by Madden, Bill
But with the 1960s came a dramatic turn in the Indians’ fortunes, both on the field and at the gate, and the team was bought and sold by a series of owners, none of whom could stem the team’s financial difficulties. Throughout all the fiscally compromised Indians ownerships, one man, Gabe Paul, remained in charge of the baseball operations. Paul had been hired as Indians general manager in 1961 after spending 23 years in the Cincinnati Reds organization as traveling secretary and, later, general manager. A respected baseball executive, Paul was used to operating in a small market, but he longed to work for an owner whose resources would put the team on equal footing with his more privileged peers.
He got his wish in 1964, when, immediately after the Indians signed a favorable 10-year lease to remain in Cleveland Municipal Stadium, frozen-foods magnate Vernon Stouffer bought 80 percent of the club for $8 million. He gave Paul a 10-year contract along with a free hand to spend whatever it took to remake the team. Unfortunately for Paul, he never got to go on a spending spree for the marquee acquisitions he envisioned. Not long after the 65-year-old Stouffer bought the team, Litton Industries, a microwave oven company in which he purchased $21.5 million in stock in order to merge it with Stouffer Foods, began hemorrhaging money. Litton’s stock, which had peaked at $120 per share at the end of 1967, had fallen as low as $18.50 by 1971, severely deflating Stouffer’s personal fortune and his grand vision of restoring the Indians to the heights of a decade before.
The Indians’ problems were a frequent topic of conversation at table 14 in the Pewter Mug every Tuesday. “How could you ignore it?” said Robert Storey. “We were all sports guys who cared a lot about our local teams. Plus, George was always talking about someday hoping to buy the Indians.”
Rosen, a member of the Indians’ board of directors, was particularly disgusted with the way Stouffer was running the team. Stouffer was one of Cleveland’s most prominent and wealthiest citizens, but Rosen viewed him as a cantankerous old man who drank too much and whose personal business failings and lack of baseball knowledge had rendered him another in a long line of bad owners for the Indians and his friend Gabe Paul.
It was during the summer of 1971—when the Indians were on their way to the second-worst season (60-102) in their history and Stouffer was entertaining overtures from a New Orleans group to transfer 27 to 30 games there—that Sheldon Guren invited Rosen to a meeting at Cleveland Stadium with Art Modell, owner of the National Football League’s Cleveland Browns. It seemed Edward DeBartolo, the prominent shopping-mall developer from Youngstown, Ohio, had purchased a large tract of land south of Cleveland on Route 8 and was interested in building a pair of racetracks, as well as two stadiums—one for baseball and one for football. Although the Browns were regularly filling Cleveland’s Municipal Stadium with 80,000 fans every Sunday, Modell was an unhappy tenant in the decaying and outmoded edifice.
“The thought here,” Guren told Rosen, “is that Art could fulfill one half of DeBartolo’s plan by moving the Browns there, but we would need to fulfill the other part by purchasing the Indians from Stouffer. Do you think you could put together a group of investors?”
Rosen thought about it for less than a minute.
“I’m on it,” he said. “Just give me a few days.”
Excited over the prospect of wresting his distressed team from Stouffer, Rosen’s first call was to Steinbrenner. Would George be interested in purchasing his hometown baseball team? “You bet I am,” Steinbrenner said. “This has been my dream. I can do this. I have the people with the money.”
Steinbrenner quickly enlisted Group 66’s Ed Jeffrey (who was also on the Indians’ board of directors) and Ted Bonda, who brought in his parking-lot partner, Howard Metzenbaum. Rosen was also good friends with Paul, who was anxious to keep his stock in the team and become part of a new ownership. “Count me in,” said Paul, who brought to the group his close friend Steve O’Neill, the trucking magnate and Indians trustee who had more money than anyone else in the potential ownership group—a group that, according to Rosen, “had more money and more smarts than all the previous Indians owners combined. We had the ability and were prepared to restore the Indians to greatness.”
