Red Sox owners sit atop a $6.6 billion sports conglomerate
Forbes today did a ranking of sports conglomerates (i.e. sports businesses’ total value, including all properties). The top group with a baseball team is the Fenway Sports Group -- owners of the Boston Red Sox, Liverpool FC, and other ventures -- which is worth a total of $6.6 billion. That’s third behind the Kroenke Sports, worth $8.4 billion, and Cowboys’ owner Jerry Jones’s empire, set at $6.9 billion.
Fenway Sports Group -- owned by Sox owner John Henry -- started with a $700 million purchase of the Red Sox and built from there. It’s fair to say, then, that the Sox were the first and primary driver that led to an 843% return on their investment, allowing them to bring in the NESN Network, Liverpool FC, NASCAR’s Roush Racing and the Fenway Sports Management company.
That’s pretty great for them. It also makes one wonder why it’s, apparently, so important for the Red Sox to get beneath baseball’s Competitive Balance Tax threshold, as they’ve said they need to do, which could possibly lead them to trade Mookie Betts. Their CBT tax penalty for this past year was reported yesterday to be $13.4 million. That’s rounding error for FSG.
The response I usually get to such assertions is that overall business value is unrelated to cash flow and payrolls and that it’s not fair to assume a team with a huge value should spend big. Which is silly of course.
If I own a house and it doubles in value -- or, like the Sox’ owners’ investment, increases in value over eight-fold -- I have enormous financial resources at my disposal. I have the ability to borrow against or spend against that value to make improvements in my home. I can renovate my kitchen and stuff. Indeed, I should, because I want to maintain or even increase that value. Just as the FSG’s owners used Red Sox money to get into the English Premiere League or the TV business, sometimes it makes sense to use money from the other buckets to keep the Red Sox running well. It’d be silly not to.
Except they’re apparently not. They feel obligated to avoid future CBT penalties because . . . they just want to? Because that’s what other baseball owners expect of them? I don’t know.
But I do know that there is nothing requiring them to do it. It’s not a hard salary cap. They can afford the penalties. They can afford almost anything given the state of their business. But no. Why?