John Henry- In for the long run?

[ieddyi]

Henry made his billions trading- mainly currencies. You know the drill- buy low/sell high or buy high and sell higher.
There will come a point when he will not be able to squeeze any more seats in Fenway short of suspending them from helicoptors above the field. The ticket prices are already the highest in the majors by far. THey're coming off a historic WS win. It would seem that the value of the franchise has to be near a near term peak.
I'm just wondering how attached he is to the team. WIll he be willing to tie up money in an asset that has peaked in value. . I know that when he sold the Marlins, he screwed them in the way he had set up the revenue from the luxury boxes, so there is ample evidence that he's willing to sacrifice loyalty for the bottom line.
Wonder if the Sox fans have nay input on this

[S2]

Comparing the Marlins to the Red Sox is ridiculous. The Marlins were a bad team with a little amount of diehard fans who would buy tickets at X price no matter what. The Red Sox are a very good team that sells out every game and has fans who spend $100 on a bleacher seat for a playoff game.

He's got it made with the Sox. They're not losing money or games. I'm not sure they've peaked either. But that begs the question: Henry (and others) bought the team for $700 M and then they won the World Series, so how much would the team go for? I mean, wouldn't he have to get more than $700 M to make it worth selling the team?

[b-ball-lunachick]

I still can't believe Selig handed Henry this team...it's a bit sickening which is why I try not to think about it much...

[ieddyi]

Comparing the Marlins to the Red Sox is ridiculous. The Marlins were a bad team with a little amount of diehard fans who would buy tickets at X price no matter what. The Red Sox are a very good team that sells out every game and has fans who spend $100 on a bleacher seat for a playoff game.

He's got it made with the Sox. They're not losing money or games. I'm not sure they've peaked either. But that begs the question: Henry (and others) bought the team for $700 M and then they won the World Series, so how much would the team go for? I mean, wouldn't he have to get more than $700 M to make it worth selling the team?

Where in my post did I compare the Marlins with the Sox?
My point was that Henry got where he is by analyzing the bottom line. Trading is a different mind set than investing. If he has an asset that has increased in value, he is NOT the type who will hold on to it for sentimental reasons as its value decreases.
If I were a Sox fan, it would be a concern for me. I seriously doubt that he bought the team because he was i love with Boston and the Sawx
I guarantee if they paid $700M for it, it was worth more then and is surely worth more now

[S2]

Where in my post did I compare the Marlins with the Sox?

I should have stated that part better, my bad. My point was that the Sox will continue to make money, unlike the Marlins who didn't have a strong enough fanbase to last through a few bad seasons. The Red Sox are not going to lose money or fans all of a sudden. Sox fans are in it for the long haul. Therfore, the money those Sox fans spend is also in it for the long haul. Marlin fans dropped off the planet once they didn't win, Sox fans won't do that.

[Prickly Pete]

My point was that Henry got where he is by analyzing the bottom line. Trading is a different mind set than investing. If he has an asset that has increased in value, he is NOT the type who will hold on to it for sentimental reasons as its value decreases.
If I were a Sox fan, it would be a concern for me. I seriously doubt that he bought the team because he was i love with Boston and the Sawx
I guarantee if they paid $700M for it, it was worth more then and is surely worth more now

A couple of points to consider:

1. Very few professional sports owners treat their teams the same as they treat their other businesses. I'm not aware of any evidence that Henry bought the Red Sox solely as a commodity to be traded at a future profit, regardless of what he does for a living. He seems to like owning a baseball team. The fact that the Red Sox are, and will likely continue to be, quite profitable, gives him even less incentive to sell.

2. Your "peak value" analysis is flawed. Roughly $250-$275 million of the $700 million purchase price was for NESN. That property is most certainly not at peak value. There are lots of things they can and probably will do to increase its value over the years. As far as the team itself, there is absolutely no evidence to suggest its value is going to decrease over time. Are you aware of any major league baseball franchise whose value has decreased?

[ieddyi]

I should have stated that part better, my bad. My point was that the Sox will continue to make money, unlike the Marlins who didn't have a strong enough fanbase to last through a few bad seasons. The Red Sox are not going to lose money or fans all of a sudden. Sox fans are in it for the long haul. Therfore, the money those Sox fans spend is also in it for the long haul. Marlin fans dropped off the planet once they didn't win, Sox fans won't do that.

