Feeding the Monster

by Seth Mnookin

  The limiteds then turned their attention to Dolan’s bid and the Henry-Werner bid. One of the partners, former Dexter shoe executive Harold Alfond, initially was leaning toward Dolan because he was just one person, not the motley collection of players who had gone through dizzying permutations since Les Otten filed papers to incorporate Longball LLC more than a year earlier. What’s more, Dolan clearly had the money. However, there was lingering concern over everything from Dolan’s media holdings—other baseball owners had been wary that large media companies running baseball teams would run up player salaries—to his brother’s ownership of the Indians and his dispute with George Steinbrenner.

  On the other hand, Bud Selig had already made clear that Henry’s group was likely to get a speedy approval. The limiteds also knew that Henry, whose personal wealth was estimated at around a billion dollars, had the money to complete the deal. Finally, they were worried, as Harrington, Morreale, and Goldberg had been, about wrapping up the process in time for the new Red Sox owners to be approved by baseball’s other owners at their annual meeting in mid-January. Any delays could put the deal on hold for another year. After going back and forth for about an hour, the partners agreed. While Dolan might ultimately be able to win approval, the uncertain economic outlook for the country meant that any snags in the sale could be disastrous, and since Dolan’s bid and Henry’s bid were identical, it wasn’t worth the risk. The partners chose the Henry-Werner group.

  As the limited partners were meeting in Fenway, John Henry, Tom Werner, and Larry Lucchino were ensconced in a suite on the 29th floor of the swanky Sheraton in Boston’s Back Bay. All of them were exhausted. As Henry thought through all that had happened in the previous year, he felt a vague sense of vertigo. He’d gone from being convinced he’d be successful in his efforts to build a new ballpark in Miami to being told the Marlins would likely be contracted and he’d take over the Angels to thinking he would simply buy the Angels outright to this last-minute bid to buy the Red Sox. As the hours ticked by, Henry, Werner, and Lucchino restlessly waited for a phone call. Noon passed, then one o’clock. Werner began to grow concerned.

  “We’re sitting around all day eating lousy hotel food, and feeling more and more disappointed as the day went on,” says Werner. “By this time, I was feeling like John and Larry are good friends, and all of a sudden I might never see John again. He’d go back to Florida and I’d go back to California. That was it.”

  “As it got later in the day and we hadn’t heard anything, we assumed it wasn’t going to be us,” says Henry. “You would have thought they’d call about something—a question, or wanting a little more money, or something. Even just to tell us to prepare for an announcement.”

  In fact, the limiteds had long since moved on from their decision about which group to award the team to and had commenced squabbling over money. Since the sale of the team had evolved from consisting solely of the Yawkey Trust’s controlling portion to including all the other shares as well, the limited partners had begun to question why there was still a need for a buyer to pay a premium for the Yawkey Trust’s 53.5 percent of the team. Since the limiteds could veto any deal, they argued, every percent of the Red Sox should now be valued equally. Instead of the Yawkey Trust getting around $7.66 million for each percentage of the team it owned and the limiteds getting around $5.38 million for each percentage they owned, everyone’s stake should be proportionately worth the same thing.*

  Morreale and Goldberg refused to budge. “We basically said, ‘We’re not giving away a dime,’ ” says Goldberg. “ ‘This is what the bid on our controlling interest was, and this is the value. What’s more, we have a fiduciary duty to the charity not to give away any of this money. If you don’t want to approve either of these deals, we’ll just take the club off the market.’ ” As afternoon stretched into early evening, Goldberg and Morreale finally proposed a solution the limiteds could accept. “Look,” Goldberg said. “The money’s going to charity. It’s not like it’s going to someone’s profit. You guys are all wealthy people, and the likelihood is even if you get a little more for your shares, you’ll be giving that away. So if you have a favorite charity that you want the Yawkey Foundation to consider, we’ll take those views into account and will do our best to direct some funds to those designated charities.” After nine hours of meetings and with the local media waiting anxiously for news, the limiteds finally agreed, and plans were made for an announcement.

