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ESPN is reporting that the New York Yankees have signed free agent first baseman Mark Teixeira. Add up Teixeira's contract with the offseason signings of A.J. Burnett and C.C. Sabathia and you have $423.5 million in guaranteed contracts. Pretty amazing, huh?
Sure, the Yankees have contracts that come off the books, but that's not the reason why the Yankees can do this. The reason the Yankees can do this is because their owners, the Steinbrenners, have no other primary business besides the Yankees.
What am I talking about? Think about all the other owners who have gotten pounded this year in the sector of the economy that they might still have their money in.
Think about the New York Mets, whose owners not only lost money from the Madoff mess, but are in the real estate investment business. So too is Theodore Lerner, the owner of the Washington Nationals, who were hoping to land Teixeira. The Chicago Cubs are being sold by an entity that is bankrupt.
Go down the list and you can see that there's a lot of people that lost money this year in other businesses. I have no idea where the Yankees are investing their personal money, but the bottom line is that their business is only the New York Yankees.
What does that mean? It means that as long as the Steinbrenners believe that the business of the Yankees will be good, they are not as affected as the others are. Will people still go to games? If not, will they watch the YES Network. It's a pretty simple equation.
Here's a quote from an owner: "One of the challenges I have is buying into a falling market," he told the Milwaukee Journal-Sentinel. "When you buy into a rising market, you can't move fast enough. The challenge here is that, look, any investment you made in 2008 on Wall Street, 12 months ago, 12 weeks ago, 12 days ago, even 12 hours ago, you are down. We have to be careful with what is going on here."
That owner was Mark Attanasio. He is the owner of the Milwaukee Brewers. He gave up C.C. Sabathia. And you have to believe that some of that has to do with the fact that he's an investment banker. Hank and Hal Steinbrenner are not.
Questions? Comments?
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