Tuesday, October 23, 2007

The Yankees made Joe Torre a GREAT offer

With the Fall Classic set to begin in 24 hours the Yankees ongoing saga (their offer to Joe Torre, Torre’s reaction, who is going to replace Torre, Alex Rodriguez’s future with the Bronx Bombers) illustrates at least in part what’s right and wrong with Major League Baseball. For baseball fans the World Series is always a special time, the end of the baseball season when one team is declared the best in baseball.

But at the same time with the Fall Classic set to open at Fenway Park tomorrow, the soap opera, and the seemingly never-ending drama that is the New York Yankees continues unabated. If nothing else the headlines the Yankees are bringing to the sport pages suggest those who love the days when the Yankees were baseball’s most dysfunctional baseball franchise are about to relive that bygone era – when the Yankees stumbled, fumbled and lost their way. These days the Yankees are having their challenges – both on and off the field. And yes the Bronx Zoo is back and open for business.

While the Red Sox and Indians were putting baseball fans through an exciting seven game American League Championship Series last week, the Yankees took more than their share of the baseball spotlight with a series of internal meetings at the teams’ spring training headquarters in Tampa Monday and Tuesday that culminated with the Yankees offering Joe Torre a one year contract which he rejected Thursday, Torre calling the contract an insult Friday and the heir apparent to Yankees owner George Steinbrenner his son Hank calling out Torre the longtime manager the weekend.

“Where was Joe's career in '95 when my dad hired him?" Hank Steinbrenner told the New York Post. "My dad was crucified for hiring him.

"Let's not forget what my dad did in giving him that opportunity - and the great team he was handed," Steinbrenner told The Post by phone from Tampa, Fla.

The sentiments represent a classic case of vintage Steinbrenner, from the late 1970’s, 1980’s and the 1990’s, statements George Steinbrenner became infamous for in a period when the Yankees won some of the time but more often than not were noted for a series of bumbling off-field hiring and firing moves. Yes the Yankees have been under fire for their mishandling of Joe Torre’s exit over the last few days, but at the end of the day the younger Steinbrenner would have been well advised to stay away from the tone of the remarks his father became famous for, when the elder Steinbrenner bought the Yankees nearly 35 years ago.

A group of investors, led by Cleveland-based shipbuilder George Steinbrenner, purchased the club from CBS on January 3, 1973 for $8.7 million. Mike Burke stayed on as president until he quit in April. Within a year, Steinbrenner bought out most of his other partners and became the team's principal owner, although Burke continued to hold a minority share into the 1980s.

One of Steinbrenner's major goals was to repair the Stadium, which had greatly deteriorated (along with the surrounding area) by the late 60's. CBS had suggested renovations, but the team would have to play elsewhere, and the Mets refused to open their home, Shea Stadium, to the Yankees. A new stadium in the Meadowlands, across town in New Jersey was also suggested. Finally, in mid-1972, Mayor John Lindsay stepped in. The city bought the Stadium, and began an extensive two-year renovation period. Since the city also owned Shea, the Mets had to begrudgingly allow the Yankees to play the two seasons out there. The renovations modernized the look of the stadium and reconfigured some of the seating.

After the 1974 season, Steinbrenner made a move that started the modern era of free agency, signing star pitcher James Augustus "Catfish" Hunter away from Oakland. Midway through the 1975 season, the Boss made another move, hiring former second baseman Billy Martin as manager. With Martin as the helm, the Yankees reached the 1976 World Series, but were swept by the Cincinnati Reds, the famed Big Red Machine.