  At the Sheraton, when John Henry heard about the Red Sox’s imminent press conference, his heart sank. After all, he reasoned, Harrington would want the winning team on hand, and no one had called to tell them to get ready. Henry thought about David Ginsberg and Lucinda Treat, who’d spent the last year working around the clock on Henry’s various plans, first trying to find a way to build a stadium in Florida, then embarking on his bid for the Angels, and finally shifting their attention to this last-ditch effort to buy the Red Sox. Henry had joked recently about sending Ginsberg and Treat to Los Angeles in order to work on a plan to buy the Dodgers; now, he feared that joke might become a reality.

  Henry, Werner, and Lucchino began changing out of their suits and into jeans. Someone suggested they call for pizza. “I felt like we had put everything we had into this,” says Henry. “It had been an absolutely extraordinary month. We’d all had very little sleep. I mean, just in the past 24 hours we had this partnership where Joe O’Donnell and Steve Karp were supposed to be putting up half of $700 million and they pulled out the night before the bid and we still thought we could do it.” Finally, just before eight o’clock, the local stations interrupted their programming and showed a bank of microphones at Fenway. Werner suggested everyone in the room put a dollar in a hat and bet on which group they thought was going to win the team. No one chose their own bid.

  “At the time, I just felt like we did the best we could,” says Werner. “We had a strategy—we were going to keep the team at Fenway Park. We had ideas about how to staff the operation. We talked to Larry about what we would do with baseball operations. But it didn’t look like we’d ever get a chance to tackle it.”

  “At about two minutes to eight, Creighton [Condon] gets a phone call,” says Henry. “We’re all watching this big television, waiting to find out who won the team. John Harrington’s getting ready to speak. And then Stacey”—Stacey Ballard, Larry Lucchino’s then girlfriend and now wife—“said, ‘Wait, everybody, look at Creighton!’ And Creighton’s got this big smile on his face and holding the phone to his ear with one hand and giving a thumbs-up with the other. A couple of people started jumping up and down and I thought, ‘My God, does this mean it’s us?’ And at almost that exact moment John Harrington appeared on TV.”

  “I am delighted to announce that the Boston Red Sox partners have voted unanimously this evening to sell 100 percent of the team’s interests to the group led by John Henry, subject to approval by Major League Baseball,” Harrington said. “This has been an intensely competitive process, and the John Henry group has been selected for several reasons.” As Henry began to celebrate, Harrington ticked off the reasons: Henry and his partners were committed to Boston, to the Red Sox, and to beating the Yankees and winning the World Series. Finally, Harrington said, “They were the highest qualified bidders.”

  Henry was overwhelmed. “It was so unexpected,” he says. “You can’t ever really prepare for owning the Red Sox. It was surreal, and there was so much stress involved in the whole process, and we’d all gotten so little sleep over the past month, when it finally happened I just felt, overwhelmed, I guess. And relieved.”

  That night, Henry had dinner with Joe O’Donnell at Abe and Louie’s, a Boylston Street steakhouse. Later, Henry, Werner, and Lucchino celebrated alone with champagne. Finally, in the early morning hours of Friday, December 21, they went off to get some sleep. When they woke up, they all thought, they’d be entering into a whole new world. “No time to rest now,” Henry told Larry Lucchino before they went to sleep. “We ha
ve a lot of work to do. Spring training starts in a couple of months.”

  *Prentice did not respond to written or verbal requests for comment, although I did speak at length with several of his business associates.

  *The limited partners’ 23 shares collectively accounted for about 54 percent of the team, with each share worth approximately 2.4 percent of the team. Because the Yawkey Trust owned three of the limited shares (about 7 percent of the team) in addition to the 46.5 percent of the team it controlled outright, the non-Yawkey Trust percentage of the team’s ownership was 46.5 percent. (The bids for the Yawkey Trust’s portion of the team included the Trust’s three limited shares.) Most of the limited partners had bought their shares for $500,000 each in the late 1970s; the $250 million bid for their 20 remaining shares valued each share at $12.5 million.

  Chapter 13

  Boston’s Second Favorite

  Sport: Revenge

  IF JOHN HENRY AND TOM WERNER went to sleep early Friday morning overwhelmed with anticipation about what their ownership of the Red Sox might mean, they woke up later that day and were greeted with the harsh reality of Boston’s second-favorite sport: revenge. The Boston Herald’s front page ran a mock-up of Fenway’s famed manual scoreboard; on it was written, “Visitors 1, Boston 0.” In a ranting, raving front-page column, Herald business writer Cosmo Macero Jr. complained that because the team had not been sold to Joe O’Donnell and Steve Karp, “the fix was really in.”

