Published by EH.NET (May 2004)

Henry D. Fetter, Taking on the Yankees: Winning and Losing in the Business of Baseball, 1903-2003. New York: W.W. Norton, 2003. xi + 461 pp. $25.95 (cloth), ISBN: 0-393-05719-4.

Reviewed for EH.NET by Michael J. Haupert, Department of Economics, University of Wisconsin – La Crosse.

“If ever a paradox were true, it is that big league baseball is strictly a business to those who make money off those who think it is strictly a sport” (The Sporting News, August 29, 1964).

Henry Fetter, a Los Angeles based attorney, has written a financial history of the New York Yankees that covers the entire period of their existence. What it lacks in quantitative detail, it more than makes up for with its broad view of the topic. As the subtitle of his book suggests, Fetter extends his analysis beyond the New York Yankees, focusing on several other teams as well while he explores the changing trends in the financial management of Major League Baseball teams.

The good news for researchers interested in professional baseball is Fetter’s voluminous citations. The endnotes total 38 pages, and I found them useful as sources of related data for my own research. I count this as a definite plus. There are also 20 tables at the end of the book, though they are not particularly enlightening.

The bad news is the lack of primary data. All of the financial data included in the book come from secondary sources. Some of them are more reliable (U.S. House of Representatives Hearings before the Subcommittee on the Study of Monopoly Power) than others (newspaper accounts quoting a biased owner or player) and thus should be used cautiously. As an example of the latter, Fetter reports that the Yankees spent unprecedented sums to acquire players, and “reportedly spent a major-league-leading $60,000 on acquiring players” in 1915 (p. 32). As his source for this data, he cites the presumably reliable Sporting News. However, a quick check of Yankee financial records shows that they actually spent $87,700 that year to acquire players. While this may well have been a major league record, it did not stay one for long. The Yankees themselves would go on to spend more than that on players in thirteen of the next twenty-seven years, including more than $90,000 the next year, and $161,000 in 1919, $100,000 of which constituted the famous purchase of Babe Ruth.

To his credit, Fetter does occasionally mention that his sources are not necessarily reliable. While this is a disappointment to an economic historian, the paucity of such data sets makes secondary sources for this type of research necessary. Indeed, I am aware of only one set of primary financial records for a professional baseball team — the aforementioned Yankee financial records, and then only for a limited period of time. The point is, secondary data sources are not reliable, and counting on them can lead to misinterpretations.

Aside from the data issue, I have no complaints with this book. It is well written, an easy and entertaining read, and features several reasonable hypotheses raised by Fetter in his attempts to explain why the New York Yankees have been so dominant on the field during their history. Since their first World Series appearance in 1921, they have appeared in the series thirty-nine times, emerging as the champion in twenty-six of those encounters. The next three teams combined have only twenty-six World Series titles. And the second winningest franchise in league history has won only nine championships.

Fetter attributes this on-field success to a then-innovative managerial strategy employed by the Yankees owners, Colonel Jacob Ruppert and the euphuistically named Colonel Tillinghast L’Hommedieu Huston, who bought the team in 1914. Ruppert and Huston, successful businessmen before they purchased the team, instituted a pyramidal front office structure that proved successful, and would ultimately be copied by other franchises. At the time, however, it was in contrast to the other franchises, which tended to be run almost single-handedly by their owners. As Fetter argues, the Yankee way proved to be the winning way, and was ultimately copied, though not perfected to the same degree that the Yankees were able to do it. Of course, what is not as clearly pointed out is how being located in the largest metropolitan market in the country certainly helped. The Yankees’ new owners introduced a management style that “successfully managed the delicate task of reconciling fandom with business acumen in operating their team” (p. 31), a statement not many would attribute to today’s teams.

Fetter does a nice job weaving the parts of his story together, separating the book into four parts, divided roughly by geography. In the first part, he focuses on the city of New York, discussing the rise of the Yankees and the decline of the Giants franchise as a function of their different financial approaches to the game.

Part two investigates the farm system, as devised by Branch Rickey of the St. Louis Cardinals, and whether the system of acquiring, evaluating and training labor was efficient. Part three moves back to New York, this time centering on Brooklyn and the shift of professional baseball franchises that began in the 1950s. The primary focus of these chapters is on the decision and negotiations that led to the move of the Brooklyn franchise to Los Angeles in 1958. The final section focuses on the modern era of professional baseball, touching on the changes wrought by television and free agency and their overall impact on the stability of the game.

Fetter takes the reader on a behind-the-scenes journey through the history of major league baseball. The discussions range from the impact of the revision of blue laws on baseball revenue to New York politics to league front office battles and cable television contracts. En route, he tackles some straw men, e.g. that baseball was a gentlemanly sport, not a business, and that free agency destroyed competitive balance (when that proved untrue, owners and their media shills changed their tune to “big market” payrolls destroyed competitive balance). As Fetter argues, and is supported by numerous studies, major league baseball has never been more competitive than it has been over the past decade.

