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Magazine

Look at That Line outside Fenway


Never mind the recent pronouncement from Major League Baseball Commissioner Bud Selig that the big leagues, overbuilt and losing money, must cut two teams. What's really making waves in baseball these days is the first sale of the Boston Red Sox since the Depression. No fewer than six groups submitted bids on Nov. 29. Among those joining the bidding: ex- Baseball Commissioner Peter Ueberroth, ex-Senate Majority Leader George J. Mitchell, Cablevision Chairman Charles Dolan, and New York Times Co.

The prize won't come cheap. Industry insiders expect the Sox to fetch $400 million or more. That easily eclipses the $320 million paid for the Cleveland Indians in 1999. In addition to a controlling 53.5% stake in the team, the winner would get 11 acres of land in and around historic Fenway Park and control of New England Sports Network, the cable channel that broadcasts the team's games.

BALLPARK FIGURES. And that's just a start, since "$400 million is only likely to get the new owners to first base," says David F. D'Alessandro, CEO of John Hancock Financial, a sponsor of Major League Baseball. To do the deal, the winner may have to buy out some of the team's limited partners. D'Alessandro figures that could cost $300 million.

Plus, to really make money, the new owners must quickly come up with a plan for Fenway. The options: Renovate the fabled park, or build a new stadium elsewhere. Either way, the challenge will be coming up with a design that includes such revenue-enhancing goodies as more luxury boxes without losing the charm and scale of the old place. It'll be pricey: Red Sox CEO John L. Harrington's 1999 aborted plan to build a new park came in at $545 million.

Add it all up, and Ganis says the cost of acquiring the Sox could approach $1 billion. That may sound like a high price for a team, dogged by failures, that hasn't won a World Series since 1918. But the loyalty of fans, combined with the competitive bidding, should help command a multiple of at least 2.5 times revenues, says Andrew Zimbalist, a Smith College economics professor and baseball expert. He estimates that in Fenway, the Sox brought in $160 million in 2001; in a modern stadium revenues could rise to $200 million annually. That would make the team alone worth $500 million. Then there's NESN. John Mansell, a cable-sports analyst at Kagan World Media, figures it's easily worth an additional $200 million.

RISK FACTORS. Bidders look to be of three types. First are those poised to build a new stadium because they own land nearby. A group led in part by Boston developer Steven Karp has the best local political ties, including with the team's limited partners. A second is headed by a smaller local developer, Frank McCourt.

Another set of bidders aims to maximize revenues from NESN. They include Cablevision's Dolan, who may have the deepest pockets and could give the Sox national TV exposure.

Finally, some simply want the team itself. A top contender here is the group headed by TV producer and ex-San Diego Padres owner Tom Werner. His allies include Mitchell and New York Times Co., the owner of The Boston Globe. The latter could use the Sox to promote its interests in New England. Werner's group, which has the closest ties to other owners, would renovate Fenway.

Picking the winner will take more time. Harrington, the trustee of the Jean R. Yawkey Trust--which owns the controlling stake and is holding the auction--has said he'll favor the high bidder. Most believe he'll ask for a second round of bids to drive up the price. But he'll have to take into account the views of the limited partners and other owners, as well as Selig.

Whoever wins, the ramifications will extend far beyond Beantown. To recoup their investment, the new owners will have to market the Sox on a national basis, says D'Alessandro. And that, of course, assumes they can break their losing streak. By William C. Symonds in Boston, with Tom Lowry in New York


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