Boston Red Sox's Blockbuster Trade: The Liverpool Effect
This is an amazing, yet not unexpected, move for the Sox since they are out of the pennant race and have had very definitive chemistry issues over the last two years. For keen observers of the sporting world, a massive salary dump like this was in the cards for a while.
The future of the Red Sox franchise changed in October 2010, across the Atlantic.
October 15, 2010, was the day the Fenway Sports Group, led by John Henry, was awarded ownership of Liverpool FC in a sale estimated to be around £300 million (around $450 million, based off October 2010 currency exchange rates).
For a franchise with as much prestige as Liverpool has had in the past, the price might have seemed like a steal at the time. About two years after the purchase, the deal is changing the Fenway Sports Group's strategy and the Red Sox's fortunes.
The English Premier League may be the most hyper-competitive league in all of sports. To be the best in the league, an owner has to spend and spend and spend—and then spend some more.
According to a Business Week article, Liverpool lost around $80 million in 2011. In baseball, the Red Sox have to compete against the Yankees, a team that will spend like mad to win a title. The EPL has Manchester City, Manchester United and Chelsea, all of which spend like the Yankees.
The $262.5 million in contracts is a huge number—until compared with Liverpool's current balance sheet, which is about three years of operations.
What is this trade a sign of for Red Sox fans?
The $80 million loss (2012 has not been reported yet) has to have an effect on a franchise that put out so much money after the Liverpool purchase.
Gonzalez and Crawford are in year two of massive long-term contracts. The spending Fenway Sports Group did between the end of the 2010 season and the start of the 2011 season really is amazing. It's as if John Henry and his group thought Liverpool would bring in this new revenue stream to pay for Gonzalez and Crawford, even though history has many examples of this same business model failing miserably.
In the history-teaches-nothing category, the Fenway Sports Group took over Liverpool FC from Tom Hicks, who owned the Dallas Stars and Texas Rangers; both teams were forced into bankruptcy.
Hicks owned the team with George Gillett, former owner of the Montreal Canadiens and Richard Petty Motorsports. Gillett sold the Canadiens in 2009 and had to give up his stake of Richard Petty Motorsports after going through financial troubles in 2010.
Randy Lerner owns Aston Villa and was the owner of the Cleveland Browns. As of earlier this month, Lerner sold the Cleveland Browns.
Malcolm Glazer owns the giant of the Premier League, Manchester United. He also owns the Tampa Bay Bucs. Since Glazer started his ownership stake in Manchester United in 2003, the team has won four Premier League titles, one FA Cup and three League Cups. The Bucs have not won a playoff game.
In so many examples, the American owner that goes over to Europe to buy a football club discovers that his hobby or toy becomes his obsession and main money investment. The Red Sox have to dump salaries to pay for Liverpool and other expenses.
It's a great move for the Red Sox since most of the guys they are trading are worth nowhere near what their obligations are. Yet the trade is also a sign to Red Sox fans, who may wonder what the future of the team is going to look like.
Are they just trying to get younger and compile arms? Are they going to fall back and resemble Toronto, which is always in the middle of the pack? Will they spend for wiser free agents in the next few years? Will they once again take a long back-seat ride to the Yankees?
The answer to that last question is probably yes, as long as the Yankees can basically print money with little consequence.
However, the most important question for Red Sox fans should be this: Are the Red Sox going to take a back seat to Liverpool FC? Witnessing the monster trade that just happened, and history, I would say yes.
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