For nearly 40 years, George M. Steinbrenner, late owner of the New York Yankees, was the very definition of the passionate owner who would do whatever it took to field a winning team. He also was one of the first owners to grasp that TV-related revenues could be important to a bottom line and could be used to fuel championship-caliber ballclubs.
“He came to understand quickly that, beyond revenues, which were significant, TV was valuable,” says Joe Cohen, who founded MSG Network and played a key role in bringing the New York Yankees to MSG Network for 13 years beginning in 1989. “First, he used the dollars to improve the ballclub, but second was the exposure beyond just the game. On broadcast TV, there was just pre- and post-game coverage, but, on MSG, there was ancillary programming and robust coverage around the game. It was 12 months a year of promotion.”
MSG paid an average of $55 million a year for those rights, and the deal is widely credited as having started a national trend toward greater team coverage on regional sports networks, with more games broadcast than over-the-air stations’ regular programming schedules could usually permit.
“Along with giving 12 months of marquee programming for MSG, it allowed the network to expand its regional coverage to upstate New York and allowed us to sell annual sponsorship packages,” says Cohen. “George really understood that the ultimate power in the industry are the fans who vote with their dollars.”
In 1999, the Yankees laid the groundwork for a different approach, a network almost completely dedicated to the New York Yankees, with a merger of the business operations of the Yankees and New Jersey Nets into a holding company called YankeeNets.
One of the reasons the teams merged was to give them better leverage over their own broadcast rights: each party believed that it would get a better deal individually if the rights were negotiated collectively. Ultimately, however, the decision was made to launch the YES Network, a move that ended a five-year monopoly held by Cablevision on local rights to New York sports coverage.
Harvey Schiller, co-founder of the YES Network, worked closely with Steinbrenner during that time. “The thought of a dedicated Yankees network was planted in the early ’90s,” Schiller says. “He watched what Ted Turner did with the Braves and wanted his fans to watch games wherever they were.”
And watching they are. The YES Network finished the 2009 broadcast year as the most-watched regional sports network in the country in total day (Monday-Sunday, 6 a.m.-2 a.m.) for the seventh consecutive year, experiencing a 10.3% growth over 2008. It was also the most-watched in primetime (Monday-Sunday, 7 p.m.-11 p.m.), experiencing 13.9% year-over-year growth.
Cohen says the sheer size and power of the YES Network have gotten everyone’s attention.
“The whole industry, from other networks to team owners, have embraced the concept of team-owned regional networks as an option if not a fact. And giving every franchise a tangible alternative [to broadcast-rights deals] has had a dramatic impact.”
Steinbrenner was able to grow the Yankees from a $10 million franchise in 1973 to a $1.2 billion heavyweight. In 2005, the Yankees became the first U.S. professional sports franchise to be conservatively estimated at more than $1 billion. If one adds up the revenue of the $1.2 billion valuation of the 36%-Yankees-owned YES Network to the team revenue (the other 64% is owned by Goldman Sachs and the former New Jersey Nets owner, which is also a minority owner of the ballclub), they far surpass any other sports franchise in terms of estimated value.