Agroup Led By John Henry Paid 700 Million To Purchase The Boston Red Sox In 2002

Agroup led by John Henry paid $700 million to purchase the Boston Red Sox in 2002, eventhough the Red Sox had not won the World Series since 1918 and posted an operating lossof $11.4 million for 2001. Moreover,Forbes magazine estimated that the current value of the team was actually $426 million.Forbes attributed the difference between the currentvalue for a team and the price investors are willing to pay to the fact that the purchase of ateam often includes the acquisition of a grossly undervalued cable network. For instance,in purchasing the Boston Red Sox, the new owners also got an 80% interest in the NewEngland Sports Network. Table 12.9 shows data for the 30 major league teams (Forbes,April 15, 2002). The column labeled Value contains the values of the teams based on current stadium deals, without deduction for debt. The column labeled Income indicates the earn-ings before interest, taxes, and depreciation.

Posted in Uncategorized