ABsolutely a stronger fan base. But with the NESN deal and the seating maxed out it's just a question of whether he will be happy with the money flow. I have no idea how the deal was set up and how much of his actual money is involved and what the debt they have to serivce is. It's just that their revenue stream is unlikely to take a big jump- they're probably near to maxed out. If the Sox performance happen to slide a bit, it probably would affect their income ( I"m not predicting that- they are managed very well)
Just a thought that crossed my mind on a rainy day here

[Mystic Merlyn]

ABsolutely a stronger fan base. But with the NESN deal and the seating maxed out it's just a question of whether he will be happy with the money flow. I have no idea how the deal was set up and how much of his actual money is involved and what the debt they have to serivce is. It's just that their revenue stream is unlikely to take a big jump- they're probably near to maxed out. If the Sox performance happen to slide a bit, it probably would affect their income ( I"m not predicting that- they are managed very well)
Just a thought that crossed my mind on a rainy day here

Except you're forgetting that the Sox will always make money.

[ieddyi]

Except you're forgetting that the Sox will always make money.

I'm not saying that the Sox will lose money or that the value of the franchise will decrease. My point was that in the mind of a trader, there is always the trade off between current use of money with other potential uses of that money. There is not going to be a sudden rise of income from the Sox. I'm just wondering whether Henry will be content with the use of his money in that kind of "investment" rather than cashing out at the top and going on the the next trade.
The worst thing a trader can do is hold on too long and see profits dissapear. The holy grail of trading is to sell at or near the top.

[ieddyi]

A couple of points to consider:

1. Very few professional sports owners treat their teams the same as they treat their other businesses. I'm not aware of any evidence that Henry bought the Red Sox solely as a commodity to be traded at a future profit, regardless of what he does for a living. He seems to like owning a baseball team. The fact that the Red Sox are, and will likely continue to be, quite profitable, gives him even less incentive to sell.

2. Your "peak value" analysis is flawed. Roughly $250-$275 million of the $700 million purchase price was for NESN. That property is most certainly not at peak value. There are lots of things they can and probably will do to increase its value over the years. As far as the team itself, there is absolutely no evidence to suggest its value is going to decrease over time. Are you aware of any major league baseball franchise whose value has decreased?

I have no idea how connected Henry is to owning the Sox. I do know that as much as we likes owning a team, it didn't stop him from using some fancy bookeeping in the revenue for the luxury boxes for the marlins which actually hurt the team. Assuming that he has a soft spot for owning a team and will disavow his traders instincts deosn't seem to be a good bet to me.
I'm sure that there are many things that can be done to increase revenue streams. It's just that most traders look for situations where they buy an undervalued asset and do what needs to be done to flip it for a profit. The mind set is not to think long term to try and incrementally boost profits 2-3% per year.
As you said, franchises don't decrease in value. A lot of owners don't see much profit year to year on frachise operation, the big dlooars are made on flipping them
Like I said, this is just speculation on my part, but I would be surprised to see him still owning the team 5 years from now

[scull567]

He has made many comments about wanting to win multiple championships so it seems he is planning on stay around for a while.

[Prickly Pete]

Like I said, this is just speculation on my part, but I would be surprised to see him still owning the team 5 years from now

It's interesting speculation. I'm certainly not criticizng you for bringing it up. I just don't think it's based on any facts, other than Henry's background as a hedge fund trader.

I agree that Henry doesn't have some lifelong emotional attachment to Boston or to the Red Sox, but he does seem to enjoy some of the spotlight and adulation that has come with success, and as long as he's making money, I'd be surprised to see him walk away. He certainly doesn't need another big score financially.

[ieddyi]

It's interesting speculation. I'm certainly not criticizng you for bringing it up. I just don't think it's based on any facts, other than Henry's background as a hedge fund trader.

I agree that Henry doesn't have some lifelong emotional attachment to Boston or to the Red Sox, but he does seem to enjoy some of the spotlight and adulation that has come with success, and as long as he's making money, I'd be surprised to see him walk away. He certainly doesn't need another big score financially.

