Oct. 17 (Bloomberg) -- Nothing heralds the decline of an empire quite like the construction of an expensive new headquarters.
Louis XIV built Versailles after his power had peaked, and before much of Europe united against him. Park Avenue’s Pan Am Building went up not so many years before the iconic company went under. Enron was still completing its postmodern skyscraper in Houston when it filed for bankruptcy in 2001.
All of which brings us to the New York Yankees and their $1.5 billion-plus stadium, baseball’s monument to America’s pre-crash hubris. Entire sections of the ballpark, opened in 2009, sat empty during the opening two games of the American League Championship Series last weekend against the Detroit Tigers. Those fans who did show saved their boos for the home team. “This is a very easy place to play now,” Tigers outfielder Quintin Berry said after Game 2, issuing the ultimate indictment.
It’s easy to dismiss fan apathy and even resentment as simple disgust with a $200 million team that’s hitting a collective .200 in the postseason and faces elimination in Detroit tonight. But there’s something larger at work here, something the Yankees should have seen coming when they broke ground on the new stadium in 2006.
The new stadium was never just about George Steinbrenner’s desire to cement his legacy in limestone. It was meant to serve as the centerpiece of his franchise’s new economic model, one based on the delusional assumption that success ad infinitum was a given. It was this same assumption that led the Yankees to re-sign the 32-year-old Alex Rodriguez to a 10-year, $275 million contract after the 2007 season. (Actually, A-Rod costs the Yankees much more than that. Because of baseball’s luxury tax, they have to cough up an extra 40 cents for every dollar they pay him.)
What did that matter? The Yankees had a plan. The new stadium -- with its 51 luxury suites, countless corporate sponsorship opportunities, 12,000 square feet of retail space and extortionate ticket prices -- would dispense money like a giant ATM; A-Rod would chase a variety of baseball milestones, most notably the career home-run record, in pinstripes; and the Yankees would add to their collection of 26 world championships. Everyone would be happy.
The Yankees, you see, were no longer a baseball team. As Randy Levine, the team’s president, told me in 2008: “The Yankees today are an entertainment company with a baseball team at its core.”
It stands to reason, then, that consumers of this entertainment would be valued not so much for their loyalty as for their potential to generate revenue. In other words, they would be squeezed for every last dollar.
Professional sports teams are always trying to maximize their revenue, of course, but nobody does it with the audacity of the Yankees. For years, I shared a package of season tickets with a group of friends. I eventually bailed out, but they still had their tickets when the new stadium opened. In order to keep the same seats -- which went from $45 a ticket to $100, in large part because they gave ticket holders access to a cheesy stadium bar called the Jim Beam Suite Lounge -- they had to sign a two-year contract. My friends initially balked, but eventually relented after being assured they would have no trouble reselling tickets on the secondary market.
As it turned out, the Jim Beam Suite Lounge wasn’t such a big draw. People weren’t willing to pay a premium for the tickets, and my friends had to sell their extras at a discount. At the end of the season they informed the Yankees that they wanted to move to cheaper seats. They were told they couldn’t, and the Yankees threatened them with litigation if they didn’t pay up.
Yankee Global Enterprises LLC is not exactly in financial trouble. The team is worth some $1.7 billion. Its regional sports channel, the YES Network, with its obscenely high subscriber fees, is the most profitable such channel in the country. All of those seats may be empty, but someone -- or some corporation, anyway -- has paid for them. The Yankees will never need a taxpayer bailout; anyway, they’ve already soaked the city’s taxpayers to the tune of $1.2 billion for their new stadium, according to Neil deMause, co-author of a book about publicly funded stadiums called “Field of Schemes.”
Still, you have to wonder. How many season-ticket holders will continue to re-up? The Yankees are stuck with A-Rod for five more years. Not only is he having trouble cracking the postseason lineup, it’s looking increasingly unlikely he’s going to break that home-run record. (He’s 115 away, and has hit a combined 34 over the past two seasons.) Even if he does, don’t expect much of a celebration now that he’s an admitted steroid-user.
All of this will probably be forgotten if the Yankees can turn things around. Those empty seats will once again be filled, New York’s biggest ATM back in service. The A-Rod contract will always be a mistake, but in the grand, multibillion-dollar scheme of things, one that the franchise can easily afford.
That’s a big if, though. The math is simple: The Yankees can buy all of the players they want, but they can’t make them hit. If they don’t hit, the team will lose, and Yankees fans -- having emptied their wallets to see a winning team -- will lash out, or simply stop buying tickets and merchandise altogether.
Last weekend, we witnessed the first rumblings of a mutiny. If things continue at this rate, the new Yankee Stadium may ultimately become just another symbol of an empire in decline.
(Jonathan Mahler is a sports columnist for Bloomberg View. A longtime contributor to the New York Times Magazine, he is the author of the best-selling “Ladies and Gentlemen, the Bronx Is Burning,” “The Challenge” and “Death Comes to Happy Valley.” The opinions expressed are his own.)
Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View editorials, columns and op-ed articles.
Today’s highlights: the editors on what the presidential candidates aren’t saying about coal power and on the right way to plug national security; Caroline Baum on five things the Republicans won’t tell you; Ezra Klein on how Obamacare is still the best thing about Obama; Fouad Ajami on Malala and the history of Pakistan; Phil Zuckerman on why secular voters may be more powerful than you think.
To contact the writer of this article: Jonathan Mahler at firstname.lastname@example.org or @jonathanmahler on Twitter.
To contact the editor responsible for this article: Michael Newman at email@example.com.