Inside the Empire

by Bob Klapisch

  As with a lot of Levine’s stories, though, there’s a second punch line coming. Unbeknownst to all but his closest friends, Levine is a passionate defender of animals. He has a farm outside the city that is home and haven for three abandoned horses, six rescued dogs, and one truculent mule that he and his wife, Mindy, saved from certain death. At their New York apartment, they live with the six dogs, who must be walked by sunup, “or there’s gonna be serious issues in my place.” Four hours after George slammed the phone down on him, Levine got off the elevator with his dogs . . . and found the lobby of his building carpeted in flowers.

  “For you,” said the concierge, handing him a card with two first-class plane seats to anywhere in the world. The attached note was addressed to Mindy, saying—more or less—Thank you for putting up with Randy all these years! “Classic George,” says Levine, misting up again. “A great, wonderful guy, but it was hard for him to say ‘thank you.’”

  Or, apparently, “sorry.”

  Thus was Levine inducted into Steinbrenner’s sanctum, which, for all practical purposes, meant his family. The Steinbrenners are as close—and close-mouthed—a brood as has ever loved a man of George’s bluster. His widow Joan and their four children (Hal, Hank, Jessica, and Jennifer) are almost never glimpsed in public; it took eight months of pushing to get in front of Hal, the silent-movie star of this book. Once Levine was in, though, he was in all the way, and not just as George’s consigliere. From 2000 on, when he left his job with the city administration (he was then the deputy mayor for economic development, his third, and last, position under Rudy Giuliani) to become George’s adjutant general, he has either spearheaded or consulted on every major decision George or his loved ones have made.

  One of his favorite stories—and certainly the most stunning—is set in the years before he joined the Yankees. In 1998, George almost sold the Yankees to Chuck and Jim Dolan, the father-son moguls who owned the New York Knicks and Rangers; the building those teams played in (Madison Square Garden); and, most crucially, the MSG Network. There was a long and amicable history between George and Chuck Dolan, going back to their city of origin, Cleveland. The two men did their first deal in 1979 for the rights to show the Yanks on a cable network called SportsChannel, a subsidiary of Cablevision.

  It was the first real money the Yanks made from broadcast rights. In the sixties and early seventies, they actually paid to be on the radio, giving WMCA $5,000 per game while earning peanuts off their TV deal with WPIX. George re-upped with Chuck in the early eighties, but wrote an escape hatch for himself into that contract. He reserved the right to exit the deal for one very special reason: to found his own regional sports network. “Since the day I first met him [in the early eighties],” says Levine, “he never stopped talking about it. He just knew that’s where the real money was, and that it would get bigger over the years.”

  Chuck Dolan, who’s ninety-one now but still a media baron (his portfolio includes MSG, AMC, and a brace of other channels), was a mentor and role model for George. In the sixties, Dolan founded Sterling Manhattan, the first cable channel in the world. Several years later, he created HBO, the first premium channel in the world. He eventually spun those off to Time Life, Inc., and used the money to launch Cablevision on Long Island. Through a slurry of mergers and acquisitions, he and one of his sons, Jim, took possession of MSG, where, in 1989, they struck a twelve-year deal to keep George in the fold. For a then-shocking sum of money—$50 million a year—they’d overpay to air the Yankees’ games while George and Chuck hashed out an eventual sale.

  That $50 million annuity essentially rescued the Yankees, says a senior team official. The Yanks were a bad team then and getting worse by the minute as they entered a period unfairly known as the Stump Merrill era. (Alas, poor Stump: he managed for only a year and a half, but the stink of those seasons endures.) George had been banned from baseball, Andy Hawkins threw a no-hitter in Chicago and lost, and only seagulls showed up to watch the action, slugging it out with rodents for hot-dog buns. But that twelve-year deal with Dolan soft-scrubbed their losses and gave George, once reinstated, the needed cash to go out and chase free agents (Jimmy Key, Wade Boggs, and Danny Tartabull, to start the party). For George, it was found money that no one else had and that no team in the National League could even get a percentage of till the landmark labor agreement of ’95, when, for the first time, rich clubs were forced to share revenue with small-market clubs.

