Feeding the Monster

by Seth Mnookin

  “So then I thought, ‘OK, the Mets are next. That’s $500 million, and I’d be a co-owner with Fred [Wilpon], and Fred’s had a partnership with [Nelson] Doubleday that’s been a bad partnership. And the last thing he probably wants is to be in another partnership.’

  “The Red Sox were next. And I thought, ‘You know, I should just call Larry and check in and see what’s going on with that.’ ”

  Larry Lucchino was spending the morning of November 3 at the Yale Bowl, in New Haven, Connecticut, watching his law-school alma mater’s football team play Brown University. He was worried about Tom Werner and Les Otten’s bid for the Red Sox. Joe O’Donnell and Steve Karp, Lucchino knew, were the hometown favorites. Charles Dolan’s pockets seemed bottomless. Werner and Otten, meanwhile, were still struggling to raise about $200 million for their $350 million bid, all the while being brutalized in the Boston media.

  Lucchino answered his phone in the Yale Bowl’s stands. “How’s the deal going in Boston?” Henry asked.

  “Well, we’re pretty much dialing for dollars right now,” answered Lucchino. Just days earlier, Lucchino had met with executives from The New York Times Company in an effort to convince them to make a $50 million investment in the Werner-Otten bid.

  “Well, that’s what I have,” Henry answered. “Maybe I could provide the missing dollars?”

  “It’s a lot of missing dollars,” Lucchino said.

  “After Larry explained the situation, it seemed fairly clear [Werner and Otten] weren’t getting the team,” Henry says. “They were short a lot of money.” Henry told Lucchino to look into setting up a meeting with Tom Werner. “But this is the deal,” Henry said. “If I’m putting up the most money, I want to have control. If I can be the control person”—the person Major League Baseball recognizes as being ultimately responsible for all decisions relating to the team—“I’ll fund the thing. Whatever money we can’t raise I’ll put up.”

  Werner and Henry had never met, but both men had been told repeatedly by friends and associates how much they’d like the other. Within days, Henry flew out to California to sit down with Werner. The two met at Mr. Chow, the Beverly Hills celebrity hotspot.

  “I had an immediate connection to him,” Werner says. “If John were a different sort of fellow, if he weren’t so cooperative, this wouldn’t have worked. I could sort of tell right away that he was just a terrific, terrific individual who agreed with me that baseball was a labor of love.” Henry felt a similar connection with Werner. Still, there were issues that had to be resolved. Initially, Werner and Otten saw the Red Sox as an organization so rife with inefficiencies and untapped potential that they looked at the club as a possible return-on-investment deal, where they’d stay involved with the team for a limited amount of time, say, five or ten years, and then sell it at a profit. “For me, I was in it for the long term. I was in it for the rest of my life,” says Henry. “This is what I want to do, and I wanted to make sure everyone agreed with that.” There was also the question of control. Werner remembered all too well from his days in San Diego that partnerships sometimes didn’t work out. And Les Otten, convinced he was being marginalized, was growing increasingly agitated about the entire deal. At one point, Henry said he’d simply walk away.

  “There was no bluffing on my part,” says Henry. “Because I was taking all the risk, it was either, ‘I’m in control or I’m not in.’ ” Werner ultimately agreed. Otten, however, proved to be more difficult, and since he had been the one who initially filed the team’s bidding papers, he could stop the partnership from going forward. “Les was going to torpedo the whole deal,” says Henry. “The clock was running on this thing, and we needed a unanimous vote [to join in a partnership].” The week of November 5, Otten and Henry met in New York. “He wasn’t happy about the situation,” says Henry. “And I couldn’t blame him. It seemed like Tom and I were deciding what to do about what had started out as his bid.” Henry explained to Otten that he was happy to extricate himself from the deal, but that he didn’t think Otten would get the team without his financial backing. Finally, after being paid several million dollars for some of his plans for the team and his ideas about how to renovate Fenway, Otten agreed to a reduced role, and Henry officially became part of the bid. The shape of the Red Sox ownership was taking place: Henry would be the principal owner, Werner would be the chairman, Otten would be a vice chairman, and they’d hire Lucchino as the team’s president and chief executive officer. The New York Times Company had agreed to sign on as well. Since Henry still owned the Marlins, his involvement would have to be kept secret; for the time being, he was simply known as “Investor 11.” The team now had approximately three weeks to put together its bid.*

  *In 2002, Bingham, Dana & Gould merged with San Francisco’s McCutchen, Doyle, Brown & Enersen. The new firm is known as Bingham McCutchen.

