December 11, 2007
Owning the Minors
The Boston Red Sox entertainment arm, Fenway Sports Group just bought the Class A affiliate of the Houston Astros. They'll probably make it a Boston affiliate in 2009, but I wonder if there is a conflict of interest there?
As Fire Brand of the American League points out, Fenway Sports Group is a great way to hide money from MLB:
Well, because ever since its inception, New England Sports Ventures has looked for other ways to raise capital in order to both turn a profit and invest it in the company. Since all Red Sox-related revenues are subject to revenue sharing and then invested in a MLB-wide pool which is then equally disbursed to all clubs, there is not much avenue for profit there (unless you're the Marlins).
FSG changes that, as well as the yearly concerts that are played on Fenway soil and wreck the outfield for a few weeks. (And NESN, too.) These are not Red Sox-related profits so they are not subject to MLB rules and regulations. Not only is FSG providing an invaluable service in terms of expertise in the area, they are also generating dollars for Henry, New England Sports Ventures and the Red Sox.
Without these concerts, without FSG and without the other satellite operations going on, the Red Sox would not be able to compete as extensively as they do. The payroll would be lower, the community service would be lower, the marketing (Red Sox Nation) would be smaller. This additional revenue stream is what allows the Red Sox to have an obscene payroll.
The group also sells the advertising for MLBAM, so they are indeed helping all of MLB.
Posted by David Pinto at
08:19 AM
|
Management
|
TrackBack (0)