by Jane Leavy
Klindt was a local golden boy, one of those graceful former high school stars, not quite good enough to make a living at it. He carried himself like an athlete, leaned on a bat with the je ne sais quoi of an athlete. He was useful and charming, skills championed in the July 1920 issue of Hardware World magazine as a sporting goods merchant “who really knows.”
In the decade before San Diego acquired a Pacific Coast League franchise, when amateurs and semi-pros competed for use of the City Stadium field on Sundays (against the wishes of local clergy), Klindt wielded his charm and resorted to threat when necessary in order to provide the city with “clean and regular baseball throughout the year.” As founder of the San Diego County Managers’ Baseball association, he fined teams that failed to show up for appointed games and helped to fill the stands and rosters for barnstorming tours that came through town.
His friendship with Ruth—commemorated by a thank-you note on yellow “‘Babe’ Ruth’s coming to town!” stationery addressed to “Dear Friend Carl”—extended to rounds of golf, hunting and fishing trips, visits to local bootleggers, outings at the Hotel del Coronado, and, family lore has it, dinners at the Klindt home featuring bathtubs filled with gin.
In January 1927, during Ruth’s weeklong vaudeville run at the Pantages Theater, Klindt, then employed as the manager of the athletic department at the Cycle & Arms sporting goods store, had arranged a fishing trip to the Point Loma kelp beds for the Babe, who wanted to catch a jewfish—a bottom-feeder with large lips that has since acquired the politically correct name “goliath grouper.” They were accompanied by Linn Platner, a local boxing promoter, Speed Martin, a former big-league pitcher, and a school of local waterfront reporters. “We caught no jewfish,” Max Miller of the San Diego Sun reported in his bestseller I Cover the Waterfront. “We caught five mackerel.” He credited Ruth with one fish. “One Strike and He’s Out,” his column read.
“Doc” Gottesburen, angling columnist for the San Diego Union, credited Miller with five mackerel, Klindt and Ruth with three each, and the Big Fella with a Big One that got away. Ruth and Klindt appeared with their catch in the April issue of Tackle magazine along with the particulars of the equipment Ruth used. The well-mannered Babe promptly wrote Klindt’s boss, extolling his employee’s virtues, and thanked Klindt separately the next day for making his week in San Diego “an extremely happy one.”
By the time he returned nine months later, Ruth was happily counting more than fish. The man who once said, “I’ve spent a half a million dollars and I haven’t the faintest idea what I’ve spent it on,” was swimming in dough and boasting of his ambition to become a baseball magnate, telling West Coast reporters, “I have saved enough money to buy a club tomorrow.” (Indeed, he could have purchased the Cleveland Indians that year for $1 million, or the Oakland Oaks of the Pacific Coast League for $175,000.)
It was a career year financially for the Babe. Between his $70,000 Yankee salary—sixty-seven times that of the average American worker—and the $73,247.34 he made in what Christy Walsh called “by-product money,” Ruth earned the equivalent of $10,232,799 in 2016 dollars. And that didn’t include the money accruing in his annuity accounts with the Equitable Life Assurance Company.
II
By sleight of hand and dint of luck, Walsh had engineered a stunning reversal of fortune in the eighteen months since Ruth had come to him for a $4,000 loan in March 1926. Thanks to assorted fines and misdemeanors, Ruth had been paid only $42,000 of his $52,000 1925 Yankee salary. He, in turn, had paid his estranged wife Helen only half of the $20,000 he owed her in October 1925, as stipulated by their 1925 separation agreement. And he had paid only $25,000 of the $30,000 he owed her the following October. He was in arrears $15,000 by February 1927, when Walsh trumpeted the news that Ruth had agreed to fund an irrevocable trust at the Bank of Manhattan.
By the time the trust was executed on April 26, he had upped the initial deposit from $33,000 to $40,000. In August, he socked away another $10,000—a fact Walsh publicized widely and loudly, tipping off New York World columnist Joe Williams and providing the bank with a spate of free publicity. He coordinated with Frank Hilton on the circulation of the Babe’s own (ghostwritten) story about his new fiscally responsible self and the fiscally conservative portfolio the bank had created for him, investing his money in treasury bonds and blue-chip stocks, protecting him from the crash that manager Miller Huggins warned his players was coming.
