John Henry on Big Show: MLB fined him $500K for revenue sharing comments
|03.01.11 at 4:51 pm ET|
Red Sox principal owner John Henry, in an interview on The Big Show, said that he was fined $500,000 by Major League Baseball for comments that he made about the sport’s current financial system. In late-2009, Henry told the Boston Globe that “seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits,” had received over $1 billion in revenue sharing money.
Major League Baseball took objection to the public comments — which, Henry noted, were subsequently validated by leaked documents about team profits — and fined the Sox owner. As such, he was relucant to discuss the state of baseball’s economics.
“There’s not much I can say, because the last time I made a comment, I was fined $500,000. The large markets aren’t allowed to give their opinions,” said Henry. “Did you know I was fined $500,000? … I made statements which turned out to be true, or at least there were various documents that were leaked after that. But anyway, the large clubs are not allowed to talk about it.”
Henry said that the Sox received a letter from MLB following recent comments by Yankees co-chairman Hank Steinbrenner that voiced similar criticism of the revenue sharing system. He also noted that small-market teams are allowed to comment on baseball’s economic system.
Some other highlights from the interview:
–Henry said that the long-term deal for Carl Crawford did not represent a change of business model, noting that the team has made long-term commitments in the past to Daisuke Matsuzaka and J.D. Drew, and tried to sign Mark Teixeira to a long-term deal.
–Asked about the Teixeira deal, Henry repeated his stance of the past two years that the slugger — as he said in his introductory press conference — wanted to sign with the Yankees from the outset.
–He said that, had there been massive public funding for a new ballpark, the Sox might have found it more economically compelling to have moved into a new park than to renovate Fenway. However, since there was none available, the team has spent $285 million on renovations with an eye towards remaining in Fenway for decades to come.
–Henry said that while there will be some money for the club to make moves at the trade deadline, it will be limited given where current payroll expenditures are for the 2011 Sox.
–Henry expressed his hope that both manager Terry Francona and GM Theo Epstein would remain with the Sox for years to come, but noted that both perform exhausting jobs that make it uncertain whether they are sustainable. Towards that end, Henry also noted that he and CEO Tom Werner have discussed that they can’t remain owners forever, but that they still love their roles with the Sox, and have no idea to see those roles change anytime soon.
A complete transcript is below. To listen to the complete interview, visit the Big Show’s Audio on Demand page.
Were you a soccer fan growing up?
No, at that point I was a baseball fan pretty much only. I watched a little bit of basketball. The Celtics were actually my team, because they were the only games I think that were shown on the farm.
Why buy Liverpool?
As you remember, a few years ago, we bought a NASCAR team for some similar reasons. In this case, one of our employees came to us and said, ‘Save my football team. I think there’s an opportunity here. The more we looked at it, the more we came to believe we were uniquely qualified, even though we didn’t know English football, we knew the sports business pretty well. We felt there were enough similarities between what we inherited with the Red Sox and what we were looking at with the Liverpool Football Club. It just seemed to be the right thing to do. And we’ve been seeking out other revenue opportunities because of the economics of baseball.
Is there any cross-pollenation between the Sox and Liverpool?
There certainly are some [examples], but they’re more along the lines of marketing, sales, how we deal with ticketing. We’ve learned a lot from renovating Fenway Park. There are certainly areas of cross-pollenation.
When you first bought Fenway, were you aware of the discussions about building a new park?
I saw the model about a year before buying.
Was renovating Fenway always your plan, or had there been public support for a new park, might you have gone that route?
For me, personally, I’ve always loved Fenway Park. To me, you could never replicate in a new park the feeling of history that Ty Cobb stood at that plate, Ted Williams. It would have been a difficult transition for me personally and I think for a lot of the people, maybe most of the people, in the group. We had to study — and we did — we had to study both sides. But to answer your question directly, if we’d have had all the support, that plan included public money. I’m not sure we would have, in the real world, had a lot of support for putting a lot of public dollars into the new facility.
With public funding, would you have built a new park that would have been more spacious and that would have had a traditional look?
It’s possible, because anything you can do to enhance the fan experience, you want to do. But could you replicate what we have at Fenway? No. So there would have been arguments on both sides. We didn’t have that opportunity, so it’s a little bit pointless to speculate what we would have done if we’d been given…I don’t know. I think it was a $600 million ballpark, something along those lines. And I think the Red Sox were going to be on the hook for something like $100 million. It probably would have been more. It’s hard to speculate, going back. But to try to answer your question, it would have been a difficult decision if we could have gone large enough, if taxpayers were willing to pay those kinds of dollars, it probably would have been economically beneficial for us to go that route.
Would it have been impossible to do something like that privately?
