On Tuesday, one of the greatest, if not the greatest owner of a sports franchise passed away: George Michael Steinbrenner III, owner of the biggest club in baseball, the New York Yankees, died at the age of 80.
Steinbrenner was far from being everybody’s darling, yet as an entrepreneur he was extremely successful. When he bought the Yankees in 1973 together with a group of investors, he paid $8.8 million (actually they paid $ 10 million but got $1.2 million back shortly after for selling back garages to the previous owner). Today, the Yankees are worth an estimated $1.6 billion – that’s more than 180 times the price paid in 1973, a average yearly rate of return of over 15%!
It would be asked for too much to try to find his secret of success, but I attempted to identify five points that maybe kind of characterize Steinbrenner’s approach to entrepreneurship and that could also be used as best practices by others:
1) Focus on being productive
When hired by the Yankees in 1981, Dave Winfield was the most expensive player in baseball. Winfield played great on average, being selected as an All-Star in his first eight years with the Yankees before he missed most of his last (ninth) season with the team due to an injury and won five Golden Gloves during the same period. Yet, he never won the World Series. Steinbrenner’s criticism of Winfield for not performing in peak situations went way over the top, but still it is remarkable to see how much Steinbrenner focused on the final result, not on beautiful performance. His quote from 1985 is still a classic: “We need a Mr. October or a Mr. September. Winfield is Mr. May. My big guys are not coming through (…) They aren’t producing”. Being productive is being Mr. October.
2) Having a long term vision
Buying the New York Yankees in 1973, ten years since they won their last title and basically in one of their worst slumps ever, did not seem like an obvious investment. Steinbrenner understood the potential of the Yankees brand and the New York market. He did not see what was there, but what could be built on the long run.
His long term visions for the development of the market for sports TV rights lead to probably the most successful deal he ever closed. Many great investors, from Warren Buffet to André Kostolany, support(ed) the notion of building investments on long term visions.
3) Trying new things
The sponsorship deal with Adidas in 1997 was the first of its kind and changed sports sponsoring significantly: While today it is common practice that Adidas, Nike and others use sports teams names, logos, etc. for advertising their products and even own stakes in professional sports clubs, that kind of intense partnership was a breakthrough 13 years ago. Steinbrenner had to fight hard to push it through, but he did as he wanted to change and improve things.
4) Having a sense of what can earn money and what can not
Steinbrenner’s project of building a new stadium was, to say the least, discussed controversially. The New Yankee Stadium, which cost $1.5 billion in construction, was opened prior to the last season. The Yankees’ revenues from ticketing in 2009 reached $397 million, more than twice the amount reached just four years earlier ($157 million in 2005). This shows, despite the fact that the strong figure in 2009 was supported by the successful run of the Yankees in the postseason, that there are significant chances the investment may pay off. Just a few days ago, S&P upgraded the stadium bonds to positive.
George Steinbrenner will not experience himself if the investment will be successful on the long run, but I am pretty sure he knew it would be looking quite positive before he invested.
5) The strong will to win
“Winning is the most important thing in my life, after breathing, breathing first, winning next.” (George Steinbrenner)
Steinbrenner did everything possible to be successful and he could not stand being unsuccessful. In his first 23 seasons, he changed managers 20 times until finally settling in with Joe Torre, who brought Steinbrenner the success he was looking for. Torre described Steinbrenner as “demanding”, and many consider this an euphemism. However it seems clear that Steinbrenner’s strong will and drive kept the whole Yankees organization active at any time, which might be another piece of the puzzle of the Yankees’ success. There probably is no successful 9 to 5 entrepreneur and Steinbrenner wasn’t one neither. He was pushy and getting involved, always trying to improve things, always trying to win – not only ballgames. Yet, when the news of his death reached the Yankees offices, many in the Yankees organization had tears in their eyes.
During Steinbrenner’s ownership (1973-2010), the Yankees won 11 AL pennants and 7 World Series titles. Baseball lost a controversial, yet outstanding personality, a man who definitely had a huge impact on baseball as we know it today.