The greatest single quality of a championship baseball club is a collective, dominating urge to win.—BRANCH RICKEY, baseball executive
When the American League put a baseball team in New York in 1903, it did so with the hope that it could challenge the National League’s Giants and become one of the AL’s flagship franchises. Instead, the new club (called the Highlanders until 1913, and then the Yankees) floundered both on the field (no pennants and just three second-place finishes in their first dozen years in New York) and off. The tipping point for the club, the event that caused their fortunes to change, came when Jacob Ruppert and Tillinghast L’Hommedieu Huston bought the club in 1915. Within a few years the American League had its strong New York team—stronger than anyone could have imagined, in fact.
Jacob Ruppert Jr. was born into a German brewing family in New York City in 1867. His father ran the Ruppert Brewery, while his mother came from another brewing family. Not surprisingly, Ruppert’s parents directed him into the family beer business, where he started at the bottom as a nineteen-year-old barrel washer. Ruppert proved himself a personable yet determined young man and was rapidly promoted through the company ranks. A perfectionist who often lapsed into a German accent when agitated, he soon proved a skilled executive.
Of medium height and a stocky 170 pounds, Ruppert cultivated an imperial appearance. Often lamenting that men did not dress as well as women, he dressed impeccably, wearing his hair slicked back and sporting a well-trimmed mustache.1 He led an active social life but did not drink much beyond beer and remained free of public scandal. He had unusual interests and hobbies. He collected jade and Chinese porcelain, decorative books, and oil paintings. At his country estate in Garrison, New York, he had a large collection of exotic animals, including small monkeys and unusual birds. Like many of the upper class at the turn of the last century, he also enjoyed horses. Before he left the hobby, Ruppert had purchased and raced some top racehorses and ran the Ruppert Stables. He later became a leading breeder of St. Bernards and was most proud of his champion, Oh Boy.
Ruppert never married and throughout his life remained one of New York’s most eligible bachelors. Over the years Ruppert developed deep friendships with several of his subordinates, particularly Al Brennan, his secretary, and George Perry, a business confidant and Yankees public relations man. Ruppert was also very close to New York mayor Jimmy Walker. Ruppert once lent Perry to Walker’s mayoral campaign for four months while still paying Perry’s salary.2
In 1886 Ruppert joined an upper-class regiment of New York’s National Guard. A few years later he was appointed aide-de-camp to Governor David Hill and given the rank of Colonel, a largely ceremonial title. Ruppert took great pleasure in this title and for the rest of his life liked to be addressed by it. Later, with the support of Tammany Hall, Ruppert spent four terms in the U.S. Congress. Ruppert then retired from politics and concentrated most of his energies—aside from his various hobbies of the moment—on the brewery business.
In 1914 the forty-seven-year-old Ruppert became interested in purchasing a baseball team. At the same time Huston, an engineer who had made his fortune in Cuba after the Spanish-American War, had been independently rummaging around baseball’s boardrooms for a team to buy. Ruppert and Huston decided to join forces. They consulted Huston’s friend New York Giants manager John McGraw for advice on finding and buying a team. The two quickly learned that the American League was seeking a new owner for its New York club.
The Yankees were controlled by a couple of the city’s more disreputable characters, though they had mostly reformed over the previous decade: Frank Farrell, a onetime operator of gambling venues, and William Devery, a multiply indicted former police chief. Huston secretly agreed to pay McGraw $5,000 for his help making the connection, and in January 1915 he and Ruppert closed on the purchase for $463,000, assuming roughly $20,000 in debts.3 With the sale Ruppert became one of baseball’s first owners from America’s upper crust, a society within which he moved easily and comfortably.
Ruppert and Huston wasted no time in aggressively trying to acquire talented players, relying on Ruppert’s wealth and their own limited knowledge of the game, albeit with significant input from manager Bill Donovan. Detroit president Frank Navin honored the league’s pledge to make some capable players available to the new owners, selling them little-used first baseman Wally Pipp. Cash-strapped Philadelphia owner Connie Mack later sold pitcher Bob Shawkey to the Yankees for only $3,000. When organized baseball and the Federal League reached a settlement after the 1915 season, Ruppert spent $40,000 buying four players from the Federals (including outfielder Lee Magee and twenty-two-game winner Nick Cullop), though none panned out as hoped. More successfully, Ruppert went back to Mack and landed star third baseman Frank “Home Run” Baker for $37,500, at the time one of the highest prices ever paid for a player.4
After three years of finishing well behind the American League leaders, Ruppert and Huston grew dissatisfied with field manager Donovan. In late 1917, while Huston was away in France with the AEF (he would return a lieutenant colonel), Ruppert hired Miller Huggins, who had managed the Cardinals during the just completed season. Huston had championed his friend Wilbert Robinson, the Brooklyn Dodgers’ manager. Ruppert’s hiring of Huggins led to a serious and long-lasting disagreement between the two owners and fueled Huston’s excessive and unreasonable dislike of Huggins.
