Baseball is known as America’s past time. From 1900-1920’s, baseball was one of the country’s most popular sport. There were many household names with celebrity status. Ty Cobb, Lou Gehrig and Lefty Grove are to name a few. But the biggest name was George Herman “Babe” Ruth Jr. In 1920, the Red Sox sold Babe Ruth to their rival the New York Yankees which altered the economic landscape of both teams and Babe Ruth himself. The financial impact this move had helped the team’s owners which was unprecedent for its time. But, more importantly it also gave Ruth power to financially better himself.
Babe Ruth played Major League Baseball from 1914-1935. Upon retiring from baseball in 1935, he was the homerun king. Many sportswriters argued today if Babe Ruth is the greatest baseball player to ever play the game. He was a sensation and “baseball greatest attraction”.[1] To call him an attraction was absolutely justified; a well-known story was the Boston Red Sox sold his rights to the New York Yankees. The move was a first for this era. The New York Yankees purchased Babe Ruth “for $100,000, highest price in baseball annals”.[2] Ruth financial value to the Yankees was worth the remarkable spending. They felt Ruth would bring success to the team which in turn lead to financial return.
Ruth annual salary was $20,000 a year after being sold to the Yankees. He initially was making $10,000 a year as a Red Sox. The Red Sox financial reward was not only the $100,000 selling price but the Yank’s loaned the Red Sox $300,000. This amount was used to help then owner, Harry Frazee’s Broadway theaters.[3] This loan helped Frazee’s theaters become stabilized after some failures. He always wanted success in the entertainment industry. This amount helped Frazee “put on the smash hit Broadway musical No, No, Nanette” which would not had occurred without this move.[4] These facts showed Ruth status as a financial asset to not only himself but to the Yankees and Red Sox.
The impact Ruth had on the Red Sox does not pale into comparison with the Yankees. The amount the Yankees paid was unprecedented but if you reviewed the chart below (Table 1). It will show the revenue impact Ruth had on the Yankees. The biggest revenue increase was in 1926. The Yankees revenue increased by $240,597.00. Overall, the Yankees profited over 2 million dollars during Ruth Era. To put in perspectives, Ruth’s highest annual salary earnings was $84,098.00. In 1926, Ruth salary was $49,605.00, this was the year Yankees had their most profitable success.[5]
Ruth understood the affect he had on the team and the league. As we see today with superstar athletes, there are some contractual disputes. It was in the late 20s to the next decade “Ruth’s salary clashes with Yankees owner Jacob Ruppert became the subject of much public attention and discussion”.[6] This is not uncommon today but during this era, it was ahead of its time in sports. Ruth challenged the labor system and how players were treated “as chattel, literally selling them from one team to another and providing them no option of seeking employment on other teams”.[7] Ruth effected the game on and off field.
Ruth salary average from 1926 to 1932 was $76,110.00. His salary had a disparity with U.S. Production workers. Many workers made around $1000.00 a year.[8] These figures show Ruth’s ability to negotiate his contract value. He understood his economical value to a team that was profiting from his likeness. He was the highest paid player in the league, but he was also the most profitable.
Babe Ruth was the most famous financial investment in Yankees history. They were awarded for their spending by over 1200% in profit. Not only did the Yankees benefit but Ruth himself was financially compensated. He had to fight for his salary at times because he understood his economical value. Ruth was ahead of his time as today, many athlete’s holdout due to contract dispute in a billion-dollar industry.
Biography
Haupert, Michael. “The Sultan of swag: Babe Ruth as a financial investment.” The Baseball Research Journal 44, no. 2 (2015): 100+. Gale General OneFile (accessed April 8, 2020). https://link-gale-com.ezproxy.liberty.edu/apps/doc/A433878484/ITOF?u=vic_liberty&sid=ITOF&xid=28ecdcd5.
Pantuosco, Louis J. and Gary Stone. “babe Ruth as a Free Agent: What the Old-Time Greats would Earn in Today’s Labor Market for Baseball Players.” The American Economist 55, no. 2 (2010): 154-161.
Vass, George. “Some of baseball’s strangest deals ever made from Babe Ruth being unloaded for financial purposes to clubs exchanging managers, there have been some odd trades in the game’s history.” Baseball Digest, September-October 2010, 18+. Gale General OneFile (accessed April 8, 2020). https://link-gale-com.ezproxy.liberty.edu/apps/doc/A238153328/ITOF?u=vic_liberty&sid=ITOF&xid=42a59f29.
Wehrle, Edmund F. Breaking Babe Ruth: Baseball’s Campaign Against Its Biggest Star. Columbia: University of Missouri Press, 2018.
[1] Michael Haupert, “The Sultan of swag: Babe Ruth as a financial investment.” The Baseball Research Journal 44, no. 2 (2015): 100+. Gale General OneFile (accessed April 8, 2020).
[2] Ibid.
[3] Ibid.
[4] George Vass, “Some of baseball’s strangest deals ever made from Babe Ruth being unloaded for financial purposes to clubs exchanging managers, there have been some odd trades in the game’s history.” Baseball Digest, September-October 2010, 18+. Gale General OneFile (accessed April 8, 2020).
[5] Ibid.
[6] Edmund F. Wehrle, Breaking Babe Ruth: Baseball’s Campaign Against Its Biggest Star, (Columbia: University of Missouri Press, 2018), 9
[7] Ibid.
[8] Michael Haupert, “The Sultan of swag: Babe Ruth as a financial investment.”
Mostly History 