This is from Wikipedia and is well referenced so is probably close to the truth:
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-double his previous salary. However, Frazee refused, and Ruth responded by letting it be known he wouldn't play until he got his raise. 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 "Yank" the Red Sox out from under him. The White Sox offered Shoeless Joe Jackson and $60,000, but Yankees owners Jacob Ruppert and Cap Huston offered an all-cash deal--$100,000.
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.