Some Facts About Red Sox Finances

As the legislative battle over public financing for a new Sox stadium intensifies, it's time to summarize what we know about the Sox' finances. Although authoritative information from the club' is scarcer than Republicans who admit encouraging Jack Robinson to run for the Senate, informed estimates from Forbes, Broadcasting & Cable, and other sources are a good place to start.

According to the June 12 issue of Forbes, the Red Sox are worth about $284 million, making them MLB's tenth most valuable franchise. (See accompanying table.) Of the nine higher-valued clubs, six play in new stadia, the others in New York or Los Angeles. Even with their new parks, Houston, Arizona, Detroit and San Francisco are worth less than the Sox. Ranking clubs by estimated revenue elevates the Sox sixth, ahead of the Dodgers, Rockies, Rangers and Mariners and just behind the Mets.

If you're reading this in the stands, pat yourself on the back -- you're the reason why. Multiplying a club's paid attendance by its average ticket price produces a good estimate of gate receipts. Using this measure, the Sox took in $58.8 million last year, behind only the Yankees, Orioles, Braves and Indians. John Harrington claims that the Sox "have maxed out ticket prices" after raising them 60% in three years, but so long as the Sox keep selling out, there's no reason not to expect similar increases in the future...especially as the club tries to raise the capital for a new ballpark. I predict that next year's average ticket will cost $31 or more, up from $28.33 in 2000.

The March 27 issue of Broadcasting and Cable reports that the Sox will receive $23.6 million from their local media outlets, including $8.7 million from WFXT, $10 million from NESN and $4.9 million from WEEI. In the American League, only the Yankees and Rangers earn more. And this figure is low, since as the 48% owner of NESN, the Sox also share in the cable network's profits from Sox games.

In short, it's clear that with or without a New Fenway in their future, the Sox can afford to field a competitive team. The real question is whether the Sox can afford to build New Fenway.

Figures posted on the official Red Sox Website estimate the total costs of the New Fenway project at $627 million. This includes $140 million from the City of Boston ($90 million to acquire the land, $50 million for site work); $135 million from the Commonwealth of Massachusetts ($53 million in transportation and utility improvements, $82 million for parking garages); and $352 million from the Sox.

The Sox further break down their share by source of funds. The club estimates that it can provide $84 million in equity from "club seat/suite deposits, corporate marketing, concessionaires, current site land value." In English, this means collecting up-front payments for premium seats and advertising; auctioning the right to be New Fenway's official beer and soft drink; and selling most of the land under Old Fenway. The club has no capital of its own to apply to the project.

However, the Sox insist they can raise $128 million in additional capital from "Red Sox ownership, naming rights, season ticket deposits, etc." While listed first, Red Sox ownership can't be counted on for significant funds. Most of the limited partners don't have that much cash to contribute, and the Jean R. Yawkey Trust, which controls the club, is a charitable foundation. Season ticket deposits aren't much more promising, unless the Sox want to alienate their most loyal fans.

That leaves naming rights. The Tigers received $86 million over 30 years to name their new stadium Comerica Park; the Astros, $100 million over the same period to call theirs Enron Field. For all the emotional appeal of the name "Fenway Park," New Fenway will almost certainly be called something else.

Finally, the Sox plan to borrow the last $140 million, to be repaid at the rate of $19 million/year. As any cost overruns would be financed through additional loans, a 25% increase in the cost of New Fenway (less than the recent average) would require the Sox to spend $30 million each year on debt service.

John Harrington may be an accountant, but is he a construction manager? The future of the Red Sox may ride on the answer.

TABLE: MLB's 10 Most Valuable Franchises
   Team  Value  1999 Revenue
 1.  New York Yankees  $548 million  $195.6 million
 2.  Atlanta Braves  $388 million  $155.2 million
 3.  Cleveland Indians  $364 million  $151.7 million
 4.  Baltimore Orioles  $347 million  $138.8 million
 5.  Los Angeles Dodgers  $325 million  $120.3 million
 6.  New York Mets  $314 million  $125.6 million
 7.  Colorado Rockies  $305 million  $122.2 million
 8.  Texas Rangers  $294 million  $117.5 million
 9.  Seattle Mariners  $290 million  $111.6 million
 10.  BOSTON RED SOX  $284 million  $123.3 million

Copyright © 2000 Doug Pappas. All rights reserved.
Originally published in the June 2000 issue of Boston Baseball.

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