Yanks, Nets To Merge Operations

By CBSNews.com staff CBSNews.com staff

February 25, 1999 / 2:18 PM EST / CBS Sportsline

The New York Yankees and the NBA's New Jersey Nets have signed a letter of intent to merge the two teams into one company.

However, the teams' current management will remain in place, with George Steinbrenner running the Yankees and Lewis Katz running the Nets, the teams announced Thursday.

The deal, which creates a company called YankeeNets, will enable the Yankees to gain better leverage in selling their local broadcast rights. Their $486 million, 12-year contract with Cablevision Systems Corp.'s Madison Square Garden Network expires after the 2000 season, and Cablevision also controls Fox Sports New York, the only other sports cable network in the New York area.

With the Yankees and Nets united, they will have 12-month programming and will be able to approach The Walt Disney Co.'s ESPN or Time Warner Inc. about starting a new regional sports channel.

On the field and on the court, the deal is not expected to change anything.

"I would venture should you go around the room, 98 percent of the players won't know what you're talking about," Yankees pitcher David Cone said in the team's spring training clubhouse in Tampa, Fla. "By and large, most players worry about their manager."

Steinbrenner, whose group purchased the Yankees in 1973 from CBS Inc., had spent much of 1998 discussing a possible sale of a large interest in the Yankees to Cablevision, with prices of $650 million to $1 billion mentioned. But those talks broke off after Steinbrenner insisted he maintain control of the Yankees' operations.

The Nets' current contract with Fox Sports New York runs through the 2001-02 season. Cablevision, which owns the NBA's New York Knicks and the NHL's New York Rangers, also owns the TV rights to those two teams as well as baseball's New York Mets and the NHL's New York Islanders and New Jersey Devils.

Tishman Speyer Properties Inc., the landlord of Rockefeller Center, and the investment bank Allen and Co., will own part of the Yankees' and Nets' new parent company. Entertainer Bill Cosby also is involved; he is chairman of the Community Youth Organization, a trust to benefit urban area youth that currently is the Nets' largest shareholder, with a 35-40 percent share.

The deal is subject to approval of owners in major league baseball and the NBA.

The merger also will affect lease negotiations. The Yankees have been discussing whether to push for New York City to remodel Yankee Stadium or to ask for a new stadium in Manhattan, near Madison Square Garden.

The Nets, who play in the Continental Airlines Arena in East Rutherford, N.J., would like to have a new arena built for them in Newark, N.J. Their current co-tenant, the New Jersey Devils, have talked about relocating to Hobokn, N.J., if a new arena is constructed there.

Also on the board of the new company will be Harold Steinbrenner and Stephen Swindal, Steinbrenner's son and son-in-law; Lester Crown, a long-time Yankees limited partner; philanthropist Ray Chambers, part of the group that bought the Nets last autumn; Tishman Speyer president Jerry Speyer; former Coca-Cola Co. president Donald Keough; former Capital Cities-ABC chairman Thomas Murphy; real estate investor Jerry Cohen; and Howard Rubenstein, Steinbrenner's longtime spokesman.