The Yankees Show How the Economy Works

©Robert Buzzanco

It’s been refreshing, for the past decade or so, to see Capitalism become an increasing topic of discussion in the media, among activists, and even in the political classes.  Throughout the 20^th and into the 21^st Century, Americans focused so heavily on whatever rival ideology existed, especially Communism, that they took for granted that the U.S. system of private ownership of the means of production and financial and services institutions with heavy government input through tax breaks, subsidies, favorable laws, state suppression of labor and other perks (socialized debt and private profit) was just the natural order.  But the Great Recession of 2008 and subsequent crises, especially the 2020 pandemic with the attendant economic crises and the clear failure of the U.S. healthcare system made it impossible to ignore Capitalism’s flaws any longer.

Still, we could know a lot more about how this system works.  We’re seeing workers take a more assertive role in their work lives right now—with organizing drives and strikes at places like Amazon, Starbucks, John Deere, and elsewhere—but one of the biggest labor, or more accurately anti-labor, actions just occurred not with working-class people but with a group of billionaires going on the attack against a group of millionaires—the Major League Baseball lockout, which lasted 99 days and just ended a couple weeks ago.

I’m not here to write about the lockout, but to suggest that, even though we’re talking about a labor conflict that involved 1 percenters vs. 1/10 percenters, it’s a good way to understand how Capitalists operate.  And when you’re talking baseball, there’s no better example than the most famous franchise in sports history, the New York Yankees, and its owner, Hal Steinbrenner  (Steinbrenner had a big role in the lockout too,  but that’s a story for another day).

The Yankees are the most valuable baseball franchise by a lot, valued at figures between $5.25 and $6.75 billion (see Forbes estimate and Sportico numbers).   Most striking, that’s about $2 billion more than the next wealthy franchise the L.A. Dodgers, which has the highest payroll in the major leagues. The late George Steinbrenner bought  the franchise in 1973 for $10 million (not a typo), and spent freely to purchase free agents and try to win championships (the Yankees won 7 World Series during his ownership before his death in 2010), but now his son Hal  runs the club, much differently than his father.  According to Forbes, the Steinbrenners are among America’s 75 wealthiest family, estimated at about $4 billion (according to Forbes ).  By comparison, the Florida Marlins, Tampa Bay Rays and K.C. Royals are the least valuable franchises, worth about $1 billion each. The Yankees also own the YES Network, which broadcasts its games, and which it purchased for about $3.5 billion in 2019.  As Alex Rodriguez, ex-Yankee and now a broadcaster on ESPN, likes to say, “The Yankees print money.”

The Yankees are the Microsoft or Apple or Amazon of the sports world, a financial behemoth which operates in the biggest market in the country, with a national following (really a global following….in Cuba in 2017 I had a Yankees shirt on and it started conversations with about a dozen people), a decided competitive advantage, and tons of cash.   Yet….as we’ve seen recently, the Yankees like to make money, not necessarily spend it, and that’s how Capitalism works.  Just as Amazon or Starbucks is trying to keep its wages down despite record profits, the Yankees would rather get the benefits of league-wide TV and marketing contracts and (despite constant hand-wringing about the game going downhill) massive attendance numbers, while not spending as much as they could, or as wisely as they’re able…….

The franchise has not won a World Series since 2009, an eternity in Yankee years, yet its value continues to rise.  It’s also, like virtually every other pro sports team, benefited from a great amount of public largesse—which, despite the rhetoric of “free markets” and “keeping the government off our backs” is precisely how Capitalism was always designed to work.  Every major industry and its leading corporations, banks and services receives huge amounts of government aid (fossil fuels, the biggest global industry, receives $5.9 trillion in subsides all over the world and about $20 billion, a conservative estimate, in the U.S. alone).   Yankee Stadium, the ballpark-cum-shrine where the team plays, was built in 2008 and cost more than $2.3 billion.  The Yankees were on the hook for about $670 million of that and the rest, $1.2 billion, came from public money and tax breaks.

And just as other corporations put the bottom line, profits and value, above the product or services they provide (Boeing has seen its planes crash in Indonesia, Ethiopia and China since 2018 with 478 people killed, yet none of its executives have been held legally liable and its stock prices have barely fallen and remain above what they were just a few weeks before the crash). the Yankees don’t seem to be interested in putting the team in its best position to win another title.  To be clear,  fatal air crashes and lackluster baseball are not equivalent, but both show how Capitalists are more concerned with profits than product, and yes, Boeing is an extreme example, but it’s also a useful one because that’s how the oligarchs operate.

In the recent offseason, the Yankee-Capitalism model was on full display as the team, coming off several disappointing seasons in a row, had the opportunity to significantly upgrade on the field.  It was a banner year for free agents, ballplayers whose contracts with their previous teams expired and were thus able to sign with anyone else, and especially at key positions the Yankees needed.  Most striking, shortstops like Javier Baez, Trevor Story and especially Carlos Correa were free agents, as was First Baseman Freddie Freeman, and those two positions were the Yankees’ biggest needs.  Additionally, other high-end players at those positions were available via trade.