Steinbrenner then signed star Oakland outfielder Reggie Jackson for a then record $600,000 away from his new home with the Baltimore Orioles. Jackson made a controversial comment during spring training, saying that he was "the straw that stirs the drink", and that catcher and Yankee captain Thurman Munson thought he was "the straw", but could only "stir it bad". Jackson already had bad blood with Billy Martin, who had managed the Detroit Tigers and met Jackson in the 1972 postseason. Jackson, Martin, and Steinbrenner would repeatedly feud throughout Jackson's five-year contract. Martin was hired and fired by Steinbrenner five times over the next 13 years. This conflict, combined with the extremely rowdy Yankees fans of the late 1970s and the bad conditions of the Bronx, led to the organization and stadium being referred to as the "Bronx Zoo". Despite the turmoil, Jackson proved his worth in the 1977 World Series. He hit four home runs on four consecutive pitches from four different Dodgers' pitchers, three of them in the same game. Jackson's great performance in the postseason gained him the nickname "Mr. October".

But it was Steinbrenner’s treatment of mangers that drew so much negative attention to the Yankees and the reference, the slogan (and the title of a book written by former Yankees reliever Sparky Lyle) the Bronx Zoo. Before Torre became manager in 1996, the Yankees had endured 13 different managers in 22 years, including five different stints under Billy Martin, and two each with Dick Houser, Bob Lemon and Gene Michael.

If leadership is equated in the workplace with stability then the Yankees before Torre arrived were as dysfunctional a business model that existed in professional sports. If the Yankees are going back to an era were no one knew who was in charge of the Bronx Zoo, a legitimate concern for those who see the Yankees as the model sports franchise in the industry today, especially with the Yankees moving into a new stadium at the start of the 2009 season, if the company is heading into a transitional period; and the Yankees are anything but a stable business at this critical time in the teams’ history can’t be good for the day to day business of the Yankees.

A legitimate question that needs to be discussed – just how did the Yankees after making the playoffs for the previous 12 seasons under Torre’s leadership mishandle Torre’s departure from the organization? It may have been time for Torre to leave, but at the end of the day from a communications perspective the Yankees could and should have done a more effective job of how he left the Yankees.

In many ways what happened reflects both on the inherent issue when a longtime highly visible executive (in this case a manager) leaves a sports franchise and how different that departure (in the sports industry) is different from executives in other private sector industries.

The Yankees experienced tremendous success under Joe Torre. They made the playoffs each of the 12 seasons he managed the team. They won four World Series. But in the last seven seasons, while the Yankees made the playoffs each year, the Yankees failed to win the World Series, that despite Steinbrenner investing more than $1.3 billion in player personal decisions.

Here’s where understanding the subtle differences between how a sports franchise operates and how a multi-million business functions in the private sector becomes important. Hundreds of CEO’s in the hi-tech industry lost their jobs in the early years of this decade after failing to deliver earnings numbers they were expected to deliver. The Yankees produced winning baseball in the last seven years, but why shouldn’t Torre have been held to the same scrutiny other executives would have been held too? Or should those in leadership positions in the sports industry not be held to the same level of accountability?

After a series of meetings last Monday and Tuesday at the Yankees Tampa training facility Torre flew to Tampa Thursday meeting with the Yankees management team. Torre was offered a one-year incentive laden contract for the 2008 season. The contract reportedly offered Torre a base salary of $5 million and bonuses that would have pushed Torre’s renurmeration for the 2008 season just past the $7.5 million he was paid in 2007. Additionally if the Yankees won the American League pennant next year the organization would guarantee Torre an $8 million salary in 2009. Torre’s reaction to the offer – he saw the Yankees suggestion that he be held to the same scrutiny as other executives are (stand and deliver) as an insult.

"I just felt that the terms of the contract probably was what I had the toughest time with," Torre said during a press conference held at the Rye Town Hilton, near his home in suburban Westchester County. "The one year ... the incentives; I had been there for 12 years and I felt the motivation wasn't needed.

"I just didn't think it was the right thing for me, or the right thing for my players. Whether they're on my side, or not on my side, any pressure caused by maybe the manager's going to lose his job, that pressure isn't needed when the goal is to win baseball games."

