Let me be very clear.
I hate the Yankees.
The problem is that it’s tough to argue with success.
For the better part of professional baseball’s 100-year history, the Bronx Bombers have dominated the sport. Their distinctive logo and pinstripes have become synonymous with American achievement.
The Yankee formula, especially during the George Steinbrenner era, is simple. Spend whatever is necessary to win the championship. The Yankees may not win every year, but it’s rare when they are not in the hunt.
Steinbrenner is unapologetic about his approach to the game. He knows that you get what you pay for.
A Formula That Looks Foolproof
From George’s perspective, if teams in the hinterlands want to embrace the purity of the game by building prospects from within, that’s their problem and his gain. Once those prospects start hitting .295 with 95 runs batted in or post a 2.27 earned run average, they are on his radar screen.
If you’ve got the talent, George will find you, then outbid the competition. Even if George loses the bidding war, he wins. If the player ends up on the roster of the Red Sox, Angels or, heaven forbid,the Dodgers, the sky-high salary for the player lost will put a crimp in the financial ability of that team to snag other players that George has on his list.
Steinbrenner’s only allegiance is to winning. If you’re not winning, you’re through. Remember Billy Martin. Just ask Joe Torre.
After winning six American League pennants and four World Series titles in ten years, Torre’s managerial career with the Yankees ended up like Frankie Carbone in “Goodfellas,” hanging frozen in the meat locker.
Without losing a beat, Steinbrenner hired former player and broadcaster Joe Girardi. George had lured Girardi, the former National League Manager of the Year with the Florida Marlins, to become a bench coach with the Yankees. Like most of baseball, Girardi was thrilled to put on Yankee pinstripes.
Purists argue that Steinbrenner’s approach is corrupting the game. George doesn’t care. All he wants is results. He gets them.
Why Capping Is Wrongheaded
In the wake of the worst financial meltdown since the Great Depression, political figures in Washington have been up-in-arms about exorbitant and uncontrolled corporate salaries. The White House has appointed Kenneth Feinberg – a former spokesman for the victims of 9/11 – as its Pay Czar.
While Feinberg’s job is to monitor and control the compensation of U.S. corporations that have yet to repay the government for its bailout largess, his very presence on the political scene raises thorny issues. Even Feinberg is having second thoughts about his role.
Feinberg has ordered pay cuts averaging 50 percent for the top 25 executives at Citigroup, Inc., Bank of America Corp., American International Group Inc. and four other companies that took U.S. bailout money. He will rule on pay structures covering the next 75 highest-paid employees at those firms by year’s end.
Now Feinberg is expressing concern that his imposition of salary caps may do more harm than good by driving talent away from the very companies U.S. taxpayers have bailed out.
I’ll say it again: Any attempt to cap corporate salaries is a bad idea. It’s a slippery slope, and ultimately a no-win proposition.
There is no question the compensation structure at U.S. financial firms may have been a significant contributing factor in the crisis from which all of us are still reeling. Personally, I think the money paid these guys was and is obscene.
Most analysts agree that this financial crisis was magnified by executives who were paid huge sums for taking short-term risk. Executives at many financial services companies reaped large bonuses by buying or selling mortgage-backed securities to pump up quarterly earnings. When the subprime mortgage market imploded, it drove the companies into financial ruin.
The returns were so appealing that the normal checks and balances that should have been imposed internally by the individual boards of directors or shareholders were overwhelmed.
In professional sports, many fans and writers, especially in small market cities, argue that salary caps are the great equalizer.
It’s true. Sometimes the little guy wins.
The Oakland A’s, Minnesota Twins and Toronto Blue Jays broke through in the late 1980s and early ‘90s. Even the Arizona Diamondbacks and Florida Marlins have pulled-off miracle runs. But in the last ten years, it’s been the big guns, like the Yankees and Red Sox, teams willing to pay what it takes, that have taken home the trophy.
Talent always finds a way to get paid. Guys like George Steinbrenner always will find a way to pay them.
Wall Street and corporate world are no different. If companies and their shareholders want to squander their capital on executives who are going to sell off their futures in exchange for short-term bets on mega-returns, that’s their business. The government has no business trying to stop them.
Any worthwhile exec knows the juice better be worth squeeze.
It works for George.
John Cohn is a senior partner in the Globe West Financial Group based in West Los Angeles. He may be contacted at www.globewestfinancial.com
