On December 26, 1919, Frazee sold Ruth to the New York Yankees. Popular legend has it that Frazee sold Ruth and several other of his best players to finance a Broadway play, No, No, Nanette (which actually didn't debut until 1925). The truth is somewhat more nuanced.
After the 1919 season, Ruth demanded a raise to $20,000 ($212,733 in current dollar terms)—double his previous salary. However, Frazee refused, and Ruth responded by letting it be known he wouldn't play until he got his raise, suggesting that he may retire to undertake other profitable ventures. He'd actually jumped the team several times, including the last game of the 1919 season.
Frazee finally lost patience with Ruth, and decided to trade him. However, he was effectively limited to two trading partners—the Chicago White Sox and the then-moribund Yankees. The other five clubs rejected his deals out of hand under pressure from American League president Ban Johnson, who never liked Frazee and was actively trying to remove him from ownership of the Red Sox. The White Sox offered Shoeless Joe Jackson and $60,000 ($638,200 in current dollar terms), but Yankees owners Jacob Ruppert and Tillinghast L'Hommedieu Huston offered an all-cash deal—$100,000 ($1,063,667 in current dollar terms).
Frazee, Ruppert and Huston quickly agreed to a deal. In exchange for Ruth, the Red Sox would get $125,000 in cash and three $25,000 notes payable every year at 6 percent interest. Ruppert and Huston also loaned Frazee $300,000, with the mortgage on Fenway Park as collateral. The deal was contingent on Ruth signing a new contract, which was quickly agreed to, and Ruth officially became property of the Yankees on December 26. The deal was announced ten days later.
In the January 6, 1920 edition of The Boston Globe, Frazee described the transaction:
"I should have preferred to take players in exchange for Ruth, but no club could have given me the equivalent in men without wrecking itself, and so the deal had to be made...