  But back to the pending sale of the Yankees to Chuck Dolan in ’98. Besotted with Dolan’s brilliance, George wanted to sell him 80 percent of the team for the price of $800 million. For his part, he’d keep 20 percent of the Yanks and gain two more clubs in the bargain: Chuck would name George the operating partner of . . . the Yankees, the Knicks, and the Rangers. (Several executives who were party to those talks have confirmed—on tape, if not on the record—that those were the terms of sale.) Oh, how the gag lines write themselves when you imagine George telling the then-Knicks coach, Jeff Van Gundy, You’re on the bubble, Van Gundy! or berating Neil Smith, the builder of a Rangers roster that won its first Cup in fifty-four years, What the hell have you won for me lately?

  Chuck Dolan prized the Yankees, but wanted something else besides: to air their games for nothing on MSG. This was smack in the middle of the Core Four’s run—two trophies won, two more to follow shortly—and their ratings on MSG were breaking records. Dolan’s buyout of George and his minority partners wouldn’t come cheap in ’90s dollars: that $800 million more than doubled the highest price paid for any team in baseball history. (The record to that point was held by the Dodgers, bought by Rupert Murdoch for $311 million.)

  But Chuck Dolan’s genius was for seeing the future, and the future was cable carriage fees. “He owned the cable rights to all seven teams [in the New York area] and knew the fans would pay a premium to watch at home,” says Levine. A premium, for those fans still watching at home, means ever-increasing monthlies—till infinity. The $50 million a year Dolan was paying the Yankees would double in just the next four years. So too the value of the Yanks themselves. Worth $800 million then, they’re priced at $4 billion now. Except that Dolan—Jim Dolan—killed the deal, say Yankee sources.

  “Jimmy wanted to run everything, including the Yanks, and he wasn’t gonna answer to George,” says a lawyer close to the talks whom we can’t name. (Jim Dolan’s response—in total—to these assertions: “We have different recollections of what happened.”) For months on end, there were meetings between the parties, “Jimmy and Hal [Steinbrenner], Jimmy and Steve Swindal [George’s then-son-in-law], but it blew hot and cold,” says a source. In the end, “Chuck chose to back out of the deal, because he always deferred to Jimmy for some strange reason.”

  But the Dolans weren’t done looking gift horses in the mouth. Two years later, Levine was named the Yanks’ president and given a punch list by George: “I had to build him a Stadium, get a network up and going, and bring in new streams of revenue—yeah, that’s all,” says Levine, who laughs loudly and often once he’s on a roll.

  So out he went to meet George’s new best friends: the guys who’d just bought the New Jersey Nets. Lew Katz and Ray Chambers, local industrialists who’d also bought the New Jersey Devils, had joined with George to form YankeeNets for the purpose of getting a network on-air. Their first idea was to partner with MGM on a station called the Americana Network. Its proposed lineup: Yankees and Nets games with—wait for it—musicals from the 1940s. Or, as it might have become known to certain middle-aged men, “Rainout Theater” every day!

  Alas, George’s relationship with Katz and Chambers “went sour pretty quick,” says Levine. “George tells me, ‘Go get someone else to build the network.’” Combing his Rolodex, Levine called up Joe Ravitch and Gerry Cardinale, who were bankers at Goldman Sachs. Over drinks at the Four Seasons, the three men hatched a plan, sketching it on a cocktail napkin. Goldman Sachs would front the cash to pay George $90 million a year while the network got on th
e air in the tri-state market. In exchange, the investment bank would own roughly a one-third stake in YES, as the channel would be known going forward.

  But before they could launch the station, they had to break with the Dolans, who controlled the team’s rights for two more years. “So we go to Chuck and Jimmy and say the following: ‘You guys have a network, we don’t know how to do anything, so we’ll sell you 50 percent of [what would become YES],’” says our source. But Jimmy “didn’t want to let us out of our rights,” and both sides wound up suing each other. Eliot Spitzer, the attorney general, got involved, says Levine: “He banged heads and threatened an antitrust suit if the Dolans didn’t settle.” Eventually, the parties went to arbitration and “we ended up paying $30 million so Jimmy could build his practice facility in the suburbs,” says Levine.

  Leaving the room, George and Chuck exchanged handshakes and snippets of chummy trash talk. As they parted ways, though, Chuck looked at George and said, “Congrats on your deal, but you’ll never get carried [on-air].”

