Monday, November 19, 2012
No 'For Sale' sign ... yet
By Andrew Marchand
There are people in the sports industry who think it is more of a matter of when, not if, the Steinbrenners will sell the Yankees. They also think that each and every move the organization is making right now is designed to deliver the Yankees to the highest bidder, in the next three-to-five years.
The Yankees continue to say, "Not so fast." With the soon-to-be-official sale of the Goldman Sachs portion of YES, people close to the Steinbrenners maintain they are not looking for an exit strategy.
“This has nothing to do with selling the team,’’ a senior Yankee official official told Wallace Matthews in his column. “Under no circumstances will the team be sold.’’
Another official close to the Steinbrenners told me Goldman has nothing to do with the Yankees' future.
For years, it has been known that Goldman would get out of YES. In fact, it took the investment bank longer to sell than most people in the sports cable business anticipated when they started on the ground floor with YES more than a decade ago.
Now, with the current YES valuation at $3-to-3.5B, it seems to be a good time to finally cash in.
Still, the interesting part of the deal is that News Corp. can eventually buy up a large percentage of the Yankees' ownership in YES, as well. YES is where the real money is made. The franchise, according to sources, don't make as much money as you think. The TV network is where the big dollars comes from.
So, the fact that the Steinbrenners may not be taking the long view on YES seems as if it could be a tipping point toward an eventual sale.
This may end up being true, but we won't know for a few years. In the near term, Hal Steinbrenner has mandated the payroll must be under $189 million by 2014. If the Yankees do not fall under $189 million, their tax rate will rise to 50 percent. Thus, the Steinbrenners can save tens of millions of dollars by having Brian Cashman keep spending down.
By bringing salaries below $189M by '14, they also will be able to make the team more appealing to a potential buyer. A new owner could come in with the payroll set up perfectly to spend as much as they want without initially suffering any tax. If you were planning to sell, this would make good business sense. (In fairness, the Steinbrenners, if they kept control of the team, could also take advantage of such a move.)
The $189M payroll may be here for the near-term and beyond if Hal remains in charge. If the Yankees were to rise above $189M in 2015, they would pay a 17.5 percent tax. If they did so the subsequent year, it would be 30 percent. The current CBA ends after 2016, so what would happen in 2017 is unknown.
As of now, there is no "For Sale" sign at 161st Street and River Ave., but there are signs. Stay tuned, this story is not going away.