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New park may add to Yankee clout

Financial rules can benefit Sox's rival

NEW YORK -- The House that George Builds could send the rivalry that Ruth began to new levels of intensity, on and off the baseball diamond.

Already the richest team in baseball, the New York Yankees yesterday unveiled plans to build an $800 million stadium in the Bronx that would help the team generate tens of millions of dollars in extra cash each year to sign star players, and widen the gap between baseball's richest and poorest teams.

The new Yankee Stadium would be built adjacent to the park dubbed ''The House that Ruth Built." The Yankees' acquisition of Babe Ruth from the Red Sox in 1920 cemented the economic and competitive success of the Yankees and helped the team finance construction of its ballpark. The Yankees in recent years used revenue from the stadium and their dominance of the nation's top media market to sign stars such as pitcher Randy Johnson and slugger Alex Rodriguez to lucrative contracts.

The Red Sox, though they generate the second-highest revenue in baseball, have had to compete with a New York team that spent $70 million more on player contracts in 2004 than the Sox did.

The new stadium would increase the number of high-priced luxury suites available to the Yankees to court corporate sponsors from the current 18 to between 50 and 60. The deal also takes advantage of baseball's quirky financial rules to allow the Yankees to lower the amount of money they will have to pay to baseball's poorer, small-market teams through a mechanism known as revenue sharing, making it even less likely that teams in Kansas City and Pittsburgh could afford high-priced talent.

Yankees owner George Steinbrenner wore a diamond-studded World Series ring to yesterday's event; it glinted as dozens of photographers snapped his picture. Speakers at the podium dubbed him ''King George" and, one by one, lauded his commitment.

The team's president, Randy Levine, called the current Yankee Stadium the ''cathedral of baseball" and said the team will preserve its history in the new building, simulating the limestone facade the current stadium sported when it was built in the 1920s.

Baseball teams have scrambled to build new stadiums because they bring more high-priced luxury suites and more room for corporate advertising, and teams can sell naming rights. Teams also tend to increase ticket prices when they move into new homes, which can reap millions per year.

The Yankees' decision to build a new stadium, with its dramatic boost for the team's bottom line, may reinvigorate efforts to increase the amount of money that richer teams pay to poorer ones, which would hurt both the Yankees and the Red Sox. It also could increase support for a salary cap.

After the Yankees acquired Rodriguez last year, a frustrated John W. Henry, owner of the Red Sox, fired off an early morning e-mail to reporters that called for a salary cap. ''Baseball doesn't have an answer for the Yankees," he wrote.

More recently, the team's chief executive, Larry Lucchino, said that a payroll cap of some kind is ''inevitable" and that he favors the idea. Baseball may soon be the only one of the four major sports that do not set limits on payroll: The National Basketball Association and the National Football League both have salary caps, and the National Hockey League is likely to implement one before ending its labor impasse.

For the Yankees, the economics of building a stadium are compelling. A new one could bring the team between $20 million and $25 million in extra income per year, according to an estimate by Andrew Zimbalist, an economics professor at Smith College in Northampton who studies sports. The Yankees are privately financing the stadium with tax-free bonds, so they will incur substantial debt, as well. But under baseball's rules, they will be able to offset a large chunk of the stadium's cost by deducting it from the amount they pay to poorer teams in revenue sharing, Zimbalist said. The Yankees paid $63 million in revenue sharing last year, the highest in baseball.

Levine, the Yankees' president, said he could not estimate how much money the team would save on revenue sharing, but the savings were an ''important factor" in the Yankees' decision to build.

''We think we're going to do financially very well with this new stadium," he said.

The Yankees plan to start construction in 2006 and open the 51,000-seat stadium for the 2009 season.

Under the terms of the deal, the Yankees will privately finance the stadium, while the City of New York will chip in $135 million for infrastructure improvements and to add parks outside the stadium. The state will pay $70 million for parking facilities.

The field of the current Yankee Stadium would be preserved as a baseball park.

Levine said the team has not set ticket prices for the new stadium, but the Yankees are committed to keeping them affordable. The team will continue to call the new building Yankee Stadium, he said, but executives may sell other naming rights, such as calling the building Yankee Stadium at (corporate name) Plaza.

The Yankees' stadium plan contrasts sharply with the World Champion Red Sox's decision to stay in Fenway Park.

Although the Sox's previous owners fought for a new ballpark, the current owners have professed their love for Fenway.

But the decision to stay at Fenway Park also may make economic sense. The team would not have to go through the potentially divisive process of securing public approval for a new stadium. The Sox also have unveiled ambitious plans to add to Fenway: The most recent plans call for more than 1,000 high-priced premium seats, with several hundred selling for $275 per game.

Despite the Yankees' potential boost from their new stadium, Lucchino said, the Red Sox still will find ways to compete.

''They'll still have to look over their shoulders and see us, because we'll find ways to increase our revenue," he said.

The Red Sox also make effective use of the ''psychology of scarcity" -- charging more for ticket prices because demand for Fenway seats is so high, said Dennis Howard, a professor of marketing at the University of Oregon's Warsaw Sports Marketing Center. The Yankees may attempt to do that, too; their new ballpark plan calls for about 6,000 fewer seats than the current Yankee Stadium has.

The Yankees promise a closer view of the field, wider concourses, and more concession stands at the new park. ''You'll never have to miss a pitch," Levine said. ''You'll be able to see the playing field wherever you are."

Sasha Talcott can be reached at stalcott@globe.com.

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