  *Duquette, in a move typical of his tenure, implied to reporters that Williams had some answering to do after he took Martinez out of a June game against the Yankees that New York came back to win, despite the fact that Duquette knew that Martinez was nursing a sore shoulder.

  *Selig’s put, or promise to buy the Marlins, was likely related to his desire to get Montreal Expos owner Jeffrey Loria out of his hair. The Expos were still considered a prime candidate for contraction, and Loria was threatening to sue Major League Baseball. Selling the Marlins to Loria was one of the potential solutions to this problem, but to do so Henry first had to be free to pursue other clubs.

  *It was around this time that then-Disney chairman Michael Eisner called up Henry and accepted his previous bid for the Angels. “It’s too late,” Henry replied. “I’m joining up with Tom Werner to buy the Red Sox.” About a week later, Henry agreed to sell the Marlins to Expos owner Jeffrey Loria. At that point, it seemed as if there was still a good chance that the Expos would be contracted; in the meantime, Major League Baseball bought and ran the team. Disney didn’t end up selling the Angels until 2003, when Arizona businessman Arturo Moreno bought the team for $184 million.

  Chapter 11

  A Surreal Process

  JOHN HARRINGTON, DANIEL GOLDBERG, and Justin Morreale awoke on the morning of November 29, the day final bids were due for the Red Sox, with a combination of anxious excitement and nervous anticipation. All three men had been extremely close to Jean Yawkey, and took their roles as caretakers of her team and her legacy extremely seriously. All three also loved the Red Sox, but each, in his own way, was looking forward to the conclusion of what had been an emotionally trying process.

  That day, the six groups that had bid in August submitted binding offers for the team: Charles Dolan; Jeremy Jacobs; Frank McCourt; Joe O’Donnell and Steve Karp; Miles Prentice; and Tom Werner and Les Otten, backed by John “Investor 11” Henry. Dolan (because of his money), O’Donnell and Karp (because of their local connections), and Henry, Werner, and Otten (because of their Major League Baseball connections) all had reason to be optimistic.

  After collecting the bids, Goldberg and Morreale drove out to Harrington’s four-bedroom home in Westwood, a quiet suburb about 12 miles southwest of Boston. Cautiously optimistic that the September 11 attacks would not significantly affect the final bids, the three old friends were hopeful that they’d at least be able to match the nonbinding bids that had been submitted in August. Back then, the bids had ranged from Charles Dolan’s $305 million offer to Miles Prentice’s $325 million offer.

  Before examining the offers, the men took out pictures of the three of them with Jean Yawkey. “We felt really strongly that we were carrying out Jean’s wishes,” says Goldberg. “And we wanted to acknowledge her presence.”

  “We had basically decided that if there was one blowout bid that we think is the highest qualified bidder, we’re just going to go with them and negotiate a deal,” says Morreale. “So we’re sitting around John [Harrington]’s living room, we open up the envelopes, and there was a clear winner.” With the other bidders all between $300 and $370 million, Ch
arles Dolan had offered $405 million for the Yawkey Trust’s 53 percent of the team. He hadn’t attached any conditions to his bid—no financing contingencies, no sticking points. “He won,” says Goldberg. “It was over.” Over the next several days, Morreale and Goldberg called the team’s limited partners to arrange a time when everyone could meet with Dolan and vote on his purchase of the team. They also called Dolan and, without saying definitively that he’d been selected, told him he’d need to fly to Boston sometime within the next week or two for a face-to-face talk with the limiteds.

  Most of the partners were free to meet within the next few days, but Arthur Pappas, the team doctor and owner of two shares (or about five percent) of the team, had surgeries scheduled for most of the next week and wasn’t available until the week of December 10. “We had it all lined up,” says Morreale. “We’d scheduled a press conference [to announce the sale] for later in the day [after the meeting]. We had our PR people ready. It was done.”

