YankeeNets LLC - Company Profile, Information, Business Description, History, Background Information on YankeeNets LLC

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History of YankeeNets LLC

YankeeNets LLC, a holding company, is the parent of the New York Yankees American League baseball team, the New Jersey Nets National Basketball franchise, and through its affiliate, Puck Holdings, the New Jersey Devils of the National Hockey League. Under this first-of-a-kind arrangement in professional sports, the teams retain organizational independence but share marketing, sponsorship, and advertising opportunities. YankeeNets also oversees all acquisitions, media deals, and long-term financial strategy. The company's revenues come from ticket sales and the sale of broadcasting and media rights. The investor groups owning the Yankees and the Nets each own 50 percent of YankeeNets.

The New York Yankees

On April 22, 1903, the New York Highlanders played their first baseball game, losing to Washington. They beat Washington the next day. The site for the games was a thrown-together, wooden stadium called Hilltop Park, because it stood on one of the highest points in Manhattan. The site gave the team its name. In January of that year, Frank Ferrel and Bill Devery bought the two-year-old Baltimore Orioles franchise for $18,000 and moved the team to New York. Pitcher-manager Clark Griffith headed the team, which was part of the new American League (the former minor Western League). The National League signed a peace treaty with the AL in 1903 that ended a two-year bidding war for players, but it would be ten years before the NL's New York Giants let the Highlanders play games in their park, the Polo Grounds.

The 1913 move to the Polo Grounds coincided with the team officially changing its name to the Yankees. Sportswriter Mark Roth was credited with first calling them 'the Yankees' in print. The club's trademark pinstripes first appeared on players' uniforms in 1912. In 1915, ownership of the team changed hands, when Col. Jacob Ruppert and Col. Tillinghast L'Hommedieu Huston bought the franchise. In 1919, George Halas, who founded the National Football League, batted .091 as a Yankee outfielder. But 1910-19 was the worst decade in franchise history. The team went through seven managers and had only four seasons of .500 or better.

The 1920s were certainly 'roaring' for the Yankees. On January 3, 1920, the team bought Babe Ruth from the Boston Red Sox for $125,000 and a $350,000 loan against the mortgage on Fenway Park. The Yankees won three straight American League pennants in 1921-23, beating the Giants in 1923 for the first of 25 World Championships. A Yankee infielder in that series, Hinkey Haines, was the only player ever to win both a World Series and a National Football League championship, which he won in 1927 as quarterback with the New York Giants. The year 1923 also saw the opening of Yankee Stadium. In 1925, Lou Gehrig began his record streak of playing in 2,130 consecutive games; in 1927, Babe Ruth hit 60 home runs during the season; and in 1929, the Yankees became the first team to make numbers a permanent part of the uniform. During the decade, the team won six pennants and three championships.

The Yankees added Joe DiMaggio to the lineup in 1934, buying him from the San Francisco Seals for $50,000 after releasing Babe Ruth, who had 708 career home runs. In 1932, Lou Gehrig became the first player to hit four home runs in a single game, and in 1939, Gehrig ended his playing streak when he took himself out of the lineup because of illness. The team retired his number two months later. The Yankees won five pennants and five championships during the 1930s.

The 1940s saw the deaths of Gehrig and Ruth; Joe DiMaggio's 56-game hitting streak (and hits in 72 of 73 games); new owners (Dan Topping, Del Webb, and Larry MacPhail bought the team for $2.8 million in 1945); the first night game in Yankee Stadium; and five managers, ending with the appointment of Casey Stengel in 1949. Interestingly, the decade included two of the three men who managed the team for at least ten years: Joe McCarthy, manager from 1931 to 1946 and Stengel (1949-60). The third long-term manager was Miller Huggins, who led the team from 1918 to 1929. During the 1940s, the team won five pennants and four championships.

The Yankees were hot during the 1950s under Stengel. They won eight pennants and six World Series, including a record five straight, even with Joe DiMaggio officially announcing his retirement in 1951. Catcher Yogi Berra won the American League Most Valuable Player award three times (1951, 1954-55), the most for any Yankee; Mickey Mantle made his Major League debut in 1951 and won the Triple Crown in 1956; Don Larson pitched the only perfect game in World Series history (1956).

The team lost the World Series in 1960 and Stengel lost his job, replaced by Ralph Houk. During the 1961 season, the club hit a record 240 homers and Maris broke Ruth's record with 61 home runs. The team won the World Series in 1961 and again in 1962, a season that included the longest game in Yankee history, lasting 22 innings. They won the pennant in 1963-64, marking five straight divisional titles, but would not win another until 1976. In 1964, CBS bought the team, initially paying $11.2 million for 80 percent and then acquiring the rest of the team later. For the first decade since the 1920s, the team's regular season record was below .600 (.552), and Mantle retired before the 1969 season.

In January 1973, CBS sold the club to a limited partnership, headed by George M. Steinbrenner III. The following year Yankee Stadium began extensive remodeling and Steinbrenner signed a then-record five-year contract with pitcher Catfish Hunter, marking the beginning of free agentry. During the 1970s, Billy Martin began the first of five stints as manager (1975); Reggie Jackson joined the team (1976); and the team won back-to-back World Series in 1977-78. In 1979, team captain Thurman Munson was killed in a plane crash.