Those are fair enough comments by the man who delivered as Yankees skipper, but lets be very sure about this issue. When Torre was winning World Series in the first part of his career as Yankees manager, the affable Torre and his agents negotiated as big a series of raises as they could from Steinbrenner and the Yankees. After all, Torre delivered four World Series during his first five years as Yankees manager and he had earned whatever raises he demanded of from the Yankees. But if Torre was entitled to hefty salary increases in the first half of his Yankees career does it not make sense the Yankees were just as right to offer an incentive laden contract after he failed to deliver a title in the last seven years? And let’s be very sure about one more issue – at a base salary of $5 million Torre still would have been the highest paid MLB manager in 2008.

"When I expressed my dissatisfaction with the length of contract ... I explained that and the incentives, which I took as an insult," Torre said. "If we hadn't started this run, being in five of the first six World Series, I don't know how to say that one is never enough, or two is never enough. You're constantly driving because you know that's the goal you've set for yourself.

"There really was no negotiating. I was hoping there would be."

The 67-year-old Torre, who has managed in the Major Leagues for 26 seasons, told MLB.com he believed a negotiation might have led to a different result.

"I was obviously discouraged with the fact that they would never move off the offer they made, that they never got to a negotiation," he said. "I don't know if that was the purpose.

"The most important thing for me -- sure, money's a part of it, and five million dollars is a lot of money, and I'm not going to make that this year, so I'm not taking it for granted -- but if someone is reducing your salary, it tells you that they're not satisfied with the job you're doing. ... Two years would have opened the door for further discussion, but it just never happened."

"The decision stands on its own," club president Randy Levine said during the call. "We all believe as one that this was the best way to go. We obviously wanted Joe Torre to come back; that's why we made him the offer. We respect his decision not to go forward. We thought it was a fair offer."

"This is a difficult day, because of respect for the work that this man has done," general manager Brian Cashman said on Thursday. "At the same time, we're all willing to undertake the challenge ahead of us to find the next man who's best suited to represent this franchise in that dugout. It's an enormous position."

Levine the Yankees President has been under fire – largely directly as a result of how the Yankees positioned Levine, as the public face of getting their message out. Levine contacted the New York Times Richard Sandomir the papers’ sports business writer Sunday venting his frustration at how the media has portrayed his role in the Torre saga. According to Sandomir Levine took exception to how critical WFAN’s (one of New York’s all-sports radio stations) Mike Francesa and Chris Russo comments on Levine’s role. Levine pointed out what Mike the Mad Dog failed to tell their listeners. Levine who also sits on the Board of Directors for the YES Network isn’t a fan of the investment the YES Network had made in simulcasting their daily program on YES.

“I have seriously questioned the money that YES pays them and whether it’s an appropriate fit for the time spot at YES,” Levine told Sandomir, adding that the terms of the current three-year deal were ultimately agreed upon. “But next year it’s up again, and it’s convenient for them to attack me to help their own negotiating position.”

Robert M. Steele, a professor and ethics expert at the Poynter Institute, told Sandomir, “To me, Levine’s roles are significant, both with Torre and with the business relationship” that YES has with Francesa and Russo. He added, “If somebody had asked me ahead of time, I’d say disclose the relationship.”

Whoever manages the Yankees next year isn’t going to be paid anywhere close to the $5 million base Torre was offered. The Yankees might save a couple million dollars in what they’ll pay their manager, the ramifications of Torre’s decision might cost the Yankees tens of millions of dollars in their attempts to resign their three big free agents: Alex Rodriguez, Marino Rivera and Jorge Posada. Each of the players’ agents will simply be doing their jobs in using the turmoil that currently exists in the Yankees organization as a negotiation ploy. That’s what agents do.

If it is acceptable for Torre to be held accountable where does that leave Yankees general manger Brian Cashman. In the last seven years Steinbrenner has provided Cashman (who has been the Yankees general manager since 1998) all the financial resources he needed as general manager to build a winning team. It can be argued that not only as Steinbrenner given Cashman what he needed to win, but he’s never said no to Brian Cashman when Cashman believed the Yankees needed to a player or two. When is Brian Cashman’s future with the Yankees going to be debated?

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: Wikipedia, The New York Times and MLB.com

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