New York Yankees Will LOSE Money In 2008
I just interviewed New York Yankees president Randy Levine and chief operating officer Lonn Trost. Despite the fact that the Yankees are the first team to draw four million fans for four consecutive seasons, Levine said they will still lose money this year.
Darren: What does having the All-Star Game at Yankee Stadium mean to you?
Trost: It's the acknowledgement of the history and tradition of the great ballpark that was built in 1923 and then retrofitted in the mid-70s and it's a fond farewell to this great cathedral as we're about to open up just across the street this magnificent edifice that we've replicated.
Darren: At $1.3 billion, the New Yankee Stadium is the most expensive stadium ever built in the United States. The price of steel has almost doubled in the last year. How does that affect that estimate?
Levine: It hasn't changed, Darren. The stadium is being built on budget and on time. It's been a tremendous effort by a lot of people. Every day, you walk it, you see it growing and you see it being the phenomenal replica of the 1923 stadium.
Darren: So those (steel) prices are locked in then?
Levine: Yes. Everything is locked in.
Darren: The big news in the financial world today is Anheuser-Busch getting acquired by InBev. Anheuser-Busch, the biggest advertiser in all of sports, the sponsor of major league baseball and 26 teams. Any idea how that might change sports spending?
Trost: They've made their name in this country. They've made their name internationally. I don't think much will change on that front. They have long-term agreements, not only with us but with professional teams and professional leagues throughout the sports industry. So I don't really think there will be any major changes, certainly on a domestic level.
Darren: It's always a popular story at the end of the year when people come out with the story on the Yankees. Despite what they've done, they didn't make money. For years, we've heard the payroll combined with revenue sharing resulting in double-digit losses. The way you work it and the way the Steinbrenners pump money back in the team. What's the state of the bottom line going to be in 2007 with four straight years of more than four million fans?
Levine: I think obviously our bottom line is affected by revenue sharing and luxury taxes. That's one thing George Steinbrenner always insisted on is putting his money back into the team. However, next year, with the new stadium, I think things will turn around in a serious way. And we've also been very, very fortunate to maximize the Yankee brand and other ventures. So the Yankees are financially in very, very good shape.
Darren: So, red is still the color for this year, then?
Levine: I anticipate it. With $100 million in revenue and luxury tax sharing, the answer is yes. But that will clearly change next year.
Questions? Comments? SportsBiz@cnbc.com