The 1980s began with a new record-setting contract signed by Dave Winfield for ten years, and in 1981 the team won the AL pennant. But with a weak pitching staff and 11 manager changes, they never made higher than second place during the rest of the 1980s, and had a losing season in 1989. In 1988, Deion Sanders was a 30th-round draft pick, playing with the team in 1989 before going to the National Football League.

Following losing seasons in 1990-92, Steinbrenner's choice of managers, first Buck Showalter and then Joe Torre, turned things around. The Yankees won three championships in four years (1996, their first since 1981, and 1998-99), including an American League record 114 regular season wins in 1998. In their century of play, the Yankees had the most MVP winners, World Series MVPs, Hall of Famers, and retired team numbers. The 1999 win marked the team's 25th championship, the most championships in major North American professional sports history.

The New Jersey Nets

One of the original 11 teams in the American Basketball Association, the franchise began as the New Jersey Americans. The ABA wanted to place a team in New York City to give the league legitimacy, just as the American League had done with the Highlanders baseball team 65 years earlier. But the basketball team could not find an arena in Manhattan and they ended up in the Teaneck Armory in New Jersey, playing their first game in October 1967.

The following year, owner Arthur Brown moved the team to Commack Arena in New York. He changed the team's name to the New York Nets when a reporter suggested he get a name that rhymed with Mets and Jets. After failing to sign Lew Alcindor (the future Kareem Abdul-Jabbar), Brown sold the franchise to businessman Roy Boe. The new owner moved the team to the Island Garden in West Hempstead, closer to Manhattan. The team made the playoffs for the first time and attendance tripled.

Lou Carnesecca became the Nets' general manager and head coach in 1970 and signed superstar Rick Barry. The following year, Barry was forced to return to the National Basketball Association, but in the offseason, the Nets obtained Julius Erving. 'Dr. J' became a media sensation and made the team a championship-caliber club. The Nets won the 1974 ABA Championship under head coach Kevin Loughery.

The Nets won their second ABA championship in 1976. That June, the NBA and the ABA merged. The Nets became an NBA team at the cost of $8 million, of which $3.2 million went to the NBA and $4.8 million went to the New York Knicks as compensation for having a competing team in the same area.

Despite the acquisition of Nate 'Tiny' Archibald from Kansas City, the Nets collapsed when Boe sold Erving to Philadelphia for $3 million following a salary dispute. After Archibald broke his foot, the team ended the 1976-77 season with a 22-60 record. Following the season, Boe took the team back to New Jersey. In 1978, Boe sold the Nets to a partnership led by Joseph Taub and Alan Cohen, but despite making the NBA Playoffs for the first time that season, the team continued to have lean years, with an aging cast of players.

The 1980-81 season saw a new coach, Larry Brown, the signing of Otis Birdsong, the move to a new arena at the Meadowlands in East Rutherford, New Jersey, and a winning season. In 1984 the Nets won their first playoff series since becoming an NBA team. But their appearance in the playoffs the following year was their last for seven seasons, even with the additions of Derrick Coleman and Drazen Petrovic in 1990.

The team drafted Kenny Anderson for the 1991-92 season and won its first playoff game since 1984. But with coaching changes, injuries, disciplinary problems and the death of Drazen Petrovic, the Nets had up-and-down seasons through the middle of the decade. In 1996, under coach John Calipari, the Nets made a nine player trade with Dallas to create a new, quick nucleus of players that took the team to the playoffs in 1998. But injuries continued to plague the team.

By the late 1990s, Nets owners Katz and Chambers wanted to move the team to Newark, to help revitalize that city with a new arena. Their co-tenants in the Meadowlands Sports Complex, the New Jersey Devils hockey team, wanted to move to Hoboken. Neither team could build an arena without help from the state, and the state wanted to keep them in one arena. Katz and Chambers tried to buy the Devils, but the owner of that team, John McMullen, was not interested.

Things would begin looking up for the Nets in 2000, after becoming part of YankeeNets. They won the number one pick in the draft and, in June, hired Rod Thorn, the NBA's executive vice-president of basketball operations, to become their president.

New Jersey Devils

The 2000 champion of the National Hockey League began life as the Colorado Rockies. In 1982, John McMullen bought the team and moved it to New Jersey. The team won its first Stanley Cup in 1995.

YankeeNets: 1999-2000

In February 1999, George Steinbrenner announced plans to merge the New York Yankees and the New Jersey Nets to create a new sports entity, a 50-50 corporate partnership called YankeeNets LLC. The value of the holding company was $750 million, with the Yankees worth $600 million and the Nets, $150 million. By December, following approval by the National Basketball Association and the major league baseball owners, the deal was completed. Steinbrenner, who owned 57 percent of the Yankees, received $225 million from the partnership for his share of the baseball team.

The decision to merge came about when talks with Cablevision Systems Corp. about purchasing the Yankees for $600 million fell through. Cablevision refused to agree to let Steinbrenner call the shots for the network's basketball (New York Knicks) and hockey (New York Rangers) teams as well as the Yankees.