Hilton, in turn, had commended Walsh to his banker father-in-law, Oscar M. Souden, president of the U.S. National Bank in Los Angeles, as a consummately “alert” young man.
But frugality did not come naturally to the Babe. Results came naturally to the Babe. Behind the scenes, throughout the tour, he had been hectoring Walsh about a dividend check he had expected by the first of October, the initial quarterly return on his investments. In the absence of tangible results from New York, Walsh was having no luck convincing Ruth to add to the account, according to John B. Kennedy’s barnstorming travelogue.
“You’re doing well on this trip, Babe, why not sock a few thousand away in your trust fund?”
The Babe bit at a cigar and replied, “Shut up.”
Undeterred, Walsh persisted. “In a year or two you’ll have $100,000 in that trust fund, Babe. And that’s a small estate. Lots of men who live in swell apartments on Riverside Drive and have cars and chauffeurs don’t leave estates that large when they pass out.”
“Don’t give me a pain,” Ruth replied.
Walsh could imagine all his years of financial conjuring disappearing like a cheap scarf up a magician’s sleeve. He had coerced Ruth into creating the trust, using his leverage over the Babe to divert all his outside income into the account. He had built it up while allowing the debt to Helen to go unpaid and the interest to mount. Whether this was accomplished with Ruth’s knowledge and approval—or hers, for that matter—is impossible to say.
He had gotten the Babe to agree to live on his Yankee salary with the incentive that he could keep the dividend checks and the interest generated by the account as play money. “Were I to insist he save what his trust fund earns there would be no fun in saving,” he explained to writer Norman Beasley in Forbes magazine. “That is not for him.”
He had enlisted Ed Barrow’s help in arranging for the Yankees to pay Ruth once a month instead of biweekly starting in 1926, an enforced savings plan that remained in effect through 1933.
He had cajoled Hilton into sharing proprietary information without Ruth’s knowledge that so he could keep an eye on things. Hilton had acceded to the request after reminding him of the confidential nature of the fiduciary relationship and pleading with him to keep the information in extreme confidence.
Walsh reciprocated with an introduction to Gehrig.
But Ruth was a “supremely unconscious financial wizard,” as Tommy Holmes put it in the Brooklyn Eagle, and an impatient one.
Walsh fretted in a letter to Hilton, “He is losing some of his enthusiasm on this subject which is having a poor influence on Gehrig. . . . Personally, I fully understand the delay etc etc but no one knows better than yourself the obstacles I have had to overcome in lining Babe up in this matter.”
Hilton replied with alacrity; he didn’t want to lose the Babe either. A check for $643.13, the first money generated by the trust, and a suitably unctuous letter, noting that the quarterly return was higher than the projected estimate, arrived in time for Walsh to read it aloud to Ruth on the train en route back to New York. “Your example in establishing this trust fund has caused a great deal of most favorable comment on all sides.”
Walsh replied: “He was well pleased and particularly delighted with the check. Money talks.
“I am hopeful to have had his promise to add $20,000 to his Trust fund at a very early date. However, since I talked to you he has showed signs of weakening. He changes his mind so much on me that I am confident I can get him to do as he promised. I wish you would please write me a letter
immediately which I can show him along the lines of the enclosed copy.”
Hilton followed the script calculated to inflate the Ruthian ego and trust fund, writing the next day that he was “gratified” by the Babe’s decision and commending his “rare good judgment at the time of his prosperity.”
He also commended Walsh’s “splendid effort.”
Later, in the club car, Kennedy overheard Ruth in conversation with Gehrig.
The Babe’s voice rang out like an organ note. “A young guy like you,” he declaimed, “should be saving his money.”
“Yeh?” said Gehrig.
“Yeh,” said Ruth. “You’ve got ten years ahead of you in the big league. Save your dough now. Start one of these trust funds and push away the jack you’re making out of a racket like this. Every dollar you sock away now will be one more laugh left when your home run days are over.”
Back in New York, big-city columnists dutifully composed hosannas saluting Ruth’s excellent example.
In December, the promised $20,000 was added to the account: $10,000 from barnstorming tour earnings, $4,654.58 of his $12,807.59 syndicate profits, $3,000 from unnamed royalties, and $1,500 from the comedy record he and Gehrig had made for Perfect Records. The remaining $845.42 was a loan from Walsh, who had a fondness for round numbers. They looked good in press releases.
