George Steinbrenner famously said he wouldn’t sell the Yankees for anything, that “owning the Yankees is like owning the Mona Lisa. You don’t sell it.” It appears Apollo Sports Capital have finally cracked the da Vinci code.
The $2.6 billion from Apollo Sports Capital buys an undisclosed minority stake in Yankee Global Enterprises and refinances the franchise’s existing debt. Apollo Sports Capital CEO Al Tylis takes a newly created seat on the YGE board. Hal Steinbrenner and the Steinbrenner family retain full control, with Steinbrenner saying the partnership “allows us to explore pursuing strategic opportunities.”
Is this the Yankees finally capitulating to the Dodgers’ dominance and deciding the equitization route is the only way to level the playing field?
For all my grievances with the Yankees, I have respected that they have not been as willing to bend to modernity as the rest of the league. Abstaining from a City Connect uniform, and until recently holding to a rigid facial hair policy. But it looks like the times may have finally caught up with the Bronx Bombers.
What does this foreshadow about the likelihood of a salary cap being instituted, one the MLBPA has already said they will never accept?
Would the Yankees have still made this move if they truly thought a hard salary cap was a inevitable? A change expected to raise franchise valuations even higher.
Debt restructuring is one of the key reasons listed by New York for the move. Though the remaining debt on Yankee Stadium is reportedly under $100 million, which makes $2.6 billion an awfully large hammer for that particular nail. It could also signal Hal Steinbrenner is anticipating the top of the market is approaching, and is cashing out serious profits on what he views as an acceptable valuation of his franchise.
Most importantly, it could be the Yankees getting much needed liquidity to survive a long work stoppage that looms after the CBA ends on December 1st. If that is in fact their primary motivation, it’s another sign we could be in for a long and bloody battle between the owners and players over the next 18 months.
This sort of deal rescued FC Barcelona from falling behind, and it looks like the Yankees have it in mind to follow that blueprint. But whereas Barca sold a 25% stake in future media rights, the Yankees have sold a minority stake in Yankee Global Enterprises — not just the ballclub, but the holding company that also owns 26% of the YES Network, roughly 16% of Legends Hospitality, and 10% apiece of AC Milan and New York City FC. MLB rules cap a single private capital fund at 15% of a franchise, so there is a ceiling on how much of the Bronx is actually for sale.
On the other side of the rivalry, Red Sox ownership Fenway Sports Group is closing in on selling a minority stake in Liverpool FC to a consortium that includes Jeff Bezos. Fenway Sports Group have made enormous gains on their Liverpool acquisition — they bought the club for £300 million in October of 2010, and the reported deal values it at roughly £4.4 billion today, with the consortium’s one-third stake going for somewhere around £1.4 billion. I’d love to imagine John Henry is willing to sell the Red Sox, preferably in their entirety, as well.
The Yankees now have the capital to keep pace financially with the Mets and Dodgers, at least for a while. Those two franchises may also exhibit their new ceiling, and in the LOL Mets case, their new floor.
Photo: Matt Bolton / Wikimedia Commons — CC BY-SA 2.0