  By Friday, December 7, the likely selection of Dolan had been leaked to the press, and that day, The Boston Globe ran a story that reported that the team was negotiating exclusively with the Cablevision mogul. The Globe story also made note of the potential problems with Dolan’s bid, including his brother Larry’s ownership of the Cleveland Indians (a purchase that was heavily financed by family trusts funded by Charles Dolan’s wealth), and Dolan’s long-standing personal feud with George Steinbrenner.* Finally, the Globe reported, there was the hurdle of the team’s limited partners, “who are widely perceived to prefer O’Donnell and Karp.” Goldberg, Morreale, and Harrington weren’t worried. To them, the Globe article simply featured the standard caveats journalists use to hedge their bets. “He came in so much above anyone else and his bid was so much cleaner, it wasn’t going to be an issue,” Morreale says. “It didn’t matter how much some of these guys might have liked Joe [O’Donnell]. He didn’t have the cash.”

  Dolan’s advisors, however, grew concerned, and tried to find a way to shore up support for their boss’s bid. By Friday afternoon, apparently thinking that some courting of the limited partners was in order, they were telling local reporters that Dolan was willing to pay a premium for the limited partners’ portion of the team as well. The next day, the Boston papers trumpeted the news. “Cablevision Systems Corp. chairman Charles Dolan is willing to spend as much as $250 million to buy out the limited partners of the Red Sox as he attempts to complete a deal to become the team’s new owner, according to an advisor to his bidding group,” began a front-page Globe story. After a year of steadfastly maintaining they weren’t interested in selling their shares, the limited partners, who’d initially thought their stake in the team was worth only around $150 million, indicated they were willing to listen to Dolan’s bid.

  When Morreale, Goldberg, and Harrington saw Saturday’s papers, their stomachs dropped. Since the first day the Sox had been up for sale, they had been explicit about the fact that, because of the limited partners’ ultimate ability to select the winning bid, no one was allowed to talk to or negotiate with them prior to the sale. “If they wanted to buy some of the limited shares once the sale was complete, fine,” says Morreale. “But they weren’t allowed to do that before the sale. It would look like they were trying to buy their votes. So now here we had decided to sell the team to Dolan and his guys are out talking to the press and announce that he’s willing to pay all this money for the limiteds. Well, all of a sudden, a) he’s violating the rules, b) the limiteds now have a bid they read about in the paper for their interest, and c) all the other bidders who respected the rules are saying, ‘Wait a minute, what about us, we were all playing by the rules!’ ”

  By Monday morning, Dolan’s planned meeting with the limited partners had been canceled. There would be no press conference, no announcement. Instead, Harrington, Morreale, and Goldberg decided they had no choice but to go back to the five other bidders and offer them a chance to make a pitch for 100 percent of the team. They’d have a little over a week—until Thursday, December 20—to make a new bid.

  Morreale reached Henry as Henry was in the back of a taxicab in New York City. “John, it’s Justin. You’re going to have another chance to bid for the team. But this time it’s for 100 percent.”

  “This is a huge rule change, Justin,” Henry replied. “We’re going to need to come up with another $350 million in a week. How can we be expected to do that?”

  “I’m sorry, John, but that’s what you got. We can’t give you anything more.” Morreale himself was uncomfortable with the dramatic change. “It was,” he says echoing a refrain that was repeated about the Red Sox’s sale from many of its participants, “a bit surreal. But the [Major League Baseball] owners [annual] meeting was in January, and we needed to have the new owners in place by then to be approved. If not, we’d potentially be facing the start of the new season [without a new owner].” Since Bud Selig didn’t like teams changing hands in the middle of a season, any delay would mean the sale would likely have to wait until November 2002. “Who knew what the economics of the situation was going to be by then?” Morreale says. “Who knew who would still be interested? Who knew what shape baseball would be in? We all felt we had done a great job of getting some very good bids for the team, and we definitely did not want to risk needing to wait another year.”