For the economist who is also a baseball fan, Fetter does a nice job of covering the economic aspects of the game while mixing in just enough on-field action to keep things interesting. For the historian or baseball fan who is not an economist, the economics lessons offered in this history are not overbearing. In fact, little of what Fetter discovers should surprise an economist. That is not to say it wasn’t worth writing, only that much of what he relates substantiates basic economic theories. For example, he argues that even before free agency, the best players tended to migrate to the biggest and most profitable markets. His example of the sale of Babe Ruth to the Yankees is only the most obvious example of the Coase Theorem in action.

He has however, apparently not seen some of the recent research on the Yankees, though he thoroughly canvassed the New York and national sports press. He missed a couple of recent publications that would have been useful, though possibly not yet available as he was writing his book, including Neil Sullivan’s political and economic history of the construction of Yankee Stadium — Diamond in the Bronx (Oxford 2001) and Jim Reisler’s Before They Were the Bombers (McFarland 2002), a history of the pre-Colonel Yankee era. More puzzling is his oversight of the excellent two-volume business history of MLB penned by Robert Burk in 1994 (Never Just a Game) and 2001 (Much More than a Game) — both by UNC Press. Most disappointing, as mentioned earlier, is the lack of primary data sources.

Occasionally Fetter offers up some statistical evidence with no indication of its origin. This is frustrating, because data such as team payrolls and revenues are not readily available for the period before 1976. Other frustrating claims are those such as “During the 1902 season … player salaries spiraled ever upward as the rival leagues competed for talent” (p. 5). While this is intuitively obvious, Fetter neither offers evidence nor cites sources for his claim. For the most part, however, he is good about noting his sources.

As his story progresses through history Fetter takes up more modern developments in the game. He addresses the problem of corporate ownership by arguing its philosophy was the wrong way to run a ball team. He uses the Yankees, owned by CBS during much of the 1960s, as an example. The CBS ownership corresponded to the demise of the on-field success of the team. The Yankees went twelve years without a World Series appearance, their longest dry spell since 1909. Indeed, the financial performance during this period was little better, as CBS paid a reported $13.2 million for the team in 1964, and sold it to George Steinbrenner in 1973 for $8.8 million. It is worth noting that Forbes recently estimated the value of the Yankees at $849 million.

A testament to the quality of Fetter’s research is the number of economists he quotes throughout. I stopped counting once the number reached double digits, but was verily impressed to find economic historians J.R.T. Hughes and Alfred Chandler among their number. Despite my quibbles about sources, he clearly read some of the most relevant literature.

He ends an otherwise fine work by waxing rhapsodic about the game of baseball, falling dangerously close to undermining what he successfully argues throughout the book: that baseball is first and foremost a business — and as the Yankees have shown, it is a business which can be very profitable if run the right way — the Yankee way. Much to this Cub fan’s chagrin, the Cubs seem to be the antithesis to the Fetter hypothesis about what makes a successful baseball team.

Fetter provides a useful framework for anyone interested in the business of baseball, while leaving lots of room for future researchers to fill in the details. A lot of what he hypothesizes remains for rigorous testing. For example, he makes a compelling argument that the farm system was not an efficient method of procuring and training talent, but offers no statistical evidence to bolster his claim. His anecdotal evidence is interesting, but he leaves to others the job of gathering the evidence — available from primary sources — on the movement of players through the farm systems, their eventual destination at the major league level, and the success (or lack thereof) of the teams developing them. I am aware of one such study in progress, and have recommended the authors take a look at Fetter’s book.

Another intriguing example is his claim that “the colonels’ independent wealth also made it possible to reinvest the team’s profits into baseball operations, which provided the means for continued success” (p. 30). How do we know how it compares to other teams? It is an intriguing possibility, but the support of this claim is left to diligent future research. Indeed, the paucity of team financial data may preclude our ever knowing this for certain, but without at least trying to make a comparison, Fetter’s claim falls short.

My frustrations with the lack of primary data available to Fetter should not be taken as an indictment of his work. The data are scarce, or nonexistent, and he is not to be blamed for that. What he lacks in primary data, he makes up for in scope of coverage. Fetter provides an excellent read, serves as a great resource for other scholars, weaves a good story, and raises some intriguing questions, some of which can be answered by future researchers. I highly recommend this book to anyone who is a Yankee fan, a baseball fan, or has an interest in the business of baseball.

Mike Haupert is currently working on a financial history of the New York Yankees covering the period from 1914-1940, and a history of the professional baseball labor market.