With their new manager in place, the Yankees redoubled their efforts to purchase Major League stars. Though Connie Mack had run out of stars to sell, the Yankees soon found a new supplier. The Boston Red Sox had just won the 1918 World Series and, with good players returning from the war, believed they had a surplus of talent. Moreover, owner Harry Frazee was in a financial squeeze, needing money to cover the debt now coming due from his purchase of the team and Fenway Park and for his theatrical interests. Serendipitously for the Yankees, Frazee was a New Yorker and a social friend of Huston, and Ruppert had the funds necessary to buy the players. Over the next half-dozen years the Yankees sent Frazee about $450,000 (roughly the equivalent of what they paid for the entire franchise in 1915), plus Ruppert made Frazee a personal loan for $300,000 secured by a mortgage on Fenway Park. In return for this outlay, the Yankees received one of the greatest hauls of players in baseball history, most prominently Babe Ruth, Joe Dugan, Everett Scott, Carl Mays, Joe Bush, Waite Hoyt, Sam Jones, Wally Schang, and Herb Pennock. When the Yankees won their first World Series in 1923, former Red Sox made up four-fifths of their starting rotation and four of their starting eight position players.
Even before the advent of modern free agency, when a player was effectively tethered to his team, money mattered: a wealthy owner could invest personal funds into his ball club, and team revenues could be reinvested in the team. The most savvy baseball executives recognized this. “After several years of unsuccessful experimentation,” wrote J. G. Taylor Spink, “[Chicago Cubs president William] Veeck became convinced that a championship team could not be welded together without spending money.”5 The wealthiest teams often ended up with the best players, by paying more to sign the top amateurs or paying more to Minor League teams for their best players.
Many economists apply to baseball an eponymous theorem developed by Ronald Coase, which states that subject to several limiting assumptions, “parties will bargain to an efficient outcome” and that “the same outcome will be achieved regardless of property rights.”6 Thus, free agency should not affect the distribution of playing talent, but only who receives the benefit: prior to the advent of free agency (which began in 1976), the value of the property rights (i.e., rights to the players’ services) went to the owners; post–free agency it mostly stays with the players, but the players still generally end up with the teams most willing to pay for them. In other words, because Babe Ruth in 1920 was more valuable to the surging Yankees than to the declining Red Sox, he inevitably ended up moving from Boston to New York. Before the advent of free agency he would be sold or traded to the Yankees; post–free agency he would sign with them for the highest contract. But the result, according to the Coase theorem, would be the same.
Ruppert’s huge investment in the team is all the more remarkable in light of the onset of Prohibition, which banned the manufacture or sale of alcoholic beverages in January 1920. To remain in business Ruppert shifted to producing near-beer (essentially nonalcoholic beer), a much less desirable and less profitable beverage—the brewery’s annual output fell from 1.25 million barrels to 350,000.7 In 1920 Ruppert sold a collection of rare books, reportedly to help cover roughly $1 million in losses on mortgages he held on bars no longer able to service their debts.8 That Ruppert was willing to pay record prices for players and build Yankee Stadium, baseball’s most expensive venue, amid such uncertainty and declining revenues in his main business testifies to his passion for his baseball team and his competitive drive.
Furthermore, Ruppert was not taking distributions from the Yankees; he was reinvesting all of the team’s profits. From 1920 through 1924 four American League clubs distributed at least $200,000 to their owners, reducing the funds available for investing in Minor League talent. In contrast, the Yankees plowed more than $1.6 million in profits back into the franchise; no other American League team retained even $700,000. The NL rival Giants, the Yankees’ landlord through 1922, were also clearing large profits, but by the middle of the decade owner Charles Stoneham needed money. Between 1924 and 1930 the club distributed as dividends more than $1.5 million in profits, money that was not reinvested in the ball club.
Jacob Ruppert was not the first man to enter baseball willing to spend his money. What made Ruppert’s efforts so historically effective was the combination of his wealth and the professional administration he brought to the club. Ruppert hired Huggins in 1918 and let him run the team on the field. Perhaps more significantly, after the 1920 season he and Huston hired Red Sox manager Ed Barrow to be their general manager, one of the first men to hold the role in baseball. Ruppert, owner of a large brewery operation, recognized the importance of sound oversight and administration. Once in place it was Barrow who made most of the fruitful acquisitions from his old club. Just as Ruppert would let Barrow do his job, Barrow provided Huggins similar support.
Ed Barrow lived up to his half of the bargain: he and his scouts found the necessary players, and he let Huggins run the team. Whenever Huggins had to deal with an insubordinate Babe Ruth, which was often, Barrow backed his manager. The combination of their financial advantage and superior organization put the Yankees on the path to become one of America’s greatest sports dynasties. The Yankees won three straight pennants beginning in 1921, including the 1923 World Series.
