Yankees Do What Yankees Do

Enough already.

After the Yankees swooped in and signed Mark Teixeira for eight years and $180 million, most of the civilized and nearly bankrupt world predicted an end to the baseball firmament as we know it. Spare me.

What did their critics expect them to do? These are the Yankees. They were only doing what they normally do, what only they can do, and what we all should have expected them to do after missing the playoffs last year for the first time in 14 seasons.

After their latest indulgence, the Yankees now feature a lineup with the four highest paid players in MLB, not to mention the highest paid players in all of baseball at six different positions. They’ve spent $423 million on free agents this off season and they’re not done yet. Add that to the more than $400 million they spent on their own free agents last year and you can be excused for thinking Wall Street and the auto industry should have hit up the Steinbrenner family for a bailout instead of the U.S. taxpayer.

But the vitriol aimed at the Bronx Bombers is misplaced. If you’re looking for a scapegoat, blame the system. The Yankees play in the biggest and best market, are moving into a new stadium that will generate obscene amounts of money, and own a one-third interest in the YES Network. In short, they’re the sports equivalent of Fort Knox.

Even with revenue sharing, to which the Yankees will contribute in excess of $80 million this year on top of a luxury tax bill of $27 million, the imbalance in the ability to generate revenue among MLB clubs continues to grow. As pointed out in an earlier column, the 300 seats that go for $2,500 per game in the new Yankee Stadium will yield more in ticket revenue than the amount that at least half of MLB clubs generated last year from their entire ballpark.

And lest we forget, MLB doesn’t have a salary cap and no amount of wishful thinking will result in one. The union will never agree to a salary cap and MLB isn’t in a position to pull an NHL and close up shop for an entire year in an effort to implement one.

If you want to criticize the Yankees, there are ample grounds on which to do so. They bullied and intimidated the City of New York for $940 million in tax exempt bonds to subsidize their new ballpark. Not satisfied with that handout, they have the chutzpah to request an additional $259 million of tax exempt bonds while lavishing exorbitant contracts on free agent players.

Acres of parkland in the Bronx that were appropriated to build the new ballpark will likely never be replaced, in spite of a commitment by the team to do so. That’s unconscionable, and yet the Yankees can get away with flaunting the agreement because…well, because they’re the Yankees, which means they operate with an arrogance that is unrivaled in professional sports.

Yankee haters, of which there are legions, should take solace in the fact the team has spent almost $2 billion in salaries, revenue sharing, and luxury taxes since their last World Series title. And this year’s shopping binge won’t guarantee a playoff berth in 2009, let alone the team’s 27^th title. The Yankees’ annual payroll has exceeded the second highest total in the game by approximately 50% for the past several years, and they haven’t won the World Series since 2000 or a playoff series since 2004.

Last year at this time, the experts were predicting a World Series title for the Detroit Tigers after they acquired Miguel Cabrera and Dontrelle Willis in a trade with the Florida Marlins. But a check of the final standings for the 2008 season shows the Tigers looking up at every other team in the AL Central Division.

After gorging themselves in the free agent market, the Yankees will certainly enter the 2009 season as one of the favorites to win it all, and on paper, they should be. But games – and pennants – are won on the field, not with a checkbook.

Criticize the Yankees if you will. But remember, they’re only operating within the system.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at jkobritz@mindspring.com.

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BCS Should Listen To Critics

Everybody’s talking at me

I don’t hear a word they’re saying

Only the echoes of my mind.

Everybody’s Talkin’, by Harry Nilsson

The song and words made popular by Harry Nilsson in the 1969 movie, Midnight Cowboy, accurately describe the Bowl Championship Series (BCS) conference commissioners. Everyone is talkin’ at them and they don’t hear a word they’re saying.

The controversial manner in which the BCS conferences anoint a football champion – through a myriad of complex polls that would make a derivatives expert blush – is the basis for frequent and vocal criticism. Even President-elect Barack Obama got in on the act, threatening to “throw my weight around,” as he put it, in a post election interview on CBS’ 60 Minutes. Like so many other college football fans, Obama believes a national football champion should be determined by a playoff.

Such a concept isn’t unique. A playoff is held in every other football division and every other NCAA sport. But the BCS isn’t affiliated with the NCAA. The six conferences that comprise the BCS broke away from the governing body in the aftermath of a 1981 lawsuit brought by the Universities of Oklahoma and Georgia.

The major football schools wanted to divvy up the TV and bowl money among themselves, without contributing to the NCAA’s revenue sharing arrangement. Any reversal of course that includes a playoff system would most likely require the participation of the NCAA. Which makes the idea of a playoff a non-starter for BCS schools.

Now, I’m no fan of the NCAA. Their pious blatting about the welfare of student-athletes rings hollow when their actions over the years clearly prove otherwise. But in this case, there is no rational reason why the NCAA administers all national collegiate championships – 88 annually - save one.

BCS commissioners are quick to defend the status quo, arguing it protects the tradition and sanctity of the bowls. They even admit to leaving millions of dollars on the table by eschewing a playoff system. But if the extra money is distributed by the NCAA to non-BCS schools, the thinking goes, why bother?

Even worse than their unwillingness to share the wealth with their less fortunate brethren, BCS conferences don’t even maximize their own revenue potential under the current system. A survey of tax documents by Yahoo!.com uncovered what can only be described as gross overspending and mismanagement on the part of bowl committees, at the expense of BCS schools.

The Sugar Bowl, for example, took in revenue of $12.9 million in 2006 and paid only $6 million into the BCS pool (participating teams will receive $17 million for a BCS bowl appearance this season, but much of that amount is derived from TV contracts). The majority of the remaining revenue was spent on such “necessities” as entertainment, media relations, decorations, committee meetings, gifts, bonuses and employee compensation, including $453,399 to Sugar Bowl CEO Paul Hoolahan.

The Sugar Bowl isn’t alone. The Orange Bowl took in over $17.9 million in revenue in 2007, and after their contribution to the BCS pool, spent most of the remainder. The Arizona Sports Foundation, which staged two BCS games in 2007, did the Sugar and Orange Bowls one better. They took in $19.7 million and still managed to “lose” a million dollars.

The reality is BCS conferences don’t need the bowls, whether they use the present system to determine a “national champion” or conduct a playoff. They proved as much when they began staging conference championship games - in effect creating their own “bowls” - which have turned out to be extremely profitable. To wit: The 2007 SEC championship game grossed $13.7 million in revenue and distributed almost $12 million to conference schools, according to Yahoo!com.

So why allow yourself to be ripped off by the existing bowls? The answer has nothing to do with tradition or the sanctity of the bowls. The current system suits the BCS conferences just fine. They get to decide who gets how much money and they don’t have to deal with the NCAA. In this case, power is more important than money.

Those who argue for a playoff, including the President-elect, be damned. Despite all the talkin’, the BCS commissioners don’t hear a word they’re saying.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at jkobritz@mindspring.com.

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