Because Steinbrenner had a long-standing relationship with the Stouffer family—he’d attended Culver Military Academy, in northern Indiana, with Stouffer’s son, Jimmy—Rosen and Guren felt he should be the group’s point man in the negotiations. By this time, the elder Stouffer was feeling overwhelmed by the Indians’ financial losses, his deteriorating image in Cleveland and the lack of support for his plight from his fellow American League owners. He was ready to sell. The negotiations between Steinbrenner and Jimmy Stouffer moved swiftly, culminating on December 6, 1971, with the group’s offer of $8.6 million, by which the new owners would absorb the $300,000 debt that resulted from Stouffer borrowing against the team’s 1972 television contract.
“The deal was struck, a handshake was given between George and Jimmy and now all that was left was for Vernon to give his final approval,” Rosen said.
Later that day, Steinbrenner and Rosen waited at Steinbrenner’s AmShip corporate office, on the 14th floor of the East Ohio Building, for a 5 o’clock phone call from Vernon Stouffer, who was in Scottsdale, Arizona. With them on that dark and frigid December afternoon was Marsh Samuel, who had done some public relations work for Steinbrenner and, more than 20 years before, for the Indians when they were owned by the flamboyant baseball promoter Bill Veeck. After alerting the media to come to the AmShip offices for an announcement, Samuel left Steinbrenner and Rosen alone and went to another office to prepare the press release.
The call from Vernon Stouffer came shortly after 5 P.M., and it was immediately evident to Steinbrenner that the old man had had more than two martinis over lunch in Arizona.
“I’m not doing this deal,” Stouffer slurred to Steinbrenner, as Rosen listened in on another phone across the room. “You and your friends are trying to steal my team. You’ve already leaked the sale price to the press. I know I can get at least $10 million for it. So forget about it. I won’t be pressured. I’m not selling to you.”
Steinbrenner, his face white, hung up the phone and turned to Rosen. Remarkably composed considering what he’d just been told, he said glumly:
“You heard him, Al. He’s not selling. I guess there’s nothing left but to call Marsh and have him tell the media downstairs there’s no deal.”
But Steinbrenner was devastated.
“He couldn’t believe what had happened,” Rosen said. “He was really pissed, but there was nothing we could do and he realized it. You couldn’t go public with the fact that you thought the old man was three sheets to the wind. That would only have shown us to be disrespectful to the Stouffer name or his son, Jim, who was only following his father’s orders. It was just a terribly disappointing time for us.”
If there had been one positive element of Steinbrenner’s disappointing experience with Stouffer, it was the relationship he’d formed with Paul. A few days after his rejection by Stouffer, Steinbrenner called Paul, who he now knew had close ties to almost all the owners and top officials in baseball, and said: “Let me know if you ever hear of another franchise to come on the market. I’d still love to have you with me.”
In the late summer of 1972, Paul and Rosen happened to sit next to each other on a flight from New York to Cleveland.
“I remember that conversation we had like it was yesterday,” Rosen said. “Gabe looked at me and asked: ‘Is your friend Steinbrenner real?’ I said: ‘What are you talking about?’ ”
“He asked me if I ever heard of a club for sale to let him know,” Paul said, “and I know of a club for sale.”
“What club is that?”
“The Yankees,” said Paul.
GEORGE STEINBRENNER COULD not believe what he was hearing.
“You’ve gotta be kidding, Al,” he said. “Are you sure?”
“I’m sure,” said Rosen. “Gabe says CBS wants to get out of the ba
seball business. The team’s not doing well, on or off the field, and they’re tired of the losing.”
“Did he say how much they want for them?”
“I think about $10 million,” said Rosen.
The conversation with Rosen energized Steinbrenner, who immediately placed calls to some of the other well-heeled members of his Group 66, including Jess Bell, the CEO of Bonne Bell cosmetics, and Sheldon Guren and Ed Ginsberg. (Rosen had told him he was too busy handling his brokerage business in Cleveland to participate.) In addition to Paul and his wealthy friend Steve O’Neill (who told him they were prepared to sell their shares in the Indians), Steinbrenner was able to summon two other prominent Cleveland lawyers, Daniel McCarthy and Ed Greenwald, into the group.