  George, per our sources, glared back at him and said, “We’ll see about that, Chuck. We’ll see.”

  So George had his freedom to cut deals with other carriers—but no real content to put on-air. In the summer of 2001, the YES Network existed only as a line item in courthouse papers. George told Levine to hire a program executive who could quickly build or rent large production quarters, hire several dozen veteran TV staffers, and fill a 24-hour day with original product 365 days a year. Oh, and one more thing: that person, whoever it was, had exactly five months before going live.

  Levine’s first phone call was to John J. Filippelli, a New York sports-programming legend. Brooklyn-born and -raised—his first job as a kid was selling franks and Cokes at Yankee Stadium—Filippelli had a quarter-century of experience producing the Game of the Week for NBC. (He also produced the World Series for several networks, as well as Super Bowls, Olympics, and Wimbledons.) “Flip,” as he’s known by practically everyone in the business, had been friends with Steinbrenner since the early ’80s and was up for the challenge Levine brought him. It was, he says, “a chance to change the landscape of sports TV”: build an entire platform around a baseball team and film each of its games with playoff-sized crews, putting ten cameras around the field. (The norm for the regular season then was four.) George gave Flip everything he needed to do that—except, of course, the time to do it sanely.

  “Looking back now, my advice is: if living a long life is important to you, don’t ever try to put a network together in five months,” says Filippelli. “I had no infrastructure, no producers, no mobile units, no nothing. Just a yellow pad, a pen, and my imagination.” He signed his YES contract on September 10, 2001. The horrors of the following morning stopped him cold. “No one in New York City wanted to come to work; they were in shock, they were grieving. By Christmas, I was asking myself if we were going to make it.” Compounding the problem was his own inexperience: he’d never created content before. “I mean, what did I know about that stuff—I couldn’t even program my VCR. But Levine said, ‘Don’t worry. You’ll figure it out.’”

  So Filippelli consulted his past. He’d liked Biography as a kid, and also the sudsy program This Is Your Life. Presto change-o: Yankeeography and Center Stage were created. He called his friends at MLB and asked them to case their vault for tapes of old Yankee games. Forthwith, Yankee Classics. Then he sat with George and presented his list on a slip of paper. George looked at the sheet and said, “What’s ‘NE’?” “It means, ‘Not Enough,’” said Filippelli. “We need to fill more airtime.”

  GEORGE: “What about those two guys?”

  FLIP: “What two guys?”

  GEORGE: “The ones in the afternoon. On the radio.”

  FLIP: “Who, Mike and the Mad Dog?”

  GEORGE: “Yeah, those two. Get ’em.”

  Filippelli was stunned: no one had ever simulcast a sports-chat show. But that radio call-in format had printed money for Don Imus and Howard Stern, so why wouldn’t it work for a couple of smart curmudgeons who barked at their callers and at each other? “Just like that, George gave me five and a half hours of content a day—right off the top of his head.”

  Flip still needed someone to call the Yankee games. Initially he thought he’d be able to poach Bob Costas—till he caught a glimpse of his schedule. “He could only do six games a year, and I needed a workhorse who showed up every day and loved the grind.” It struck him that he had a guy by that description at hand: not the mellifluous John Sterling, who did the Yankee radio calls, but his longtime radio partner Michael Kay. Kay, an ex-reporter who looked and sounded like the Bronx, had earned a chance to make the big leap. He’d been pointed in this direction since his Hunts Point boyhood, when, as a teen in the ’70s, he walked the twenty blocks to watch the Yanks from general admission. “I’m the kid who sat in the upper deck and rooted for Horace Clarke and Jerry Kenney,” he says before going on-air one weekday night. “All I ever wanted was to be the Yanks’ announcer, though I sounded like Vinnie Barbarino. I’m a fan who got a chance to be in the booth.”

  Kay, who’s fifty-seven and the married father of two, had been a Yankees beat guy for the Post and News who wisely cultivated Billy Martin. He broke story after story of Billy’s turmoil with George, which was the great, botched romance of New York sports. Kay had an eye for clubhouse intrigue and an ear for what his readers wanted to know. He brought that affinity to the booth with him: a clairaudient sense of what his viewers thought and said, even as they were thinking and saying it. That’s how you get to be the TV voice of the New York Yankees: by being the voice of the people who watch them nightly.