  Dan Shaughnessy did Macero one better. First, he laced into Henry, Werner, and Lucchino for not being sufficiently in touch with Boston history. “Forgive me if I don’t trust these guys. Any of them every been to Durgin Park?” he sneered. “Any of them know who hit Tony Conigliaro with that spitball in 1967?” Shaughnessy was just getting warmed up. After calling John Harrington a “cowardly little accountant,” he proclaimed that O’Donnell and Karp “should be the new owners of the Boston Red Sox. They were the answer to every question. They have money…. But Harrington didn’t want the local guys.” Without explaining why Harrington—who had, after all, announced the Red Sox were for sale by saying, “God willing, my last act will be to turn this incredible team over to a die-hard Red Sox fan from New England who knows how important the team is to this town and the fabric of this community”—wouldn’t have wanted the local guys, Shaughnessy then shifted his attention to baseball commissioner Bud Selig, who, according to Shaughnessy, wanted a Red Sox team with an anemic payroll and little chance of being competitive. “Selig can be forgiven,” Shaughnessy wrote sarcastically. “It’s OK with him if we become the Kansas City Royals of the East.”

  Although the sheer vitriol of the press coverage was surprising, Henry thought he and his partners could deal with that; he felt confident that over time, they’d be able to prove to Boston fans that they were worthy caretakers for the team. What neither Henry nor the Red Sox anticipated was the threat of an investigation by Massachusetts attorney general Tom Reilly who, as overseer of the state’s charities, argued that he should have oversight of a sale that would benefit the nonprofit Yawkey Trust.

  On Friday, December 21, Daniel Goldberg called Reilly’s office with the message that he’d prepare documents relating to the sale for the attorney general to go over. That weekend, Goldberg’s mother was hospitalized in Philadelphia and he flew out to be with her. Before leaving town, he left another message for Reilly. There might be a slight delay, Goldberg said, because he had to leave town unexpectedly.

  During the next week, emissaries of Charles Dolan, Miles Prentice, and Joe O’Donnell and Steve Karp all made their cases to Reilly. The sale, they claimed, had been unfair. Selig had forced the Red Sox to sell the team to his cronies. Higher bids had been rejected. Goldberg, meanwhile, got back to town just after Christmas and began to assemble the relevant documents.

  It was too late. On Thursday, December 27, Reilly announced his intention to investigate, and possibly call off, the sale of the Boston Red Sox. Saying he was “troubled” by what he had learned about the sale, he said his office “has a responsibility to make sure the charities get all the money they’re entitled to from the sale of the Yawkey Trust’s controlling interest in the Red Sox.”

  Goldberg and Morreale were stunned. They had already set up a meeting for the following week to review the sale with Reilly. But Reilly, who’d been elected in 1998 with the support of O’Donnell and the Boston business community, made it clear he was in a fighting mood, and implied that the fact that Harrington and the limited partners accepted what seemed to be something other than the highest bid meant there had been shenanigans involved.

  This was in stark contrast to what Reilly had said about the pending sale a year earlier, in late 2000. As The Boston Globe’s Joan Vennochi later reported, shortly after John Harrington had announced the team was up for sale, Reilly attended a private meeting in Boston’s Back Bay with local business leaders who wanted to talk about “various scenarios” relating to the sale of the club. The executives, who supported O’Donnell’s bid for the team, assumed that O’Donnell would not be the highest bidder and wanted to know whether Reilly felt he’d have a legal obligation to question the sale if O’Donnell was awarded the team anyway. Reilly, Vennochi reported, “gave assurances” that he would not challenge the sale even if the Red Sox were sold to someone besides the highest bidder. In fact, in December 2000, Reilly had said on the record, “The highest bidder is one factor. It’s not the only factor. John Harrington will have a lot to say about who the next owner is because the Yawkeys wanted it that way.”

