilized blueprint. The elasticity of the consumer’s dollar was stretched beyond its means by sports franchises due to the amorous behaviors demonstrated by countless banking and financial services institutions. As executives from companies such as Citigroup and Bank of America fawned over audiences that normally exhibit qualities of intense brand loyalty, innumerable sports franchises leveraged these desirable characteristics into a premium pricing philosophy that would impact all facets of a franchise’s operations. Sports executives once proudly boasted about lofty expectations and revenue projections when it came to exclusive sponsorships. Now, these same executives are left answering questions pertaining to the scandalous behaviors demonstrated by their sponsors.

There is no denying that the New York Yankees have had an awkward and inauspicious beginning to the post George Steinbrenner era both on and off the field. Whether it is selling grossly overpriced stadium memorabilia to the masses or engaging in a war of words with the commissioner of Major League Soccer, the new leaders of the Yankees have already encountered countless obstacles. While the new ball park is extraordinary and surprisingly captures the essence of the old Yankee Stadium, the pricing model is flawed and needs substantial revision to reflect the current market conditions. The Yankees’ overtly aggressive pursuit of the white collar audience is alarming since this type of customer is quickly becoming extinct. What’s even more disheartening is that the throngs of fiscally challenged Yankee fans have to actively survey the secondary ticket market for affordability instead of desired seat locations. Season ticket holders are now starting to feel the pinch of the prices at the new ball park and they are expeditiously liquidating their ticket inventories at discounts. To put it simply, customers are paying premium prices for a pedestrian product. The constant dependence on the free agent market has been a detriment to the organization. Even though the Yankees have spent almost a half a billion dollars on three ball players this past offseason, they are still mired in mediocrity and struggling with the implementation of cutting edge ideas regarding player development. Fans are paying prices fitting for a team like the 1998 Yankees. Instead, they are receiving the 2008 version.

No one will ever capture or replace the zeal and bluster of George Steinbrenner. He will forever be an American sports icon and pioneer. While many long for the days of “The Boss” during these turbulent times, one must be careful what they wish for. In all honesty, could George Steinbrenner handle the current financial and economic dilemmas that the Yankees are experiencing? How would he combat the resistance regarding the Yankees’ ticket pricing model? How would he resolve attendance and customer service issues at the new ball park? These are valid and legitimate questions to ask if “The Boss” were to return. However, we know that is not the case.

The new ownership group of the Yankees has made a few gaffes. But, it is not their fault that the economy has imploded and we are now living in a world of unforeseen disarray. Unfortunately, they are a victim of bad timing. Just like our economy, the New York Yankees are trying to learn how to conduct business in an effective and efficient manner. However, they also have to learn how to accommodate baseball fans and make each person who walks through the turn stile feel valuable and important. Only time will tell if the New York Yankees are ready to compete in a world of economic uncertainty or will they adhere to their irrational ideals and principles.


Wayne G. McDonnell, Jr. is a clinical assistant professor of sports management at the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University. He is a contributor to the Business of Sports Network.

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