As Guren said, “Ten million dollars was a lot of money to raise back then,” so Steinbrenner had to reach beyond Cleveland to recruit additional investors, eventually wrangling oil-and-silver magnate Nelson Bunker Hunt, of Dallas; Leslie Combs III, a Thoroughbred breeder from Lexington, Kentucky; Chicago financier Lester Crown, whose family holdings included banking, real estate and hotels; John DeLorean, then vice president of General Motors in Detroit; Cincinnati banker and real estate developer Marvin L. Warner; and, from New York, theater entrepreneur James Nederlander, whose play Seesaw, which was about to open on Broadway, Steinbrenner had helped back. The last two limited investors were Thomas W. Evans, Steinbrenner’s AmShip legal counsel, and, from Columbus, Ohio, Charlotte Witkind, heir to the Lazarus department store chain, which later became Macy’s.
The original investors’ breakdown gave Steinbrenner 11 percent ownership, the largest individual interest, with Hunt, Crown, Warner and O’Neill at 10 percent each and Ginsberg and Guren sharing 11 percent. The rest had 6 percent or less. Steinbrenner’s personal outlay was said to be $168,000.
By late summer 1972, Steinbrenner had assembled his group, and he instructed Paul to begin the dialogue with the CBS and Yankees officials. On September 17, 1972, Paul met with Yankees president Mike Burke over a late breakfast at the Plaza Hotel in New York. At the meeting, Burke informed Paul that CBS chairman Paley had given him the okay to assemble his own group of investors to buy the team, but that he’d been unsuccessful in coming up with a group sufficiently financed to meet Paley’s expected asking price.
Paul assured Burke that his own investor group was “very substantial” and that they were prepared to do a cash deal, “no green stamps or delayed payments.”
The next day, Burke sent Paul an internal memo with sales figures for the team. Paul forwarded them to Steinbrenner, who asked him to set up a meeting with him and Burke at the Carlyle Hotel in New York for Friday, September 29, at 8:30 A.M. Three days prior to the meeting, Steinbrenner had lunch with Paul at the Plaza, where he reiterated his intention to bring Paul in as team president.
But in a meeting with Burke over coffee and ice cream at the Plaza on September 17, the Yankees president was a bit discomfited by the news that, over the past few weeks, Paley had been wavering over whether to sell the team, concerned that it would reflect badly on CBS to sell while it was down. However, after returning from a vacation in Europe in late August, Paley was delighted to find the Yankees in the thick of the 1972 pennant race. His right-hand man, CBS president Frank Stanton, felt that it would now be the perfect time to sell with honor. As the meeting concluded, Paul was heartened when Burke told him that CBS was indeed looking to sell the team for a fair price.
“I’ll be glad to meet with Steinbrenner,” Burke said. “I’m sure we can work something out.”
“What about your interest in the team?” Paul asked.
“I’ll be in the picture at the start, but I don’t think my participation is a must,” Burke said. “I’ll gladly bow out once the sale is completed.”
“What do you think the price will be?” Paul asked.
“Oh, about $11 million,” Burke replied, “but it could probably be knocked down.”
“If Burke’s right,” Paul thought as he waited to hail a cab on Central Park West, “this is a helluva buy!”
Steinbrenner, Paul and Burke met at the Carlyle on September 29, at which time Steinbrenner said he would like his accountants to go over the Yankees’ books. Burke agreed and said he would arrange to make the team’s comptroller, Jack Collins, available to Steinbrenner’s men.
Over the next few days, Burke began to ponder what his own role—if any—might be with the new Yankee ownership. On October 5, he telephoned Steinbrenner and said he would like to stay with the organization and leave CBS, but added that it wouldn’t be a deal breaker if Steinbrenner didn’t want him. “However,” he said, “I do think you could make a more advantageous deal if the dealings were direct.” In their previous conversations, Burke had insisted on a 5 percent stock share of the team as a fee for his role in brokering the deal with CBS, which Steinbrenner had flatly rejected, saying: “My investors will never go for that.”
But now that he could see everything coming together, with Burke convincing Paley it was a good deal for CBS, Steinbrenner relented and began to formulate a plan in which he would offer Burke a stock option of 5 percent and install him as chief operating officer, with Paul as team president. He told Burke on October 4 that the stock option of 5 percent was okay, as long as the purchase price was $10 million and that he would be the COO. However, he neglected to add the part about Paul coming aboard as president and head of baseball operations.
Burke and Steinbrenner spoke by phone periodically over the next few weeks as the accountants and attorneys continued to pore over the books, which revealed a cash loss for the Yankees in six of the previous seven years. Finally, on December 18, the meeting was set with Steinbrenner and Paley.
