Russ Smith at Splice Today notes that the a poor season by the Red Sox might cause John Henry some financial trouble:
John Henry, the Sox’s principal owner, cannot be a happy man, for though he loves baseball, it’s safe to say the billionaire (a proud liberal, by the way; a gratuitous aside, granted, but I’m in a grumpy mood) loves profits even more. And the Sox, who’ve sold out Fenway Park for an MLB record-setting 763 consecutive games (as of May 2), are headed to an unfathomable .500 season, which means the sellouts will end, the revenue stream slows down, and disgust will envelop the greater New England territory all summer long.
The problem is that Henry’s group was highly leveraged when they bought the Red Sox, so they need to keep the team winning to pay the bills. Remember, this is why Theo Epstein once quit the Red Sox. He wanted to step back for a season and regroup to build for a surer future. The people who control the money wanted to win every year, because that’s how they pay the bills. If fans stop buying Red Sox Nation memberships, stop watching NESN, or decide that a few hundred dollars for monster seats is too much, the bubble might burst. What if the Red Sox suddenly became worth less than the amount borrowed to purchase the team? It happened to people who bought houses at the peak of that bubble, and it could happen to Boston. It wasn’t that long ago when you could walk up to the ticket booth the day of the game and get a decent seat. It wasn’t long before that where you could pretty much sit where you wanted in the park.
Russ hopes losing drives the bandwagon fans away, but those are the fans who are driving up ticket prices and paying the bills. If the John Henry bubble collapses, it could be years before the Red Sox are able to pay top dollar for talent again.
Three years ago, the Yankees were two games under .500 as of May 3. They ended up winning 94 games and the wild card.
With strong Yankee and Ray teams, maybe the Sox don’t make the playoffs this year. But Beckett will turn it around, Lester and Lackey will improve, and if Matsuzaka doesn’t, they’ll find a replacement.
In short, I’d be surprised if they didn’t finish at least 88-74.
I follow a few Red Sox blogs–I’m not sure why, they used to be my favorite AL team, but since 2004 the fans to have ratcheted up Beantown’s well-earned reputation for assholery–and the extent of the naysaying is shocking, nearly Phillies-level (although not quitel there is a growing group in the Phillies fan base convinced that Ruben Amaro is intentionally destroying the [first-place] team). I have to agree with Slideshow Bob; it will be surprising if the Sox don’t win at least 88 games, and it’s at least 50-50, I think, that they make the playoffs. Even if neither of those predictions comes true, is support in Sox Nation really so soft? The only time I’ve been to Fenway was 1997, before the current renaissance, for a banal midweek game against the Phillies. The only seat I could get (I was by myself) was an obstructed view, so it’s not as if these extremes of Sox fandom are tied absolutely to the team’s recent Series victories. I can’t imagine that even a 75- or 80-win season will decimate the Red Sox’ financial foundation in any significant way.
What evidence is there that the Sox are still heavily leveraged? They haven’t taken any cash out of the biz and cash flow has grown significantly since they bought the team in 2002.
I’ll concede that, if things continue apace, next year could be a downer on the top line. But they’ve got pretty far to go before they’d have to make significant cuts on the cost side. Don’t forget that their high marginal revenues are heavily taxed by MLB. So the potential decline wouldn’t impact their top line on a dollar for dollar basis.
@bankwe: They have spent a lot of money over the past few seasons improving the ballpark. I assume that all didn’t come from revenue or out of the pocket of John Henry. It was the right thing to do, also. The Red Sox are very concerned about their fans, and part of that concern is winning. Parks can do only so much to attract people. The team has to win. It strikes me that a death spiral is possible, where a poor record leads to less revenue, which leads to more poor records and less revenue. It seems that after 2004, the Red Sox thought their margin for error was slim, and I’m not sure how much wider it got.
A death spiral might be possible, or the lack of revenues would could work to Boston’s benefit by allowing minor league prospects to play in the majors earlier than expected. Normally a veteran major leaguer would be a better choice to throw in a lineup, but with Big Papi’s millions forcing his craptacular bat into the lineup, it’s at the point where a good minor leaguer would produce more pop for 1/20 the price. Another direct benefit for the Red Sox on a smaller budget would have been their inability to burn $100 million on Dice-K, which would have given Clay Buchholz the opportunity to season himself with major league experience for a couple years before this season.
What else… Edgar Renteria and Julio Lugo would have never been signed; ditto for this new bust named Adrian Beltre. Mike Lowell would have been given the curtain as a hero, rather than making millions to ride the bench (even though he’s a better hitter than Ortiz).
As it stands right now, with tens of millions in contract money effectively wasted, perhaps the Red Sox deserve a little less money to play with.
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