RIDDLE NO. 1: what is it that wears 25 caps and pinstripes, refuses to go out in the rain and is thought to be a more risky investment than pork-belly futures? Answer: The New York Yankee baseball team.
RIDDLE NO. 2: What is it that has 15 heads and $10 million cash, prefers to live around the shores of Lake Erie, has rarely (if ever) been to a baseball game in Yankee Stadium, feels that Babe Ruth should not have lived in vain and believes that pork-belly futures are not the stuff of which National Pastimes are made? Answer: The new New York Yankee ownership.
RIDDLE NO. 3: What is it that wishes pork-belly futures had been the National Pastime nine years ago? Answer: The old New York Yankee ownership, CBS.
RIDDLE NO. 4: What is it that drives men who are sane and rich to buy baseball teams instead of pork-belly futures? Answer: See below.
They are an oddly disparate crowd, with nothing much in common but a way with the dollar and a comfortable relationship with the profit motive. Some wear mod haircuts and bell-bottoms, some cuffed trousers and bifocals. Certainly more of them had shaken the hand of Richard Nixon than of Ralph Houk before they bought the Yankees. They are much more at ease as power brokers than player brokers, and a lot more accustomed to big deals than big leagues. They are rich men who have succeeded in businesses as varied as ships and lipstick, trucks and musical comedy, professional basketball and oil wells. When they line up for a group portrait they could pass as the membership committee of a good country club, or at least as a crackerjack crowd of Rotarians. They shine with affluence and confidence; they embody what might be called the mien of the American managing class.
They—the 15 of them—are the new owners of what has been the premier team in the nation's premier town for most of the 20th century. A couple of them are from New York but the majority are not; they are absentees. Some of them can recall the last time they saw the New York Yankees play; others cannot. They are the largest syndicate ever to buy a baseball team, and they did it with $10 million in cool green money, no credit asked.
So the Yankee heritage of Gehrig's heroics and Mantle's brave agonies have become the property of such fellows as George Steinbrenner, 42, who builds ships in Cleveland, and Jess Bell, 48, who has a cosmetics firm (Bonne Bell, Inc.) there, and Lester Crown, 47, a Wilmette, Ill. building-materials magnate. The managerial legends of Huggins and McCarthy and Stengel are now part of the holdings of Daniel R. McCarthy, 48, a Cleveland tax attorney, and his law partner, Edward M. Greenwald, 38. The House That Ruth Built is being kept in part by Nelson Bunker Hunt, 47, one of the oil-rich Hunts of Dallas, and by Francis J. (Steve) O'Neill, a retired transportation tycoon from Cleveland. The Babe's 714 homers and DiMaggio's 56-game streak and Don Larsen's perfect World Series game are now among the business assets of John DeLorean, 48, a vice-president of General Motors, and Marvin L. Warner, 53, a real-estate developer from Cincinnati, and James Nederlander, 50, who owns playhouses and art centers in Washington, Phoenix, Chicago, Detroit, Baltimore and New York. And the Yankees' 29 American League pennants and 20 World Series titles over the past 52 years now belong to Sheldon Guren, 48, a Cleveland real-estate lawyer, and to his partner, Edward Ginsberg, 55, and to Thomas W. Evans, 42, a partner in the Manhattan law firm of Mudge Rose Guthrie Alexander & Mitchell, formerly the home office of President Nixon.
The question is: What are these fellows, sound and successful and ostensibly sensible businessmen, doing in a game? Shouldn't they know better? Indeed, of the 15 members of the group, only two have been profoundly committed to the baseball business—cool and long-tressed Michael Burke, 54, who ran the Yankees for CBS, and avuncular Gabe Paul, 63, an old-fashioned baseball man who has been in the game almost as many years as Burke has been alive, the past 12 with the Cleveland Indians. So what are we dealing with here? Is it soft-hearted nostalgia or flinthearted business acumen? Are the Yankees a tax shelter or a toy? Are they merely nice small talk at sit-down dinners in Shaker Heights? Box seats to impress business contacts? A midnight table at Elaine's? Have these guys simply bought themselves a living collection of bubble-gum cards?
Well, yes...yes, it is, in a sense, all of those things. George Steinbrenner, an infectiously enthusiastic fellow who has been both catalyst and chief cheerleader for the syndicate, says quite seriously, "Look, it may sound corny, but it's an honor to be associated with the Yankees. Sure, there are 10 other investments that might be better, but this is...it's...well, all I can say is that it's such an honor."
Is this to be an honor without profit? Not necessarily. Investors are encouraged by certain tax benefits to go into such hazardous ventures as sports franchises. By far the most important benefit is depreciation of player contracts. For tax purposes, player salaries can be written off as deductions on personal income-tax returns. Say a man invests $1 million in a team like the Yankees—a 10% share—and he is able lit claim depreciation to the tune of $170,000 a year for the five years this is legally possible—a reasonable example. (After five years the allowance ends, and an owner pays full freight.) Even if the team makes money and our man's share of the profits in a year is, say, $100,000, he will, for tax purposes, emerge with a $70,000 loss. He not only will be able to take home his $100,000 gloriously tax-free, but also be able to write the $70,000 off against other income. If the team breaks even, or loses money, the tax allowance is all the larger, but a man must have a very large income to reap a substantial benefit.