III
There are many ways to measure a man’s worth.
By September 1927, according to a widely syndicated story published in, among other places, the Baltimore Sun, Babe Ruth was the second most valuable human being in the United States, carrying a reported $5 million in life insurance, second only to department-store magnate John Wanamaker. Ed Barrow quickly dismissed the story as “bunk,” telling the New York Times Ruth’s life was worth no more than those of Charlie Chaplin, Mary Pickford, Douglas Fairbanks, Will Rogers, Gloria Swanson, or John Barrymore, who each carried $3 million.
In denying the inflated report, Barrow actually conceded the point that Ruth was now an entertainer, an economic engine for major-league baseball, the American League, and every American League city he played in—not to mention the Yankees, his family, his agent, every barnstorming town he visited, every sporting goods store he patronized, and every brand of cigar he smoked.
The full extent of his economic clout was documented in Yankee accounting books and daily cash ledgers discovered by economist Michael Haupert in a climate-controlled storage room at the Hall of Fame in the summer of 2000. The Hall had acquired the records covering the twenty-four years of Jacob Ruppert’s ownership in 1973 when a team employee offered them to the head librarian in advance of the renovation of Yankee Stadium. The team’s new owner, George Steinbrenner, had deemed them unnecessary.
In the eighteen years since his discovery, Haupert has published extensive analyses of the Yankee economic juggernaut and Ruth’s role in creating it. The records show how much he was paid annually and at what rate, how much he was fined, and how much he borrowed against his future salary, figures that help explain the financial hole he had created for himself. They reveal how much the Yankees spent on his medical care and on private detectives to follow him, what it cost for Helen and later Claire to travel with the team, and how much they charged for his uniforms.
In an effort to produce a complete picture of Ruth’s financial worth and his worth to the team, Haupert agreed to reexamine the Yankee records in conjunction with the earnings spreadsheet Walsh prepared for Ruth in 1938 and Bank of Manhattan account documents found among Walsh’s papers at the time of his death. (Those documents can be found in appendix 2, “The Babe’s Portfolio.”)
Ruth earned $860,913 in salary and bonuses during fifteen seasons with the Yankees. But as Haupert points out, salary tells only half of the story. “Actually, it only tells 57 percent of the story,” he explains. “Christy Walsh helped Babe Ruth nearly double his income during his lifetime through endorsements and investments.”
In the twenty-eight years between 1920 and Ruth’s death in 1948, his total income from salary and Walsh’s so-called “by-product” money was $1,511,577, or $124,603,370 in 2016 dollars. It was an astonishment of riches compared with the earnings of the men he played with and against and all those who came before him. “But compared to what the Yankees made off him, and what athletes make today, it’s chump change,” Haupert says.
No matter what the Yankees paid him, he was a bargain. There was a reason they kept their books a secret.
The purchase price was $100,000—inaccurately reported by the New York Times in January 1920 as $125,000—to be paid to Red Sox owner Harry Frazee in four annual $25,000 installments, with 6 percent interest on three promissory notes due each November through 1922. The first $25,000 payment was made on December 6, 1919, a month before the sale was announced and three weeks before the Eighteenth Amendment became the law of the land. The brilliant brewmaster of East Ninety-third Street knew he was going to need a new source of income.
Harry Frazee was already hard up. So Ruppert agreed to loan him $300,000, guaranteed by the deed to Fenway Park, kept on file in the Suffolk County Registry of Deeds in Massachusetts.
“Frazee borrowed $300,000 at 7 percent a year, or $21,000 annually,” Haupert explains. “Ruppert bought Ruth for $100,000, a total of $108,750 with interest paid over three years. But Frazee sent Ruppert a check for $21,000 in interest that first year on a $300,000 loan that was not repaid in full for thirteen years. After six years he had paid over $100,000 in interest alone, more than Ruth had cost the Yankees. And Ruppert had the deed for Fenway! In the end, it didn’t cost him anything to buy Babe Ruth. He was a genius and Frazee was desperate. So the Red Sox actually paid the Yankees to take Babe Ruth.”
Talk about cursed.
