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Globe Editorial

A Red Sox lesson for investors

December 20, 2008
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JOHN HENRY and his colleagues in the Boston Red Sox front office gave the nation's suffering investor class a timely lesson this week in the art of preserving both principal and principle.

When Henry, his partner Larry Lucchino, and general manager Theo Epstein flew out to Dallas Thursday, their purpose was to finalize a deal that would bring slugger Mark Teixeira to Beantown for $23 million or so a year for eight years. But then, as often happens with clients of the devious super-agent Scott Boras, something went awry. Henry explained the mishap in an e-mail to the media, saying that the Sox brain trust broke off what had been positive talks with the Gold Glove first baseman "after hearing about his other offers."

Translated from the original euphemese, this likely indicates that the Sox brass were fed up with a Boras attempt to extract more millions or more years from the Fenway franchise by creating the illusion of a bidding war. So Henry, no doubt smelling something fishy, kept his wallet in his pocket and walked away.

This is what all those well-heeled victims of Bernard Madoff's Ponzi scheme should have done. They too should have seen the con for what it was.

Boras has rooked the Sox before. He got Manny Ramirez out of town when the team could have kept him on for two more years. The impulsive home-run hitter played restless, the Sox traded him, and Boras can now get his slice of a new contract for Ramirez.

This time around, Henry and partners calculated risk and reward in the way Boras was structuring the Teixeira deal. And they did what buyers of securitized subprime mortgages and credit default swaps should have done during the bubble years: By refusing to be bamboozled and sticking to their principles, they preserved principal.

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