  Even as Reilly’s investigation was gaining steam, Henry and his partners were in a bitter dispute with the Red Sox over which season tickets and luxury suites the team’s old limited partners would be able to keep. “They had carved out all the best tickets,” says Henry. “And I kept saying I needed tickets to give to my partners, to the people coming in on the deal.” On New Year’s Eve, Henry was on his yacht in the Caribbean arguing with John Harrington, who was, according to Henry, threatening to call the media the next day to tell them the deal was off. Henry, who had seen other deals fall apart over similarly inconsequential points, decided to end the tiff by building another row of seats along the infield grandstand. (The team actually ended up building two more rows of seats.)

  Then, in early January, Henry entered into discussions with Joe O’Donnell and Steve Karp about whether the two Bostonians would join the Henry-Werner ownership group as minority partners.* Despite the bad blood between the two groups, Henry thought it made sense at least to see if there was any way an alliance could be formed. At seven thirty on Thursday, January 3, Henry met O’Donnell and Karp in Boston for dinner. O’Donnell, according to letters and documents Henry wrote at the time, promised that he could make the attorney general’s investigation “go away immediately” and that he could sway the press to Henry’s side as well. At around one in the morning, O’Donnell suggested he and Karp drive Henry out to a waterfront location where they wanted to build a new ballpark for the team. Henry was sufficiently concerned about the prospect of an after-midnight trip to Boston’s waterfront that he called David Ginsberg to tell him where he was headed, and with whom.

  Once the men were at the waterfront, O’Donnell explained how difficult it could be for Henry if O’Donnell and his allies were aligned against him. “Joe played me recordings of voicemails from the house speaker, the mayor, and another who were reacting to Joe’s losing out on the Red Sox,” Henry wrote in an email he sent his lawyers and several of his partners that morning at 3:05 A.M. “He talked a lot about the sports media and the Herald being in his control or something to that effect.” Henry told how O’Donnell had asked that he be made managing partner “if something happened to you.” “That,” Henry wrote, “was a little scary.”

  Henry was conflicted, and a bit unnerved as well. Still, he had come to like O’Donnell and Karp despite everything that had gone on, and knew that having the local businessmen as part of his team would smooth his e
ntry into a city he was quickly discovering could be rough on outsiders. But Henry’s partners—particularly The New York Times Company—were put off by O’Donnell, and while the two sides did reach a truce, they never were able to come to terms.

  In the coming days, the sale of the Red Sox became even more bizarre. With the baseball owners meeting less than a week away and Reilly’s investigation still going full steam ahead, Dolan announced on January 10 that he was increasing his bid to $740 million.

  Harrington, Goldberg, and Morreale felt that, with everything else going on, they had to at least discuss Dolan’s offer with the team’s limited partners. After more than eight hours of conference calls stretched out over two days, the limiteds decided unanimously not to pursue any more “untimely bids” for the team. Undeterred, on January 14, Dolan upped his bid again, finally matching Miles Prentice’s bid of $790 million. (Prentice, in response, added another $5 million to his own offer.) This time, the limiteds refused to even discuss the new offers.

  Reilly, meanwhile, was engaged in tortuous negotiations with the Red Sox. Convinced that Harrington and the team’s lawyers had been disrespectful, he seemed determined to embarrass the team, and particularly John Harrington, publicly. At the same time, he seemed finally to realize that, after a yearlong sale process, there had been only two groups that submitted bids with their financing in place. If he called off the sale (as he was threatening to do), the team could potentially go for much less. At one point, Daniel Goldberg told Reilly that if he were so confident he could get more for the team, the Red Sox would undo the deal and let him sell the team on his own. “But,” Goldberg said, “if you don’t get as much for charity as we’ve gotten, then the deal is on your head.”

  On the morning of the January 16 owners meeting, Reilly, Henry, and the Red Sox finally reached a compromise. Since Prentice’s and Dolan’s higher bids, if accepted and approved, would have netted state charities another $30 million, Reilly was determined to find some way to raise that much extra money. As a solution, the new owners agreed to create their own charity, The Red Sox Foundation, which they’d fund with $20 million over the next 10 years. The limited partners, meanwhile, would donate $500,000 per share to the Yawkey Trust, for another $10 million. And the board overseeing the Yawkey Trust would be expanded, a move Reilly argued would give him more oversight, and John Harrington less control, over the charity.