But hold on, nostalgia buffs. While wealthy individuals, such as the Red Sox’s John Henry and Tom Werner, have recently bought into baseball, many of today’s teams remain corporate-owned, even by media. The Atlanta Braves (Time Warner), the Toronto Blue Jays (Rogers Communications)and the Chicago Cubs (Tribune Co.) all happen to have competitive teams this year.
The Cubs succeed as a business because they avoid the levels of bureaucracy that often stifle corporate-owned sports franchises, says club CEO Andy MacPhail. “I have the freedom to operate–I report to one person, not a board, and I get a yes or no in 30 minutes or 30 seconds.” He also credits the inherent business sense that corporations force on their subsidiaries. “Individual owners who don’t have to answer to anyone demonstrate a propensity to do whatever they want–they can have payrolls far in excess of revenue,” says MacPhail, who expects player payroll this year to be about fifth in the league at $88 million. “Like most of the Tribune business, we’re held to some sort of standard. We’re a break-even proposition.”
News Corp. claimed it was losing $40 million each of the past several years of its Dodgers ownership, which officially ended this January in a $430 million sale to Boston real-estate developer Frank McCourt. The Dodgers were operated horrendously during Fox’s six years, never reaching the post-season. The Angels won the 2002 World Series, but Disney never considered the club a priority and sold out in May to billionaire Arte Moreno for $183.5 million, or about half the gross of “The Lion King.” Moreno immediately announced himself as the biggest spender in the free-agent market, spending close to $150 million on star players. Is it now the individual owner who’s taking over the game? Success “isn’t formulaic,” says Andrew Zimbalist, an economics professor at Smith College. “There are pitfalls if you try to do it as a large corporation, with a middle manager running it. But there are advantages, too, with the ability to muscle local cable distributors and have a capital cushion.”
What could become a formula is the Yankees’ approach. In starting the YES cable network, which Zimbalist estimates as a $180 million annual cash cow, George Steinbrenner is turning the old paradigm backward: own the club, then start a media company around it. Going in the other direction–just ask Disney and News Corp.–doesn’t necessarily lead to any promised land.
