NYU Tisch Center Podcast Briefing - The New York Yankees: MLB's Necessary Evil

NEW YORK, April 3, 2009 - America’s National Pastime has become a multi-billion dollar business with success based upon numerous breakthroughs in collective bargaining, broadcasting, technology, and consumer consumption. Acknowledged as the sport’s “powerhouse” team, the New York Yankees confirmed their dominance once again with the recent $423.5 million acquisitions of C.C. Sabathia, Mark Teixeira, and A.J. Burnett. Yet, these deals prompted criticism from pundits and team owners over the Yankees’ aggressive spending tactics and its impact on baseball, especially in this down economy.

Wayne McDonnell, clinical assistant professor of sports management at the NYU Tisch Center, addresses these concerns and clearly explains why the New York Yankees are Major League Baseball’s “necessary evil” in the latest podcast issued by the NYU Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management

** The podcast will be available Friday April 3, 2009, at 11 am EST, at scps.nyu.edu/tischpodcast **

Overview: The Yankees: Major League Baseball’s Necessary Evil
Over the course of 30 minutes, McDonnell argues that while the Yankees have the largest payroll in baseball, they also contribute the most money, more than $100 million annually, to Major League Baseball; boost ticket sales at ballparks across the country with over 26.6 million tickets sold at other stadiums in addition to the more than 33.9 million tickets sold at Yankee Stadium since 2000; advance media opportunities and lucrative television network contracts; act as MLB ambassadors worldwide with their prominent global status in Latin America and the Far East; and serve as “baseball’s litmus test” when it comes to innovative business opportunities such as the modern amenities and retail partnerships involved in the new Yankee Stadium. 

“While their management style might come across as being flamboyant and even self-righteous, they have influenced Major League Baseball into adopting cohesive business strategies that promote equality and fiscal accountability,” says McDonnell. “Not only have they redefined revenue generation in the sport, but they have also motivated numerous franchises to reexamine their models of business.”

McDonnell also argues against instilling a salary cap, something many baseball owners and executives have recently called for.  McDonnell says that even though a salary cap might seem like a logical attempt to curtail the Yankees’ exorbitant payroll, there are still additional problems that could ensue:

  1. A salary cap structure could involve rules pertaining to minimum and maximum requirements for player compensation, which could work against franchises whose overall payroll is normally in the lower third of the league.
  2. A structure that promotes a minimum requirement for payroll could benefit the players when negotiating contracts. Teams that frequently demonstrate frugal practices when it comes to player procurement will now be required to spend money in order to meet the basic requirements of the salary cap.

McDonnell says, “Any way you look at it, the New York Yankees are a necessary evil that drives Major League Baseball’s multi-billion dollar revenue engine.”

The Podcast
The NYU Tisch podcast, along with an accompanying PowerPoint presentation, is available online at http://www.scps.nyu.edu/tischpodcast

In addition to this podcast, the NYU Tisch Center is offering “The Business of Baseball,” a one week intensive course designed for those who have a genuine interest in analyzing business strategies and practices that impact our National Pastime. The course runs from June 22nd – 26th and will focus on the business of baseball off the field and the latest financial issues affecting balance sheets and income statements of Major League Baseball franchises.

About the Tisch Center and the NYU School of Continuing and Professional Studies
The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, one of several comprehensive academic divisions within the School of Continuing and Professional Studies (NYU-SCPS), offers undergraduate, graduate, and continuing education programs in hospitality, tourism, and sports business and is host to the annual NYU International Hospitality Industry Investment Conference.  Established in 1934, NYU-SCPS is among the 15 colleges and schools that comprise New York University, one of the largest private research universities in the United States.  Through its faculty, curricula, and vibrant professional and academic networks, NYU-SCPS captures the expertise of key sectors where New York leads globally: Hospitality, Tourism, and Sports Management; Real Estate; Global Affairs; Philanthropy; Communications Media, Publishing, Design, and Digital Arts; Business, Marketing, and Finance; and the Liberal and Applied Arts, among others. Rigorous and timely programs in these and related areas attract undergraduate and graduate students immersed in university life, working professionals in 14 graduate degrees, and New Yorkers of all backgrounds enrolled in approximately 2,500 continuing education courses, certificate programs, conferences, and seminars annually. NYU-SCPS is widely considered to be the most complete example of NYU’s founding commitment to be “In and Of the City”—and “Of the World.”