Behind the Red Sox shocker

Ballpark boosters were wrong -- Sox management didn't have the bucks to build. What's next?

by Seth Gitell

FOR SALE: 100-year old ballpark with loyal fan base. Home to a team that chokes every September. Comes with incomplete plans to build a new park.

When Red Sox chief executive John Harrington announced last week that he was putting the team up for sale, it sounded like the closing pitch of a cheesy flip transaction: Harrington announces he's going to build a new park (that he never intends to build); he locks in a lucrative public-financing deal (which enhances the value of the team); and then he announces that he's selling the Red Sox.

More likely, Harrington had finally given in to the reality that financing and building a multimillion-dollar ballpark was out of the Jean R. Yawkey Trust's league. Nevertheless, Harrington's announcement has gone a long way toward answering many of the questions raised (see "Fenway Funk", News and Features, May 11) as the Sox CEO pursued a new ballpark in the Fenway (the offices of the Boston Phoenix, at 126 Brookline Avenue would be displaced under the current plan; see "Where We Stand," next page). Why was the year-long period of negotiations between the team and local political leaders cloaked in secrecy? Why did the team fail to open a marketing center and start selling luxury box seats years ahead of schedule (as the owners of both the FleetCenter and the New England Patriots have done)? Why was there no news on Sox financing plans once the team received approval for state financing at the end of July? Because the Sox weren't being straightforward with their plans.

Even the day before the sale announcement, Harrington's agents -- including a lawyer from Bingham Dana, the firm that represents both the Sox and the Boston Globe -- misled the tough-minded Globe business columnist Steve Bailey into reporting that a financing deal was near. (Bailey published an admirable -- and restrained -- account of the scam in the October 11 Globe.)

But even as Harrington's decision has answered some questions, it has raised others, which most Boston politicos and insiders are still trying to sort out. First, what, exactly, are the Red Sox selling? According to press accounts, the only thing Harrington is selling for sure is the Yawkey Trust's 53.5 percent stake in the Boston Red Sox Baseball Club Limited Partnership. But the Yawkey Trust also owns myriad other properties, such as an interest in the New England Sports Network (NESN). And what about the Harrington-headed entity known as the Olde Town Team Realty Trust -- which owns property with the street addresses that make up Fenway Park? (The Boston Red Sox Baseball Club Limited Partnership conveyed the land to the Olde Town Team Realty Trust in 1998 for less than $100, according to records obtained at the Suffolk County Register of Deeds.) Will the team be sold -- but not Fenway Park?

Attorney Justin Morreale, a partner with Bingham Dana, says that the Olde Town trust is just a "pour-through," or an agency realty trust, that makes ownership of Fenway Park easier for the Red Sox. Such a trust, says Morreale, simplifies the steps involved in completing the routine transactions -- such as obtaining or making payments on a mortgage -- that are necessary for property management. In essence, it means that the trust as a whole can conduct business and that not every constituent of the Red Sox Limited Partnership (there are seven, besides the Yawkey Trust) has to sign off on every financial transaction. Morreale says the Olde Town Trust -- and the other individual Red Sox entities -- will be sold along with the Yawkey Trust's interest in the team.

"We're going to transfer our interest in the Red Sox," he says. "Everything goes, and these things are assets." The new owners, he adds, will have the power to name anyone they want to serve as trustee for these entities. Morreale also confirms something that has only been hinted at in the dailies: in addition to its interest in the Boston Red Sox Baseball Club Limited Partnership, the Yawkey Trust will also sell its 53.5 percent interest in New England Associates, which, in turn, owns 48 percent of the New England Sports Network (the Boston Bruins and Viacom own the rest). Experts predict that the inclusion of the NESN interest will add to the value of the team.

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Seth Gitell can be reached at sgitell[a]phx.com.