Yet even Ruppert could not have envisioned just how much—or just how quickly—his investment would pay off. A good albeit conservative return is 4.5 percent, Haupert says, the same return Ruth averaged on his stock portfolio throughout the Great Depression. The lowest single-season return on Ruth was 4.5 percent in 1925, the year the Babe got a tummy ache and gave the Yankees indigestion. The Yankees earned more than 100 percent of their investment in Ruth back in 1920 alone. Then he continued to pay off for fourteen more years. By 1934, the Yankees had made $1.25 million on the $100,000 investment. (Haupert calculated the return by compiling the team profits from concessions; ticket sales for home, exhibition, and away games; plus World Series revenues during Ruth’s Yankees career.)
The best year was 1926, when Ruth returned 191 percent. “Except for 1925, the annual return ranged between 32 percent and 192 percent,” according to Haupert’s calculations. “These returns are so gaudy, they’re embarrassing. In each of six different years the Yankees earned more than double Ruth’s purchase price.
“To give you an idea how that investment stacks up, if Ruppert had taken that same $100,000 and, on the same day he bought Ruth, he invested in the stock market, he would have made $17,000 by the end of 1934, because his earnings would have been suppressed by the stock market crash. Had Ruppert purchased $100,000 of low-risk bonds he would have doubled his money by the end of 1934. Instead, he bought Ruth and more than doubled his money in less than two years, even after paying Ruth’s salary and 6 percent interest.”
Actually, Ruppert didn’t pay all of his salary. As part of the sale agreement with the Red Sox, and as an inducement to Ruth, the Yankees doubled his $10,000 salary on the two remaining years of his Red Sox contract, of which Harry Frazee agreed to pay $5,000.
The raise was offset, in part, by the Yankees’ take of $2,613.59 in additional spring training ticket sales his first year with the team, an indication of the draw Ruth would become and what economists call “the superstar effect”—people who came out to the ballpark just to see him. “Over the course of his Yankee career the Yankees sold $38,605 in exhibition game tickets just because of Ruth,” Haupert says. “No Ruth, no $38,605.”
Ruth was worth $137,975 to the Yankees in 1920, a
whopping 17 percent of their total earnings that season. They rewarded him with a bonus in his 1921 contract—$50 for each home run. That was the year he hit fifty-nine, which added $2,950 to his Yankee salary. They never made that mistake again.
By 1923, Ruth was a box-office sensation, an indispensable cog in the economic powerhouse the Yankees were becoming. On the road, where visiting teams received only 20 percent of the gate, Ruth generated $42,448 for his team. At home, in the newly opened House That Ruth Built, he was responsible for 19 percent—or $132,156—of ticket sales. Those sales contributed to an additional revenue stream for Jacob Ruppert, who had bought out his partner, Tillinghast L’Hommedieu Huston, that spring. And that didn’t include what he generated in concessions. As tenants in the Polo Grounds they received a flat fee of $8,000 annually. In their first year in their own ballpark, the Yankees made $94,025 on peanuts, popcorn, and Cracker Jack, an increase of 1,070 percent.
Perhaps the best illustration of the “Ruth Effect” is provided by looking at 1925, when he played in only ninety-eight games, his fewest as a Yankee. Attendance plummeted 34 percent and revenues dropped 22.5 percent. In 1926, when a reformed and resurgent Ruth led the major leagues in home runs (47), runs scored (139), RBI (153), walks (144), on-base percentage (.516), and slugging (.737), the Yankees drew 1,027,675 spectators and their revenue jumped 72 percent to $1.6 million.
And in 1927, powered by Ruth’s sixty home runs, attendance increased another 13 percent, all of which Haupert attributes to Ruth’s drawing power. By the end of the year, the initial $100,000 investment in Ruth had already returned $779,075.51.
He would continue to generate showy profits for another seven years, a reality Ruppert acknowledged with the two-year, $80,000 contract for 1930–1931, which also included a clause awarding him 25 percent of the net receipts of exhibition games played during the regular season (as long as he played in at least five innings). That would remain true for as long as he remained a Yankee. Ruppert could well afford this gesture of largesse. According to Haupert’s analysis, of the $3.4 million in profits the Yankees earned during Ruth’s tenure, 37 percent can be directly attributed to the Babe.