Sox executive says he's wary of weak US economy
A top executive for the Boston Red Sox baseball team, vying to repeat as World Series champions, said this week that the struggling US economy should not affect revenue this year, but he is wary about its future effects.
"The 2008 impact is minimal at worst," said Red Sox chief operating officer Mike Dee (right). "Looking forward, we are certainly cognizant of what's going on."
He said much of Red Sox revenue is locked in through sponsorship deals, and ticket demand remained strong this season. Boston is playing the Los Angeles Angels of Anaheim in the first round of Major League Baseball's playoffs.
Dee is also president of Fenway Sports Group, which owns a 50 percent stake in the successful Roush Fenway Racing team in the National Association for Stock Car Auto racing (NASCAR), as well as other businesses. Two of the racing team's drivers are among the leaders in the race for the NASCAR championship.
Fenway Sports Group has seen double-digit revenue growth every year since its formation in March 2004, as well as a few years of triple-digit growth, said Dee. He declined to reveal specific numbers, but said FSG has been cash-flow positive from the start.
Earlier this year, Forbes ranked Roush Fenway as the second most valuable NASCAR team at $313 million, and the Red Sox the third most valuable baseball club at $816 million.
Both FSG and the Red Sox are owned by hedge fund manager John H. Henry. The New York Times Co., corporate parent of The Boston Globe, owns a minority stake in the team's parent company.
The key in a weak economy will be controlling costs, Dee said. However, the Red Sox will be affected less than other sports properties because of its popularity in the New England region while Roush Fenway's success will insulate it some.
"In difficult times, leading brands are the least impacted," Dee said in a telephone interview. "In the racing world, there's no shortage of sponsorship support and interest for all the cars that are running in the top 15."
Dee said there are areas where Fenway Sports Group, which also owns a minor league baseball team, and consulting and representation businesses, may look to expand.
"There's undoubtedly going to be hard times ahead over the next couple years across the world of sports and entertainment," he said. "With hard times come opportunities."
While there are no plans to increase the stake in its NASCAR team, Dee said the company is looking to do more in racing, including possible marketing or representation deals.
"We're interested in expanding our footprint in racing," he said, pointing to the company's lack of knowledge in such areas as open-wheel racing, like the IndyCar series.
Dee agreed buying another minor league baseball team makes sense, but team valuations have become "a little crazy" over the past two decades. Representing or even buying top entertainment events also would interest him.
Fenway Sports Group's sports consulting business has been its fastest growing segment, with more than 15 corporate clients, including Major League Baseball's media unit, Dunkin' Donuts, the Canton-based coffee-and-baked goods chain; Verizon Communications Inc.'s wireless business; and EMC Corp., the Hopkinton data storage giant, said Dee.
To further boost that business, Fenway Sports Group recently opened an office in San Diego with hopes of picking up deals on the West Coast.
"We're not viewed -- in part because of our association with the Red Sox -- as being a national company," he said. "We thought it was an opportune time to plant a flag on the West Coast."
Major League Baseball controls Red Sox marketing and licensing rights outside the New England region.
FSG also has a long-term deal to handle marketing and sponsorship rights for Boston College, and is interested in representing college football bowl games, Dee said. (Reuters. File photo of Mike Dee: John Bohn, Globe staff)
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