  Filippelli caught lightning when he took a flyer on Kay, who has become an institution with Yankees fans. He isn’t as smooth as Gary Cohen, who does the Mets games on cable, or as ingratiating as Joe Buck, who does the playoffs. But he has something distinctly in the New York vein: a lightness of touch about himself. He cares deeply about the game but knows better than to treat it like scripture. He constantly tweaks his partners, Paul O’Neill and David Cone, pitting their pieties against each other just for the hell of it. That’s the Bronx in him talking, the ball-busting you do when you sit in row Y with your pals. It makes for good company in a three-hour game against the godawful KC Royals.

  It took Levine three years, and biblical labors, to get YES carried in New York. The ordeal, and its legal knife-fights, pales beside the struggle of getting the new Stadium built.

  That project took nine years and countless screaming matches between Levine and George, Levine and the City Council, Levine and—well, you name it. He negotiated plans with two mayors and two governors—before he agreed to stay put in the Bronx. “We’d met with Woody Johnson [the owner of the Jets] to build a stadium for two teams on the West Side Highway,” he says. Those talks dragged on forever before they were finally sunk by political opposition and zoning hassles. After five years, Levine had had enough of the Manhattan snake pit and said to George, “We gotta stay in the Bronx.”

  That was no small ask: George disdained his team’s location and thought it irredeemable by any measure. But eventually he was brought around by Levine and other advisers and agreed to seek a deal on River Avenue. Here, then, was the start of a fresh torment: Levine had to navigate waves of community protest and get the land for the new ballpark declared condemned. In the end, after battles with the State Assembly and City Council, Levine won approval for not only a new Stadium but also a Metro North station connecting the ballpark to the ’burbs, major improvements to both the adjacent highway and the two subway stations that served the Stadium, and a sprawling green space on the site of the old Stadium. Actually, that turned out to be twin parks side-by-side: the first a series of baseball diamonds and the other a honeycomb of handball courts, basketball courts, and a soccer field. To this day, they’re in high-rotation use by kids in the neighborhood.

  But Levine’s biggest ask was for the $1.4 billion to build th
is with the city’s money. There’s an IRS law against raising public funds without incurring federal taxes on those loans. To sidestep that annoyance, Levine contrived with Bloomberg’s people for the city to be the owner of the new Stadium. This spared the Yankees hundreds of millions in future taxes and also enabled them to borrow at the municipal rate, saving many millions more in accrued interest. The team now pays the note on its forty-year bond—about $75 million a year, in mortgage and interest—but pays the city neither rent nor a cent from what it earns in the Stadium. Furthermore, it deducts that $75 million from its revenue-sharing bill with Major League Baseball. An annoying but useful note: revenue-sharing, or the “competitive-balance tax,” is separate and distinct from the luxury tax. The luxury tax, derived from a complex formula, hits chronic overspenders like the Yankees, Dodgers, and Red Sox for every dollar spent over the threshold. By all means, look that formula up, if you’re fresh out of chores or need to distract yourself before a root canal.

  “In effect, the other teams are paying a third of our note for the new Stadium,” says Levine, referencing the amount the Yanks deduct from the income they report to MLB. He also won concessions in the last collective bargaining agreement that chopped the team’s payments to MLB by about $40 million a year. “We’ve paid by far the most money to MLB since 2002 or whenever,” he says. “Thanks to the new rules and the stadium deduction, we dropped from number one to number five in revenue-sharing.”

  And what did New York’s taxpayers get for their $1.4 billion, besides the right to go on claiming the Yankees as theirs? Well, in addition to the new parks and the roughly $80 million that the team is donating, over time, to local nonprofits (for recreational programs and health and wellness programs offered by neighborhood schools), Levine granted the city all the monies from Stadium parking—except there are no profits from those spots. In fact, they currently lose money hand over fist, in part because the city spent hundreds of millions of dollars to improve mass transit to the park. To be sure, the neighborhood fared nicely in the deal, getting the two parks and hundreds of subsidized apartments built, with a wave of new developments in the wings. Somewhere down the road, the city will cut its losses and sell those parking structures to developers. For the moment, though, it should probably watch its wallet whenever it talks to Levine. The man has a way of getting what he wants, while making everyone else check their back pocket.