Steinbrenner decided to create a company of his own that offered year-round sports programming. The Yankees' 12-year, $486 million broadcasting contract with Cablevision's MSG Network (formerly Madison Square Gardens Network) would expire at the end of the baseball season in 2000 and the Nets' contract with Fox Sports New York, which also was owned by Cablevision, would run out after the 2001-2002 season. By merging, the two teams had much greater clout in negotiating a new local television contract, and Steinbrenner began talking about starting his own regional sports cable network. The other factor supporting a merger, and the one that most interested Lewis Katz, the principal owner of the Nets, was the desire for a new baseball stadium and a new basketball arena.

In October 1999, YankeeNets hired Harvey Schiller to become chairman and chief executive officer. Schiller left the presidency of Turner Sports, where he headed up sports programming for TBS and TNT, helped to set up Turner South, a regional sports network owned by Time Warner, and was president of the Atlanta Thrashers hockey team. Before coming to Turner Sports in 1994, Schiller had been secretary general of the U.S. Olympic Committee, commissioner of the Southeastern Conference of collegiate sports, and a military pilot in Vietnam.

2000 and Beyond

In March 2000, YankeeNets sold $200 million in bonds to pay Steinbrenner for his share of the Yankees. This left the company with a total debt of $327 million. With income dependent on ticket sales and media rights, YankeeNets wanted to build new complexes for its teams, parks with far more high-revenue luxury suites than Yankee Stadium had. The company also needed to increase the amount it received for the television rights to broadcast its baseball and basketball games.

Before the end of 1999, John McMullen, owner of the New Jersey Devils National Hockey team, indicated that he would sell the team to YankeeNets. In March 2000, Puck Holdings, an entity affiliated with YankeeNets, announced the acquisition of the Devils for $175 million, pending approval by the National Hockey League. Puck Holdings was formed by Nets owners Lewis Katz and Ray Chambers to buy the hockey team because neither YankeeNets nor the Nets could take on any more debt. That purchase appeared to ensure that the two New Jersey teams would soon be playing in a new arena in Newark.

During the spring, while still considering starting its own sports network, YankeeNets continued negotiating with Cablevision and other networks for a new television rights deal. Cablevision appeared to be offering a contract worth $100 million a year, more than double the $48 million a year received under the current contract with MSG.

Principal Subsidiaries: New York Yankees; New Jersey Nets.


Additional Details

Further Reference

Akasie, Jay, 'Out of His League,' Forbes, September 20, 1999, p. 54.------, 'Strike Two,' Forbes, April 17, 2000, p. 4.'The Boss Is About To Decide If He Wants To Be a Media Mogul,' Star-Ledger, May 18, 2000.Brennan, John, 'YankeeNets Is a Done Deal,' Record Online, December 1, 1999.Blum, Ronald, 'Schiller Quits Turner, Expected To Join YankeeNets,' Associated Press, October 30, 1999.Canavan, Tom, 'Devils Agree To Sell to Affiliate of YankeeNets,' Associated Press, March 16, 2000.------, 'Devils Owner Eyes Sale to YankeeNets,' AP Online, December 23, 1999.Dottino, Paul, 'Team of the Century,' Record (Bergen Co., N.J.), October 29, 1999, p. W4.Garrity, Brian, 'Coming Up Short: Despite Lofty Pricetags, Sports Franchises Haven't Quite Made the Investment Banking Big Leagues,' Investment Dealers Digest, June 5, 2000.Jordan, George E., 'Sports Firm Ends Plan To Build Soccer Stadium in Newark, N.J.,' Star-Ledger, March 24, 2000.Lentz, Philip, 'Yanks Slam TV Home Run,' Crain's New York Business, May 1, 2000, p. 1.Machan, Dyan, 'The Boss' Boss,' Forbes, May 15, 2000, p. 156.Macht, Norman, 'Series Stops Cold in 1904,' Baseball Weekly, August 21, 1994, p. 23.Mercurio, Stephanie, 'Public Hearing Puts YankeeNets on Track with Newark Arena,' Bond Buyer, April 6, 2000, p. 3.Moskowitz, Eric, 'Yankee Thrift: Broadcasters Line Up To Line Steinbrenner's Pockets,' TheStreet.com, March 17, 1999.Most, Doug, 'New Jersey Has Arena Plan To Keep Nets, Devils Teams,' Record (N.J.), December 7, 1999.'New York Yankees,' Sports Network, March 31, 2000.Sabino, David, 'The History: Formidable Figures the Yankees' Legacy Is Rich with Dazzling Numbers, and They All Add Up to Greatness,' Sports Illustrated, November 11, 1996, p. 6.Smith, Stephen A., 'Rod Thorn Brings Credibility to Credibility-Deficient Nets,' Philadelphia Inquirer, June 4, 2000.'With Corporate Sponsor, This Bud May Be for Yankee Stadium,' Washington Post, March 2, 1999, p. D2.'YankeeNets Make $200 Million Bond Offering,' Fox News Online, March 9, 2000.

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