Between the costs of all the players and the stunning new Yankee Stadium, which opened in 1923, the Yankee owners made a huge capital infusion into their franchise. As their investment grew, Huston had become increasingly concerned that virtually his entire net worth was tied up in the Yankee franchise. Coupled with his continued disapproval of Huggins, he eventually decided he wanted out. In 1923 Ruppert bought Huston’s share of the team for $1.25 million, leaving Ruppert, with the able Barrow and Huggins, free to develop the franchise as he saw fit.
The Yankees’ rise to the top was attained largely by their purchases from Frazee and the Red Sox. As the Boston well inevitably ran dry, and as no other American League team had any interest in selling off its stars, Barrow recognized that the club needed to find another source of talent to keep winning. With organized baseball’s top stable of scouts, Barrow turned his focus to the high Minor Leagues, who were selling, though not cheaply. Fortunately for Barrow, Ruppert kept his checkbook open, allowing his GM to buy some of the Minor Leagues’ most expensive players.
One of Barrow’s greatest contributions to the Yankees was his hiring of topflight scouts. While still with the Red Sox Barrow employed a former catcher named Paul Krichell to do some talent hunting for him, and when Barrow joined the Yankees in 1920 he brought Krichell along. Krichell mainly scouted colleges and semipro clubs, making his biggest mark on baseball history in 1923 when he signed Columbia first baseman Lou Gehrig to a Yankee contract. Krichell would still be employed as a Yankee scout when he died in 1957, having discovered and signed many players, including several future Hall of Fame players.
Barrow relied on Krichell not just for top scouting missions, often directed on short notice, but as his most trusted assistant and adviser. When Lou Gehrig was struggling with Hartford in 1923 and considering quitting, Barrow dispatched Krichell to boost his confidence. When Babe Ruth developed his famous “stomachache” in the spring of 1925, Barrow dispatched Krichell to Florida to bring Ruth back on the train. During the off-season Krichell often traveled to the Yankees players’ residences to check up on their conditioning and health. In 1928, when the Yankees purchased their first farm club, in Chambersburg, Pennsylvania, it was Krichell who finalized the deal. When Ruppert and Barrow pursued Joe McCarthy as manager after the 1930 season, Krichell went to Philadelphia to accompany him back to New York for a job interview. Though he remained a topflight scout, Krichell operated as a member of the front office, as Barrow’s top assistant.
After the team fell back in 1924 and 1925, and the Yankees needed some younger, hungrier players, Barrow’s Minor League initiative began to pay off. Between 1924 and 1925 the Yankees purchased several top Minor Leaguers, including catcher Pat Collins, second baseman Tony Lazzeri, shortstop Mark Koenig, and outfielder Earle Combs. All four of these players started for the 1926 club that began a second run of three straight pennants, and two of them (Lazzeri and Combs) were future Hall of Famers.
It is worth noting that the Yankees also had many misses. The club recognized that scouting is an inexact science: a team needed to sign as many talented young players as possible because some inevitably did not live up to expectations. But Ruppert did not scrimp when it came to his ball club; he trusted Barrow and his scouts. The eventually wasted cost of Ben Paschal (twenty thousand dollars from Atlanta in 1924) was part of the price the Yankees were willing to pay so that they could land a Tony Lazzeri or an Earle Combs.
After the 1925 season Barrow added two more scouts to his staff: Eddie Herr, who would scout the Midwest, and Bill Essick, manager of the Vernon club in the Pacific Coast League (PCL) for the previous eight years, would now scout the West Coast. Essick did not get off to a great start—his first big recommendations led to the purchases of shortstop Lyn Lary and second baseman Jimmy Reese from Oakland for $125,000. Lary and Reese never panned out, eventually leading owner Jacob Ruppert to become disillusioned with this method of talent acquisition. Fortunately for Essick, in 1929 he purchased pitcher Lefty Gomez from San Francisco and the next year landed shortstop Frank Crosetti from the same club. Two years earlier, at the urging of scout Johnny Nee, Barrow had paid $12,000 for Minor League catcher Bill Dickey.
Meanwhile, Krichell was still scouting the college ranks and local New York teams. In 1929 he signed Fordham pitcher Johnny Murphy, who spent a few years in the Minors before having several excellent seasons beginning in 1934. Krichell had less luck with Hank Greenberg, who grew up in the Bronx and was playing semipro ball in the area when Krichell first scouted him. When he brought Greenberg to Yankee Stadium for a visit, he tried to downplay Greenberg’s concerns about trying to beat out the great Lou Gehrig for playing time. Krichell told the youngster that Gehrig was nearly washed up, a prophesy with which Greenberg correctly disagreed.
While the great Yankee teams of the early 1920s had been built largely through a series of purchases from Harry Frazee’s Red Sox, the late 1920s teams had been rebuilt by scouting and purchasing top Minor League players. The Minor League players were not purchased for the future—for the most part they were expected to step onto the team and play. When Krichell recommended Lazzeri, he was suggesting not that Lazzeri would someday be able to help the Yankees, but that he could help them immediately.
But even Jacob Ruppert began to realize that he needed a less expensive way to find players. One thousand miles away, in St. Louis, Branch Rickey was facing the same problem and trying a new model.