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Hot stove, cold cash

David D'Alessandro David D'Alessandro

What are the Boston Red Sox worth? Think $1.5 billion -- and up.

That is a staggering number considering that John Henry and his partners paid what was then considered a king's ransom of $700 million for the team less than five years ago. But the $1.5 billion is the Red Sox's valuation, not mine.

It is based on a deal this month by the Sox partnership to buy out former John Hancock chief executive David D'Alessandro's less than 1 percent stake in the team. While the transaction is subject to a confidentiality agreement, two executives who helped negotiate the deal said D'Alessandro sold his small stake for about 2.2 times his original $5 million investment, or about $10.25 million.

Applying the same multiple, the Sox would be worth $1.54 billion today -- even more if you assume a buyer would pay a premium for control versus an illiquid minority stake. (This is good news for my employer, The New York Times Co., parent of The Boston Globe, whose original $75 million would be worth $165 million using these calculations. Times Co. stock, on the other hand, is down 37 percent over the same period.)

Neither the Red Sox nor D'Alessandro would comment.

The huge appreciation in value reflects the health of Major League Baseball and helps explain this winter's orgy of spending on talent and alleged talent. The Sox just paid $100 million for a pitcher who has yet to play a day in the major leagues. They are paying more than $50 million in a luxury tax on baseball's second-largest payroll and are about to pay more than $60 million to buy into NASCAR. The team is aggressively jacking up the prices of corporate boxes and seats.

D'Alessandro, who by all accounts initiated the deal, was among the last of the investors to join the partnership, but is the first to cash out. Others may soon follow. According to several executives, TJX boss Ben Cammarata -- the guy whose company just lost the credit card information of maybe millions of its customers -- is also talking to the partners about cashing out. He is the lead partner in an investment group with Boston ad executive Ed Eskandarian and Finagle A Bagel's Martin Trust that has $25 million in the Red Sox. A Cammarata spokeswoman declined to comment.

The other partner to watch is Les Otten, who started it all. Otten originated the idea of putting together a bid for the team and saving Fenway Park. He met Tom Werner, a Hollywood television executive, on a ski slope, and together they began their campaign to buy the Sox. When Cablevision's Charles Dolan pushed the price out of their range, Werner and Otten recruited Henry, and the rest is history.

But according to multiple Sox insiders, Otten has worn out his welcome with Henry and Sox president Larry Lucchino. Most recently Otten is said to have angered Henry over an attempt to market fan loyalty programs. The company, Sports Loyalty Systems Inc., was built around affinity cards that allowed fans to earn points with purchases made in ballparks and with merchants. The Los Angeles Dodgers and Arizona Diamondbacks were the only teams to sign on. The Red Sox didn't, and two executives said Henry felt Otten was inappropriately using his status as a team owner to market his company. The company folded in December.

Otten reportedly has a 1 percent stake. One executive said a window is approaching soon that would allow Otten to sell or the partners to buy him out. Yesterday Otten declined to discuss that, but said: "I have no plans to leave my investment at this time." He described his relations with Henry and the other partners as cordial. And Otten, always the fan, described the signing of Japanese pitcher Daisuke Matsuzaka as one of the best deals of all time.

Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.

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