New York Yankees redefined Baseball’s Business Model

New York Yankees redefined Baseball’s Business Model

As the sports world mourns the loss of George Steinbrenner, let us reflect on just how much he changed the business model of professional sports.  When George Steinbrenner purchased the New York Yankees from CBS for $10 million in 1973, the team was a mess.  Today, the Yankee’s business model and club is valued at $1.6 billion.  Most of the credit for the dramatic transformation in value goes to Steinbrenner.  He redefined the role of the owner as well as overhauled the traditional baseball business model.

Jerry Jones is credited with improving the NFL’s business model.  However, Jones was simply extending the innovations created by Steinbrenner.  Here are some of the business model innovations created by Steinbrenner:

Bottom line, Steinbrenner brought an improved business model to baseball and an improved business model to sports.  He understood under-valued assets and he had a business model to leverage them.

Most business owners have the same set of circumstances.  They are sitting on vastly undervalued assets.  Much like CBS in 1973, it is difficult to see your own under-valued asset.  Typically, it takes an outsider like Steinbrenner.  How can we business owners get the perspective of an outsider to see the dramatic business model changes like the Yankees?

A great place to start is what we call Gasoline, Cigarettes and Soda.  Take the Business Model Evaluator to learn more about this technique.  Applied to the Yankees, CBS was using the Gasoline, Cigarettes and Soda model wrong and Steinbrenner ran it to perfection.  The model is based upon the premise that every business has a portion of it (gasoline) that is hard, unprofitable and necessary to procure customers.  Gas pumping is a lousy business.  However, the cigarette selling business model isn’t bad.  It is high turnover and decent margin.  The soda fountain business model is terrific.  It has super-high margins and good volume, if you have gasoline customers.  Many businesses only sell gas.  This was CBS’ problem.  They were in the baseball business.  Steinbrenner realized that baseball was only the gasoline to get them to buy cigarettes (catering, signage, licensing), and soda (his cable network which is worth more than the Yankees themselves).


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