When it comes to the New York Yankees, you either love ‘em or hate ‘em. That’s been the case for almost 90 years now, since the Yanks became a powerhouse in the 1920s.
But over the past 37 years, the same could be said for the team’s owner, George Steinbrenner.
In fact, over those decades, even Yankee fans had a love-hate relationship with “The Boss.” They wanted to run the guy out of town during the losing years, while seeking his near-canonization during winning seasons.
And now there seems to be an effort under way to make Steinbrenner into “St. George the Free Marketeer.”
On July 13, Steinbrenner died at the age of 80 after suffering a heart attack. Most of the subsequent accolades have been deserved. For example, on the field, Steinbrenner returned the Yankees to glory — but for some dismal years in the late 1980s and very early 90s.
As for the performance of his investment, according to a report in Forbes, Steinbrenner’s investment group bought the team in 1973 for about $10 million, with Yankee Global Enterprises valued at $3.4 billion today. Nice returns.
But can it be said that George Steinbrenner truly was a capitalist, an entrepreneur, or an example of how the free market works?
That’s the view of many assessing his career. For example, in a Wall Street Journal piece titled “The Yankee Capitalist,” Allen Barra compared Steinbrenner to the “entrepreneurs of a century earlier.” And a bit later, Barra spoke of Steinbrenner’s “aggressive forays into the free market,” referencing his pursuit of free agents.
Bob Boland, a New York University professor of sports management and business, wrote for Forbes: “No owner, in the history of sport, has ever infused more of that entrepreneurial spirit than George Steinbrenner.”
Sticking with the theme in another Forbes piece, Michael Ozanian compared The Boss to the great 20th century economist Joseph Schumpeter, who emphasized how entrepreneurs pushed the economy and society ahead by creating entirely new goods, services and industries that destroyed old ones, memorably calling it “creative destruction.” Regarding Steinbrenner, Ozanian declared: “He was Schumpeter in pinstripes.”
Those writing for The Wall Street Journal and Forbes should know better.
While George Steinbrenner made Yankee fans very happy with seven World Series victories during his ownership tenure (with the two next closest teams, the Cincinnati Reds and Oakland A’s, winning three each), that does not mean he was a free-market, entrepreneurial capitalist.
Why? Steinbrenner was on the government dole. He received, benefited from and lobbied for handouts from the taxpayers. I speak, of course, about Yankee Stadium.
During the 1974 and 1975 seasons, the Yankees played in Shea Stadium while the original Yankee Stadium was gutted and rebuilt. The taxpayers picked up the tab, which was originally estimated at $24 million but ballooned to more than $113 million. Yet, by the late 1980s, the brazen Steinbrenner was lobbying for a new ballpark.
He got his wish when Yankee Stadium III opened in 2009. Often billed as being privately funded, nothing could be further from the truth. The New York City Independent Budget Office put the public costs at $855 million of a widely reported $1.5 billion total cost. But Neil deMause, co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, put the total cost of the Yankee Stadium project at $2.3 billion, with the taxpayer share at $1.2 billion. That’s still not the full picture, though, as the Yankees’ PILOTS (payments in lieu of taxes) to New York City are used to pay off the tax-exempt bonds used to construct the ballpark. In effect, the Yankees’ de facto property taxes pay off the team’s mortgage. Few businesses get such a sweetheart deal.
The late Edmund Opitz explained in The Freeman magazine many years ago that once a business accepts a government handout, “it is no longer a business; it’s a hybrid which deserves criticism as an unethical aid on the public treasury.” He continued: “A businessman per se operates within the framework of rules laid down by ‘the market’; when he operates outside this framework, and by a different set of rules, he is something other than a businessman.” Indeed, he becomes a ward of the state.
If you want to see true sports capitalists, go back to baseball in the early 20th century. Over the period 1909 to 1923, 15 of the 16 Major League Baseball clubs moved into new ballparks or extensively upgraded their existing facilities. In each case, the projects were funded with private dollars. So, team owners like Robert Lee Hedges of the St. Louis Browns, Charles Comiskey of the Chicago White Sox, the Brooklyn Dodgers’ Charles Ebbets, Charles Weegham of the Chicago Cubs, and the Boston Braves’ James Gaffney were true entrepreneurs — using private money to build their own facilities.
Oh yes, and among these capitalists were the owners of the New York Yankees — Jacob Ruppert and Tillinghast L’Hommedieu Huston — who bought land for $600,000 and spent $2.5 million to build the original Yankee Stadium, which opened in 1923.
Steinbrenner had many accomplishments and a few scandals. Like the rest of us, he was both saint and sinner. But given the corporate welfare his team received, Steinbrenner most certainly was not a true capitalist — and nor are most of his fellow owners in baseball.
Keating is chief economist for the Small Business and Entrepreneurship Council. He can be reached at email@example.com.