  Unlike every other sports franchise he had ever pursued, Henry had, by this point, decided he was willing to spend pretty much whatever it took to buy the Boston Red Sox. “This was a rare, unique opportunity to own one of the crown jewels of baseball,” Henry says. “I had also gotten very close with Tom and Larry, and I wanted to keep on working with them.” The press had reported Dolan’s proposed bid for the team at $695 million—$405 for the Yawkey Trust’s stake, $250 million for the limited partners’ shares, and the assumption of $40 million in debt. (In fact, Dolan had initially only been willing to pay $230 million for the limiteds’ shares.) Henry and Werner decided fairly quickly they’d be willing at least to match that.

  Joe O’Donnell and Steve Karp had decided they’d raise their bid as well, and enormous pressure was building behind their candidacy. Craig Stapleton, who was married to a cousin of President Bush and had been a partner of Bush’s when he had owned the Texas Rangers, had joined the O’Donnell-Karp bid, and the press’s cheerleading was growing more intense. But O’Donnell was about to run into some problems of his own.

  By December 2001, Joe O’Donnell must have felt increasingly frustrated. It often appeared as if everyone of any importance in Boston—Globe sports columnists Will McDonough and Dan Shaughnessy, seemingly everyone who worked at the Boston Herald, Boston mayor Tom Menino and Massachusetts Senate president Thomas Birmingham—were in his corner. With Stapleton’s inclusion in his team, he even had the backing of the president. The bid he put together with Newton mall developer Steve Karp had been championed since the day John Harrington announced the team was up for sale more than a year earlier. So what was the holdup? The owners, the media, even the fans all kept saying that they wanted the Sox to go to a homegrown owner.

  You couldn’t get more homegrown than O’Donnell. As press reports kept pointing out, O’Donnell hadn’t merely been raised in Boston; he’d never left the city. He was the local boy made good, a hard-working son of an Everett police detective, a schoolboy standout at Malden Catholic High School, and the popular captain of Harvard’s baseball team in 1967. In 1971, after graduating from Harvard Business School, he spent a couple of years working for the university before accepting a job as the head of Drive In Concessions, then owned by Jeremy Jacobs, who went on to purchase the Boston Bruins. A year later, O’Donnell bought the company from Jacobs, and spent the next two decades building the renamed Boston Concessions Group into one of the largest concessions companies in the region.* Through the 1970s and 1980s, O’Donnell quietly amassed skiing operations, hotels, bars, restaurants, even amusement parks and movie theaters. Eventually, he bought the single largest stake of Boston’s Suff
olk Downs racetrack.

  Over the decades, he’d come to know virtually all of the major players in Boston’s stubbornly parochial political and business communities. By the time he decided to bid on the Red Sox, he knew he didn’t have to be overly aggressive about making his case to the public; his many allies would do that for him. “As a kid, I was taught not to shine a spotlight on yourself, and I always thought people who did that were kind of jerks,” he told the Globe’s Meg Vaillancourt in 2001 for a rare profile. “Even today, I still think that’s true.” At the time of O’Donnell’s comments, Tom Werner was being chided—often anonymously—in the press for mounting what was often portrayed as a crass campaign to win over the locals.

  O’Donnell’s distaste for the spotlight did not dull the shine of his bid, and as the process moved closer to completion, his partisans only grew louder. On December 2, the Globe’s McDonough all but instructed John Harrington to sell the team to O’Donnell and Karp. If, McDonough wrote in his column, Harrington wanted to do the “right thing,” he would “choose the Joe O’Donnell–Steve Karp group, because their local roots and financial stability combine the best of what [the Yawkey] tradition wanted to champion.”†

  “Maybe I’m old school,” McDonough went on, “but the O’Donnell group has been positioning itself in a way I’m much more comfortable with: staying low-profile but still putting together a substantive financial and business package for the Red Sox.” (Just to be sure nobody missed his point, McDonough added that he was none too happy with the way Tom Werner had been brazenly making his case to the public.) Finally, McDonough quoted an anonymous “business/sports figure in town” as saying, “Check out all the groups. Only one gives a damn about the Red Sox—O’Donnell and Karp. The rest of them are all in it for some kind of business deal.”