I don’t know about impossible, but I’d just spent three years in Florida trying to do something along those lines. I didn’t really come here with any kind of expectation that we were going to get the kind of help we would have needed to spend $600 million. We ended up spending, I think, $285 million, which was far more than we’d anticipated spending on Fenway. But we did more than we had anticipated in making Fenway a better fan experience and a better ballpark.
Do you still ever discuss a new park, or given the spending on renovations, are you committed to remaining in Fenway?
I don’t see a choice. I just don’t see a choice, especially with the economics that exist today for Massachusetts and locally. I think it’s a non-starter. Someday, will it make sense for the club and maybe for the community? Maybe someday. But what we’ve done and the reason we’ve spent so much money is to try to make sure this ballpark will be vibrant and viable for the next 50 years. So probably not in my lifetime will we see a new ballpark.
This ballpark will last another 50 years?
Yes. We spent $50 or $60 million on waterproofing. Waterproofing means removal of concrete. It was a major undertaking to [ensure] the structural viability of Fenway for the next 50 years.
You spent $142 million on Carl Crawford. At one point does a contract need ownership approval?
We’re a very collegial group. There’s never been a number. We discuss things regularly so there aren’t any real surprises, but when it comes to a deal of that length and that amount of money, it’s even more collegial than you can imagine. This group really does work well together. Generally on any major issue, there are enough of us that there are two sides being heard on all issues. We work well enough together that we’re comfortable in expressing different viewpoints.
Was last year a step back in terms of buzz and diminished TV ratings? Was that the catalyst for offseason spending?
I honestly don’t think so. I know so. The fact is, last year, the buzz was all about the bridge, it seemed like. This was a bridge. The buzz was we weren’t going to be able to score any runs. You know how many injuries we had, and we were still the, I think, second-highest scoring run producing club in all of baseball, even with all those injuries and playing some people who were considered by some ‘no-names.’ … I fully believe that we would have challenged for the World Series last year if it hadn’t been for injuries.
Last year, it seemed that you were adding lots of players on short-term deals. This winter, you have longer-term commitments. Is this a different business model?
Not really. We’ve given long-term contracts. We have a six-year contract with Daisuke [Matsuzaka], five years with [J.D.] Drew, we attempted to give a very long-term deal to Mark Teixeira. Sometimes things don’t work out in the offseason where you aren’t able to fulfill all of your plans. Last year, we were able to pick up Adrian Beltre and John Lackey. I think there had to be some buzz about that. But again, I think people thought we weren’t going to score runs and that we didn’t have enough of a lineup. But you’re right, ratings were down and the buzz was less.
Did that affect any of your offseason decisions, and the desire to maximize revenues outside the ballpark?
I think [the other revenue streams] aren’t as large as people might speculate that they are. We sell out every ticket. We didn’t really raise prices beyond a nominal amount. We really don’t gain a lot of financial punch by adding all this payroll. But the way we look at this, going forward, we have a number of people who are going to help us who aren’t going to be expensive, so we did have some payroll flexibility. And I think it was common knowledge that we’d been hopeful of acquiring Adrian Gonzalez over the last two years. We’ve been trying to find a way to acquire Adrian and Carl. That happened to work out. Some offseasons, certainly after 2003 offseason, we were determined, really determined. You could say that there are offseasons where, instead of us being at 120 percent, we’re at 150 percent. We’re working extremely hard. This was certainly one of those offseasons.
You mentioned Mark Teixeira. Why didn’t that deal happen?
I continually am asked the question, and I continually point to what Mark said, I believe it was at the signing ceremony when he was first announced, that they made the decision at the very beginning that they wanted to go with the Yankees. I think that played the biggest role.
Do you agree with Hank Steinbrenner that the Sox and Yankees are in the same boat on revenue sharing?
The same boat?
Are you allies on the subject?
There’s no doubt about that. But there’s not much I can say, because the last time I made a comment, I was fined $500,000. The large markets are not allowed to give their opinions.
Hank wasn’t fined $500,000.
Did you know I was fined $500,000? Then how can you say he wasn’t?
When were you fined?
It’s been over a year ago. It was an article [in the Boston Globe]. He asked me a number of questions. I made statements which turned out to be true, or at least there were various documents that were leaked after that. But anyway, the large clubs are not allowed to talk about it. We just got another letter after Hank’s comments.
Small-market teams can comment?
I’m not the person to ask.
MLB needs a court of appeals.
You know who the court of appeals is?
It makes no sense that the small-market teams can talk.
It makes perfect sense.
You paid $85 million in revenue sharing?
Yeah, plus there are a lot of other forms of revenue sharing that we don’t generally think about. Like with Liverpool, we own our hats and our jerseys and our marks and our stadium. But baseball, essentially, has all those rights. It’s another reason why we have been investing outside.
Does football have a better system than baseball?
