The owners of the Boston Red Sox ownership agreed to sell the team to a group led by Florida Marlins owner John Henry and former San Diego Padres owner Tom Werner for $700 million, more than double the previous Major League Baseball record.
The agreement consists of the team, Fenway Park and an 80 percent interest in New England Sports Network. The buyers plan to acquire the team for $660 million and assume about $40 million of debt, said Justin Morreale, a lawyer for the Yawkey Trust that owns 54 percent of the team.
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The price of one of baseball’s most storied franchises, if the sale is approved by three-quarters of Major League Baseball’s 30 owners, will top the previous MLB record of $323 million for the Cleveland Indians in February 2000. The only North American sports team to be sold for more was football’s Washington Redskins, which fetched $800 million in 1999.
“People who have accumulated wealth can buy a lot of houses, but there’s only one Boston Red Sox team, and it probably won’t come up for sale for another 20 years,” said Marc Ganis, president of Sportscorp Ltd., a Chicago firm that advises on team sales. “Baseball’s a religion in Boston and there’s a premium on the team.”
John Harrington, fiduciary of the Yawkey Trust, repeatedly said that the Red Sox were seeking the top “qualified” bid.
“We have broken all records for the sale price of any baseball team in history, in spite of the economy and challenges of this fall,” Harrington said. “This is an unprecedented value.”
Morreale said in a statement that no bid was higher “that was not subject to very significant contingencies that ranged from impractical to one which violated Major League Baseball rules.”
Marlins Sale
Henry has an agreement with baseball Commissioner Bud Selig to sell the Marlins to current Montreal Expos owner Jeffrey Loria. The Expos are one of the teams that may be shut down under baseball’s plan to close two financially troubled teams by next season.
One of the keys to sale is the stake in NESN, a regional sports network with 3.6 million subscribers, Ganis said. YankeeNets LLC is starting a similar network in New York to be built around games of the New York Yankees.
The Yankees Entertainment & Sports Network, or YES Network, is scheduled to begin broadcasting in March and might generate more than $200 million a year in cable fees and advertising revenue, according to industry analysts.
“After the Yankees started the YES Network, there’s a realization that there’s a lot of equity value in addition to rights value,” Ganis said.
Baseball Approval
The bid fronted by Henry and Werner will probably get baseball’s approval, said Clark Griffith, a Minneapolis lawyer whose father, Calvin, sold the Minnesota Twins to Carl Pohlad in 1984.
Besides Henry, who bought the Marlins in 1999 for $150 million from Wayne Huizenga, the group’s investors include Werner, a TV executive and former owner of the Padres; Larry Lucchino, a former Baltimore Orioles and Padres executive; and George Mitchell, a former U.S. Senator from Maine who served on a recent panel that examined baseball’s economics.
The New York Times Co., owner of the New York Times and Boston Globe, also is an investor, as is Les Otten, former chairman of American Skiing Co., a ski resort operator.
“The local ties are important because baseball likes its teams to be anchored to the community,” Griffith said.
Other Bidders
Others who sought to purchase the Red Sox were New York lawyer Miles Prentice, who failed in an attempt to buy the Kansas City Royals in 1998 and whose group of investors include Quadrangle Group; Cablevision Systems Corp. Chairman Charles Dolan; local real estate investor Frank McCourt; and Boston Bruins owner Jeremy Jacobs.
Werner and Henry acquired the team after an attempt to join the bid headed by local real estate developer Joseph O’Donnell and Stephen Karp failed. The groups couldn’t resolve the issue of who would ultimately control the team, WCVB-TV in Boston reported.
Originally, the sale was scheduled to include only the 54 percent stake of the franchise controlled by the Yawkey Trust, which was established in 1992 following the death of Jean Yawkey, whose husband, Thomas, bought the team in 1933.
The sale has since expanded to include a 100 percent stake in the team.
Glorious and Notorious
The Red Sox, who last won a World Series in 1918, have made a mark on baseball history with such hall-of-famers as Ted Williams, Carl Yastrzemski and Carlton Fisk. The team also is notorious for selling Babe Ruth to the Yankees in 1919 and for breaking the hearts of its fans by falling just short of winning championships.
The team this year lost $5.3 million from baseball operations after revenue sharing, according to documents given by the league earlier this month to Congress.
In 2001, the Red Sox had total operating revenue of $177 million, $153 million of which was generated locally. The team’s operating revenue was third-most in baseball behind the New York Yankees ($242 million) and the New York Mets ($183 million).
FleetBoston Financial Corp. advised the Red Sox on the sale.
Bloomberg