The thing is that his ilk don't "need" another big score, but they go ahead and look for the next one anyway
George Soros has who knows how many billions, but he is still actively in pursuit of more. Once they acquie a certain amount, it becomes about the ego.
We'll have to see how it plays out

[Prickly Pete]

The thing is that his ilk don't "need" another big score, but they go ahead and look for the next one anyway
George Soros has who knows how many billions, but he is still actively in pursuit of more. Once they acquie a certain amount, it becomes about the ego.
We'll have to see how it plays out

True, but there's nothing more ego stroking than being the owner of a sports team that wins a championship.

When Henry's hedge funds outperform their peers for a year, does his company get a parade in front of 3 million adoring fans?

It's just so completely different from what he does as a stock investor, that I find it hard to believe he got into the business of owning a major league team just so he could increase its value and sell it.

But you're right -- we'll just have to see.

[ieddyi]

True, but there's nothing more ego stroking than being the owner of a sports team that wins a championship.

When Henry's hedge funds outperform their peers for a year, does his company get a parade in front of 3 million adoring fans?

It's just so completely different from what he does as a stock investor, that I find it hard to believe he got into the business of owning a major league team just so he could increase its value and sell it.

But you're right -- we'll just have to see.

Could be the best of both worlds- winning a historic WS title after the drought, then cashing out. Will the thrill of winning ever get any better than 2004?

Quien sabe?

[Prickly Pete]

Could be the best of both worlds- winning a historic WS title after the drought, then cashing out. Will the thrill of winning ever get any better than 2004?

Good point.

Quien sabe?

I don't speak German.

[Mystic Merlyn]

Prickly Pete, that's Spanish not German.


Quién sabe means "Who knows"

[Prickly Pete]

Prickly Pete, that's Spanish not German.


Quién sabe means "Who knows"

Era una broma.

[YankeePride1967]

I still can't believe Selig handed Henry this team...it's a bit sickening which is why I try not to think about it much...

I criticized how it was done too, but would the Sox have been better off with Henry or Charles Dolan (the other bidder) owning them? The answer is evident in the sad state of the Knicks and NY Rangers.

[TommyK8]

I see absolutely no evidence that Henry is not fully committed to owning the Red Sox for the long haul. Comparisons to what he did with the Marlins are not valid. He tried for several years to get a deal on a new stadium which did not come to fruition during his tenure.

If he was trying to squeeze more profits out of the Red Sox, the team would not have the second highest payroll in baseball. He would not have given Renteria $10 million, when he could have kept Cabrera for $8 million. The Red Sox would sell out every game right now even if the payroll was $20 million lower.

Henry and his ownership group have spent millions refurbishing Fenway. They just put in an entirely new playing field, and modernized the park in several areas, including an expanding clubhouse and training area for the players. They've widened the concourse and put in many upgrades, such as new bathrooms. Putting in new bathrooms and widening concourses do not necessarily increase revenue, but they did it anyway.

The Red Sox are a cash cow. I would go so far as to say that Henry makes more profit off the Red Sox than the Boss makes off the Yankees. Between NESN and a sold out season at the highest ticket prices in baseball, and massive merchandising sales, Henry makes plenty of dough. He's already a billionaire several times over. I don't think he bought the Red Sox simply to churn them a few years later for a couple hundred million dollar profit. He's very engaged in the day to day workings of the team. He's at many games, and posts messages on SoSH. Doesn't sound like an owner who is just sitting back watching his investment appreciate.

On a last note, I think Henry might spend even more money on payroll, but he doesn't want to run afoul of Commissioner Selig, who basically delivered the Red Sox to his old chum on a silver platter. Mr. Selig wants salary containment in baseball, and I don't think Henry is going to do anything that would be distateful to Bud.

[GraniteYankee]

Could be the best of both worlds- winning a historic WS title after the drought, then cashing out. Will the thrill of winning ever get any better than 2004?

Quien sabe?

Good questions, but I think this "trio" relishes the idea of doing battle with the Yankees and being the underdog. You can sense it in their interviews. From simply a PR standpoint their is really no downside - we battle tooth and nail with the 800 pound gorilla and in the end see who's better, if we lose we can fall back on the $70MM discrepancy in salary, if we win we can claim that we slayed the dragon and our franchise is even more valuable - not a bad position, is it?

Also, factor in that their was very little potential to grow the Florida investment - that is why the quick exit. He is now owner of the #2 valued franchise in baseball, he'd be silly to sell now.