Amid this bumper crop of free agents, the most valuable sports franchise did……nothing.  In fact, they did worse than nothing.  They actually let the Minnesota Twins hoodwink them into a trade for aging 3d Baseman Josh Donaldson and mediocre-to-adequate Shortstop Isiah Kiner-Falefa, who combined make about $30 million a year, which opened money for the Twins to sign Correa on what was a bargain in baseball terms—a 3-year deal for $105 million with opt-outs after the first two years.  So the Yankees got a good but often-injured 3d baseman and a run-of-the-mill shortstop for just $5 million less than Correa’s contract.  Freeman also escaped the Yankees—who made no serious run at any decent free agent, though they did re-sign their own First Baseman Anthony Rizzo to a relative cheap $16 million deal—and signed with the Dodgers, who have had no problem throwing their money around, and have been in 3 of the past 5 World Series. 

Currently the Yankees are also in a dispute with their best player, and one of the 5 best players in Major League Baseball, Aaron Judge, over a contract extension.  Judge in in arbitration right now because he asked for $21 million, a bargain for someone with his skills, and the Yankees lowballed him at $17 million.  While there’s a good chance the sides come to agreement on a settlement soon, the very optics of it show how Steinbrenner views his company.  Judge is already financially secure for life, but that $4 million difference in salary proposals at that level is not unlike the way bosses nickel-and-dime low wage employees as well.

And there’s one group that I haven’t mentioned and is completely left out of Yankee planning and considerations . . . the fans.  The Yankees are always in the top 2 or 3 in attendance in the major leagues, averaging 3 to 3.5 million people attending the 81 home games in the publicly-subsidized stadium.  Gate receipts alone account for about $250-300 million in revenue annually (which is more than Yankee payroll) and that doesn’t include the money spent on parking, concessions, and Yankee shirts and other souvenirs.  The Yankees also get about $100 million from their local TV contract, plus their cut from MLB’s national television deals with ESPN, FOX and other media.  According to Forbes, total revenues for the team are $482 million. As one NFL owner years ago described their business model, regarding the league-wide TV and marketing deals, “basically, we’re 28 Socialists who vote Republican.”

Probably a big majority of Yankee fans (of which I am one) judge the team’s performance by one criteria—winning the World Series, and the current run—just one title since 2000—is the worst in the franchise’s famous history.  In fact, the Yankees have not only just not won a World Series since 2009, but haven’t even been the American League champions since then.  In that period from 2000 to the present, their hated rivals, the Boston Red Sox, have won 4 titles and the San Francisco Giants have won 3; the St. Louis Cardinals have 2 titles in that time and the Chicago Cubs won their first championship since 1908; even the Florida Marlins and Kansas City Royals, generally near the bottom of the standings, have each won as many titles as the Yankees have.  In the past few years, the Yankees have been disappointing, with only two American League Championship Series appearances even since 2012.

So Yankee fans were impatient during the offseason, after investing so much passion and especially money into following the team, and expected Steinbrenner and General Manager Brian Cashman to go out and spend to get free agents.  As noted above, they did not.  So the odds on the Yankees breaking their drought and winning the World Series aren’t great. With the baseball playoffs expanded to 6 teams, a playoff appearance is quite possible if not likely, but Las Vegas bookies aren’t real strong on the team’s chances to win it all.  Again, fans are likely to be disappointed and lighter in the wallet.

In fact, Hal Steinbrenner, while boasting of historically high payrolls and goals of winning championships, made it clear in a widely-tweeted comment that did not please the team’s fan base that his job was to “maker sure that we’re financially responsible.”  He pointed out that “I’ve got a lot of partners & banks & bondholders & things like that I answer to.”  This commentary is not to suggest that Yankees players are somehow an oppressed working class—the league minimum salary is $700,000, more than most Americans would make in a decade or so—but that discussing a famous sports franchise and its financial operations make it easier to understand how Capitalism works. 

The Yankees “going cheap” and putting out an inferior product is exactly how the economy operates. Now, take that business model and apply it nationally, or globally, to people who are struggling for a living wage and you see why people are living in precarity all over the world.  Baristas and fast-food workers and Amazon warehouse employees and miners and meat-packing industry workers and pretty much everyone else is feeling the pinch, stuck between owners who, like Steinbrenner, won’t put out their best product and need to be “financially responsible” and workers who are paying more due to inflation while wages have not kept up and the minimum wage hasn’t budged in 13 years now, remaining at an unlivable $7.25 an hour.

Billionaires vs. Millionaires isn’t a great example of class struggle and it’s nothing that Karl Marx envisioned, but it’s a good way to explain the economy.  No one needs to feel any deep sympathy for MLB players to see how billionaires control markets, give priority to financial issues rather than product or performance, have little regard for consumers, spend unwisely, and alienate employees in order to understand how American Capitalism works.

So when bosses complain that “people don’t want to work” or that raising the minimum wage will make it difficult for them to survive, think of the way the most famous and wealthy sports franchise in America operates.  If the Yankees don’t care enough about their fans and their team performance to spend a few extra million dollars, then you can be sure Starbucks isn’t going to want to give a barista a couple extra bucks and hour and Wal-Mart isn’t going to provide good benefits to its employees, and will forcing them onto the public dole where taxpayers will provide SNAP aid and other benefits, essentially subsidizing billionaires.

I’ve seen Yankee zealots complain on social media that Steinbrenner isn’t a good businessman because he’s not spending a slightly bigger portion of his abundant wealth to win a title.  But in reality he’s doing exactly what a Capitalist does……..

Copyright by Green & Red Media, Robert Buzzanco, and Scott Parkin.