Red Sox: Is the team primed for being sold?
A recent email exchange with a valued poster (Crusader) around the potential of the Boston Red Sox being sold. This is a topic that I have occasionally examined and decided to once again put my thoughts out.
The Red Sox apparently have their baseball fiscal house in order. Players have been signed and more importantly, the team has managed to slip under the luxury tax threshold. The ticket sales, advertising revenue, and media resources are all clicking so the money machine is in high gear.
According to a Forbes article on team values, the Red Sox were third in baseball with a value of $2.3 Billion and annual revenue of $398 Million. Both those figures are from 2015, but growth among the collective known as major league baseball has increased 7% a year.
Remember back to 2002 when the team was purchased? The Red Sox made two fiscal moves that failed. The first was trying to trade for a marquee player by finagling a deal with the Texas Rangers for Alex Rodriguez. The deal went south when the union rejected contract tinkering that would have given ownership some fiscal room.
The Red Sox also had made an attempt to detonate a gift from the previous ownership by offering Manny Ramirez to anyone willing to absorb his contract. Manny stayed when no coughed up the dough to place a waiver claim. To paraphrase Henny Youngman – “Take my Manny, please!”
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How times have changed – oh how times have changed.
The Red Sox have created an empire by using the branding associated with the team title. Real Estate in the Fenway area has been selectively purchased, NASCAR is now part of Fenway Sports Group (the sports umbrella) and so is Liverpool soccer – which I understand is one of the top brands in football.
The ownership also deserves a kudo for not using the usual threats that sports billionaires employ when faced with the need of a new venue. The ownership realized that public and governmental support were minimal, so they dressed up the old gal – Fenway Park – with continual expansions and upgrades. The team also received a historic tax credit and the area around Fenway was spiffed up with $55 Million in infrastructure.
That’s where it stands today. This is a golden egg of baseball that is in the same rarefied fiscal air as the Yankees, Dodgers, and Cubs. A solid franchise with few problems, an adoring public and three World Series titles this decade. Why do they still own it?
In the past, I have written many supportive articles and negative ones on the ownership. I have even ventured into possible buyers – all local, of course – in another article, I thought this team would have been sold by now. “I’m shocked” as Captain Renault would say in Casablanca. I will bypass that “error” in predictions.
My suspicions were aroused when Larry Lucchino did the exit from his involvement. My assumption was that the triumvirate partnership with Tom Werner and John Henry – Henry being the major domo – was either cracking or the boys were going to cash in their baseball chips. None are getting any younger despite the arm candy.
My view is somewhat slanted from a personal perspective. The old buy low and sell high, but exactly what is sell high? I thought the MLB price barriers would stall – they haven’t. Valuations continue to escalate – at what point is the optimum reached?
I still harken back to the state of the franchise – it has never been on a more solid footing. The entire package from the Red Sox to real estate would have a staggering price tag. The potential exists to parcel out each unit separately. In my distant past, I worked for companies that were dissolved into different units for sale.
Sell does not necessarily mean 100%. The Red Sox have several “Limited Partners” that hold small shares of a few percent. The current group could still have the association without the myriad of possible headaches. That, however, slips into a big item and that is big as in ego.
Ego drives us all to a certain extent. Just collecting autographs or a selfie with an athlete or quasi-celebrity will stroke the ego for many. That does not dissipate simply because you have oodles of money. As the late Howard Cosell stated: “Jockocracy.” Or to some the more offensive “Jock sniffers.”
I may finally get it right on the selling of the team. So far my scorecard is hitless, but the old blind squirrel analogy eventually kicks in. When they sell and to who will determine the course of Red Sox baseball for decades – just don’t let it be CBS.