In a phone call to Steinbrenner in Cleveland, Burke said: “He’ll meet you in his office tomorrow afternoon at 3 o’clock. He wants to sell if the money is right.”
NOW, STANDING WITH Burke outside Paley’s office, Steinbrenner gazed admiringly at the original art hanging in the foyer. Over lunch at the Brussels, they had shaken hands on their own arrangement (Steinbrenner still hadn’t mentioned that Paul would become team president) and agreed that the offer for the club would be $10 million in cash. Burke had dined on calf’s liver; Steinbrenner had been too nervous to eat. He couldn’t help but remember that awful day in Cleveland, a year and a half earlier, when Vernon Stouffer told him to take his offer for the Indians and stuff it. “What if this is all just another jerk-off?” he asked himself. “How do I know Paley isn’t using this as a way of determining what the team is worth? What if he’s decided CBS can’t sell the team at a loss?” Suddenly Steinbrenner felt his knees tremble again as Paley’s secretary interrupted his thoughts.
“Mr. Paley will see you now, gentlemen.”
Years later, Steinbrenner would remember how eerie the whole scene was as they walked into Paley’s office: Paley standing in front of the window, his back to them. Then, without turning around, he said: “So I understand you want to buy my baseball team?”
“I do,” said Steinbrenner, trying to remain cool and calm.
“Well, I hope you didn’t come here with Chinese money.”
“I didn’t,” he said, more firmly. “I came here with cold, hard, genuine American cash. It’s all the money I could raise.”
“I assume you and Mike have worked out an arrangement that is satisfactory to him?” Paley asked.
“Absolutely,” said Steinbrenner. “We wouldn’t have gone into this deal without Mike as a partner.”
When Burke, who’d been president of the Yankees since 1966 and had spearheaded the city’s $100 million renovation of Yankee Stadium, slated to begin in 1974, informed Paley of being given a 5 percent interest and the title of chief operating officer, the old man smiled approvingly. “That’s important to us,” he said, looking directly at Steinbrenner. “Mike’s identified with the Yankees more than CBS is, and we think continuity is important.”
“Mr. Paley,” Steinbrenner said, “I
can assure you we wouldn’t want it any other way. I’ve got a ship company to run. I won’t have much time for baseball, so Mike’ll have to carry the load. We’re especially going to need him to follow up with the city on the stadium renovation project. All anyone has to do is walk around the city with him. He’s ‘Mr. Yankee,’ and that’s a helluva asset for us.”
Paley ended the meeting by telling Steinbrenner he would be convening the CBS finance team in the next two or three days and that he’d get back to him. In a private conversation with Burke after the meeting, Paley said he was impressed with Steinbrenner and personally satisfied that the Yankees were being placed in good hands. There was, however, one caveat in his approval of the sale, as he told Burke: Paley said he wanted the point to be made clear at the press conference that CBS hadn’t sold the team at a loss; that tax write-offs of player contracts plus the cash sale effectively made it a wash on CBS’s original $13.2 million investment.
Steinbrenner, too, was impressed with Paley and how the meeting had gone, and flew home to Cleveland confident that, this time, there would be no last-minute double cross on the sale by CBS. Three days later, Burke called Steinbrenner in Cleveland to tell him that Paley had accepted their offer of $10 million and that they would meet again in New York on December 28 to finalize all the details, specifically the financial breakdown from all of Steinbrenner’s partners and the execution of Paul’s and O’Neill’s sale of their stock in the Indians. For years, the final price was reported to be $10 million, but as Steinbrenner later revealed, the deal included a couple of parking garages that CBS had bought from the city. Soon after the deal was completed, the city bought the garages back from Steinbrenner for $1.2 million, making the net cost to his group $8.8 million. The negotiations were concluded on December 29, but the parties agreed to delay announcement of the deal until after the new year. Marty Appel, the Yankees’ assistant director of public relations at the time of the sale, remembers sitting in the office he shared with Jackie Farrell, the director of the Yankees’ speakers bureau, in the basement of Yankee Stadium on the afternoon of January 2 when his boss, Bob Fishel, walked in and began pacing nervously around his desk while fidgeting with some papers. Something was up, but what was it?