Babe Ruth’s 100th Anniversary as a Yankee

Babe Ruth started his major league career in 1914 as a Boston Red Sox where he became a pitching and batting star. In 1920 the New York Yankees purchased his contract and he stopped pitching and played the outfield every day. Here is a look at the economics and value created by this transaction and how the values of teams grew since then.

• In January 1915 the New York Yankees were purchased for $460,000.
• In January 1920 the New York Yankees purchased Babe Ruth’s contract for $125,000 and a $350,000 loan backed by a mortgage on Fenway Park. Also, Ruth was given a raise doubling his salary to $20,000 along with a three-year contract.
• In 1920 the New York Yankees attendance was almost 1,300,000, more than double its previous highest attendance of 620,000. This provided a complete return on the investment in Babe Ruth’s contract.
• After the 1920 season the Yankees were given notice to vacate the Polo Grounds and one of the Yankee partners did not want to commit to building Yankee Stadium and sold his 50% share to his partner Col. Ruppert, for $1,500,000. The Yankees shared the New York Giants stadium but because of the tremendous popularity of the Yankees they were out shadowed and they told the Yankees to leave.
• In January 1945, Dan Topping, Del Webb and Larry MacPhail bought the Yankees (including Yankee Stadium) for $2.8 million from Col. Ruppert’s estate.

• MacPhail’s one-third interest was eventually bought out for $2 million.
• In December 1953 the Yankees’ owners sold Yankee Stadium for $6.5 million, but kept the Yankees.
• In 1964 the Yankees were sold to CBS for $14 million.
• In January 1973 a limited partnership headed by George Steinbrenner acquired the Yankees from CBS for $10 million.
• In 1998 George Steinbrenner talked to Cablevision about selling his controlling interest in the team. Cablevision had a 12-year contract for rights to air the Yankees for $486 million. A new contract would certainly cost more and Cablevision felt it would be less expensive to own the team, or at least Steinbrenner’s 59%. The ascribed value of the Yankees at that time was about $500 million. At that time there were 16 limited partners besides members of the Steinbrenner family. The negotiations might have excluded these limited partners from the transaction. A 1% partner was John Henry, now the owner of the Boston Red Sox. Until then the highest price paid for a Major League baseball franchise was the $311 million Rupert Murdoch’s Fox Group paid for the Los Angeles Dodgers earlier in 1998 that also included Dodger Stadium and the spring training facility in Vero Beach, Florida.

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