Not for me. Ask a small market owner.
Did you have a different view of how the system should run when you owned the Marlins?
I’d like to comment on all these things, but the problem is…
Are you at your spending limit, or during the season, is there remaining money to add a player?
We might have a little space, but we don’t have a lot of space. This is a big payroll. I hear the public numbers. They don’t match the private numbers. Our private numbers are higher than the public numbers.
What is the disparity, and why is there a disparity?
There are I guess three diff ways you can look at payroll. There is gap accounting, the CBT — competitive-balance payroll, and I guess MLB has a form of accounting which is separate from the other two. And then there’s cash. When you look at it from a cash basis, which is the way we generally look at it, [Sox chairman Tom Werner] and I.
Will Terry Francona be here for the long-term? Will you re-sign him?
If I had to predict, I would say yes. But this is a tough job. He has a tough job everyday over those seven months, trying to deal with a lot of pressure. Same issue with our general manager. Will our general manager agree to do this for another five, 10 years? These are tough, tough jobs. It’s not just in baseball where general managers or managers or coaches have tough jobs.
Are you worried that Theo Epstein will walk away from being the GM?
Well, he walked away once. I think it was primarily because he was exhausted, mentally and emotionally. There were other factors involved. But I think if he hadn’t been emotionally and physically and mentally exhausted, it probably would have gone a different way.
I know by the end of the season, by August, [Francona] is really tired. On the outside looking in, I don’t think that people how many hours a day all of us spend on so many issues. There are always so many issues that are hidden from public view that are going on. These aren’t easy jobs.
Given that Theo Epstein walked away once, are you concerned he might not be a baseball lifer given his potential to pursue jobs in other fields?
It doesn’t concern me. I think it’s a great thing. We’re dealing with an extremely talented guy. Same thing with [CEO Larry Lucchino]. Larry gets worn out. He’s been doing this as long as the other two combined. He could be doing other things. He could have run for Senate, for instance. He’s an extraordinarily capable, talented man, and it’s a tough job. Larry’s job, he never stops.
Why do you continue to hear rumors that Lucchino will leave?
It is odd that you keep hearing it, because they’ve obviously been wrong for however long this has been. … I think to round it all out, we all really do enjoy working together. We love being in Boston. We love the city. There’s nothing, except the weather sometimes, that we don’t love. We love the ballpark. We really do. It’s been a magical nine years, starting our 10th year, and when we all got together for dinner in Florida before the first day of full-squad [workouts], we were talking about how fortunate we feel. I was just in Los Angeles for a week with [Werner]. Again, we talked about how lucky we feel. We did talk about, ‘How long can we do this?’ You can’t do it forever, but there certainly isn’t a desire to see this all end.
What is the toughest part about the jobs of manager and GM?
Often, often, there are issues going on inside the clubhouse that are problematical, that are difficult. Terry, he has their back to an extreme degree. Everyone wants to play. Everyone wants to be — relievers want to be starters, platoon players don’t want to be in platoons. Over 162 games, it’s different probably than football, which has 16 games. Over 162 games, every night, you have tensions that sometimes can arise, do arise. He manages all that. A lot of the things [Francona] is great at, you never hear about or see.
You could probably write a book about Manny Ramirez‘ era with incidents no one knows about.
That’s so true. That’s very true. Anyway, I think we may be overstating the case to some degree. For instance, Theo has a different, I don’t know what you would call it, approach than he had in 2003, 2004 and 2005. He’s matured and he has great people that he works with. That has been a tremendous challenge, as you know. We’ve lost a lot of people. Theo has had to replace a lot of people. But overall, I think we’re in very good shape. Everyone wants to be here. We all want to be here, and we’re all extremely — including the players — extremely excited about this season. We’re focusing on the negatives and the fact that things change, that we’ll have personnel changes in key positions over the upcoming years. But we’ve had tremendous stability and it’s up to Tom and I to keep that going.
Are you optimistic about the 2011 Red Sox, or will you try to lower expectations like the Yankees are?
I think it makes a lot of sense. We haven’t played our first game.
Everyone thinks you’ll win 112 games.
I know, but if we lose the first two, they’ll be saying, ‘What’s wrong with this team?’
Are you optimistic about the economy?
The economy isn’t the economy it used to be. You used to be able to say that things look good or things look bad. Now, it’s more like, this sector is good and this sector is bad. It’s difficult to say anything with regards to the future. Things have diverged so much. Housing still hasn’t recovered. You have everything in the world going up — the price of gold hit new all-time highs today, the price of oil is $100 a barrel. That can’t be good for certain sectors. It depends on where you sit in the world. Everything is inflating. That’s keeping this feeling of robustness while a lot of people suffer. It’s a difficult question, more difficult to answer.
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