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How did George Steinbrenner Turn $10 million into $1.2 billion?

{ Posted on Jul 17 2010 by Marcus Alston }

“The Boss” bought the New York Yankees baseball team for $10 million and turned them into a $1.2 billion business.   How did he amass this wealth?

Business Family Roots.  In the 1930s, his father became a wealthy shipman by running the Steinbrenner family owned business (Kinsman Marine Transit Company) that was originally purchased in 1901 by the Boss’ great-grandfather.  The business operated ships that transported ore and grain.  The Boss was born in Rocky River, Ohio on July 4, 1930 and he did have access to resources, business advice, role models, and connections.

Education.  The Boss graduated from Williams College in Massachusetts in 1952, a small elite liberal arts college.  At Williams, he was involved in a number of activities, including football, track and field, and the band.  George also joined the United States Air Force after graduation.  Following honorable discharge in 1954, he earned a master’s degree in physical education from Ohio State University in 1955.

While studying at Ohio State, Steinbrenner was a graduate assistant on the football team for legendary coach Woody Hayes and gained valuable experience.  The team went undefeated and won a national championship in 1954, and won the Rose Bowl. Steinbrenner served as an assistant football coach at Northwestern University in 1955, and at Purdue University from 1956-1957.

Experience Running a Company.  In 1957, Steinbrenner joined the family owned business, Kinsman Marine Transit Company.  Steinbrenner worked hard to revitalize the company, which had been suffering hardship after thriving for years.  A few years later, with the help of a loan from a New York bank, Steinbrenner purchased the company from his family. He later purchased the American Shipbuilding Company.  By 1972, the company’s gross sales were more than $100 million annually.

Steinbrenner later purchased his first sports franchise, the Cleveland Pipers, of the American Basketball League (ABL).  Under the Boss’ leadership, the Pipers won the ABL championship in 1961-62. The ABL folded in December 1962.  Steinbrenner and his partners lost significant money, but Steinbrenner paid off all of his creditors and partners over a few years.

Perseverance and Luck.  Prior to buying the Yankees, the Boss failed in his attempt to buy the Cleveland Indians in 1971.  What could have been for the city of Cleveland?  Sorry Cleveland fans, you could have had the best owner in baseball in the last 40 years (not what you want to hear especially after losing LeBron James to Miami this month).  The Boss bought a struggling franchise from CBS (who had owned it since 1965) in 1973 for $10 million ($8.8 million net after 2 parking garages were bought back in the deal by CBS).

Innovation.  A Trailblazer.  Steinbrenner was more than a leader in sports, he was a trailblazer.  He was the first owner to sell TV cable rights by selling them to the Madison Square Garden (MSG) Network.    Under his leadership, the Yankees also signed a 10-year, $97 million deal with Adidas in 1997.  After a dispute with the MSG network, the Boss promptly helped create the Yankee Entertainment and Sports (YES) Network.

Talent; Personality; Work Ethic; Demanding; Focus on Being the Best. He was one of a kind. He was opinionated. He had a vision. He worked hard and expected and demanded the best. As the owner of the Yankees, in his first 23 seasons, he famously changed managers 20 times, including firing and rehiring Billy Martin 5 times. He also hired 11 general managers over 30 years. Steinbrenner spared no expense in putting talent on the field. He hired Reggie Jackson for 5 years at almost $3M total at the end of 1976 and in Jackson’s first 2 seasons, the Yankees won the World Series. Steinbrenner had a similar focus in bringing in other players—he wanted to be the best and win championships. While some in business believe it “costs too much to be the best” and they just want to make money, Steinbrenner ignored this popular belief and went for it all and was enormously successful.  He won 16 Division titles and 7 World Series titles during his ownership (see below picture from SportsCenter for more details).

Conclusion.  George Steinbrenner grew the Yankees from a $10 million franchise to a $1.2 billion empire.  How would you like that kind of return on your investment over 37 years?  If you made a one-time investment of $10,000 at this rate of return 37 years ago, you would have $1.2 million dollars today.  There is no exact formula that you can bottle.  Steinbrenner brought a lot of intangibles to the table and the variables and conditions of today are not the same.  Yet we can still take lessons from The Boss’ path to success-get an education, gain valuable experiences, work hard, be creative and be the best you can be.  A little luck doesn’t hurt either.

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