Boston Red Sox fans owe a “debt” of gratitude

The Boston Red Sox appear to be on solid financial footing and that is the opposite of the Los Angeles Dodgers who have mounting debt. Take a quick look at Red Sox finances.

The Dodgers have a financial issue and that has caught the attention of the Commissioner’s Office. The issue is debt and the Dodgers apparently are becoming a baseball version of our own national debt that exceeds $20 Trillion and counting. The Dodgers have not sunk to junk bond status, but, hey – you never know.

As reported the Dodgers have – according to a source – “hundreds of millions in debt.” The Dodgers’ ownership is under an agreement that kicks in for all new franchise owners in keeping debt under 12 times annual revenue minus expenses. That, however, is a Dodgers problem and not a Red Sox problem.

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The Dodgers will certainly have a tinge of sympathy from Red Sox Nation for taking on the burdensome contracts of Josh Beckett and Carl Crawford that were part of the Nick Punto trade. The Dodgers assumed contracts and freed up cash for Boston.

Forbes magazine releases a yearly profile of each major league team, and what is of interest to me is the assumed value and operating revenue. I have viewed operating revenue simply as profit and I may be lax in that, but I will go with it. The Dodgers sit a -73.2 Million – that is a minus sign.

The Red Sox have a +43.2 Million operating revenue and that is among the best in baseball. The Red Sox also are the third ranked franchise in value – slightly ahead of the Cubs and Giants as of spring of 2016. The Dodgers value is about $200 Million more than the Red Sox. The Red Sox operate as Fenway Sports Group and own Liverpool Soccer and dabble in NASCAR. The value of the three is $3.4 Billion.

What a difference ten years make. Wander back to when the Red Sox attempted to acquire Alex Rodriguez and failed. The failure was not an intricate three-team deal, but a rejection of a reworked Rodriguez contract with the union. The Red Sox were simply short on cash.

The Red Sox also placed Manny Ramirez on waivers in 2003 simply to save the $100 Million remaining on his contract. That one failed when no team was willing to assume Manny’s contract. Again, it was strictly a money issue.

Since that early going, the ownership has made incredible strides in solidifying the financial bottom line of the Red Sox and their other enterprises that included sports teams, real estate investment and the purchase of the flagship paper of New England – The Boston Globe.

The Red Sox have seen a steady increase in franchise value, revenue and operating income since 2007. That has translated into an ability to absorb bad contracts, hand out excessive bonus money to international players such as Rusney Castillo and Yoan Moncada, take aboard pricey free agents, improve the ballpark and actually reward the expensive ticket prices with three championships.

The Red Sox have money and they will continue to be in the top-tier in revenue for the foreseeable future. That bodes well for the team’s fans who realize this ownership – which certainly has flaws – is willing to spend to put a winning product on the field. That was clearly demonstrated with the signing of David Price, Hanley Ramirez, and Pablo Sandoval.

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Expect that investment in players to continue. Homegrown will stay or at least most will. Free agents will be signed and your ticket prices will continue to be the highest or close to the highest in baseball. You want to win you have to pay the price and that price is paid by ownership and fans.

Sources: Forbes/MLB.com

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