Feeding the Monster Page 13

  It didn’t take long for Otten and Werner to figure what was going on. “We were getting raked through the coals,” says Otten. “I’d been in New England doing business for thirty years and never seen anything like this. Every day, there was somebody trying to drop a dime on our heads.” Otten and Werner eventually hired a Boston PR firm in an effort to defend themselves. “[O’Donnell and Karp] spent a lot of time and money and effort trying to discredit us,” Otten says. “We needed someone who could help us go on the offensive, who could ramp up our credibility in the marketplace.”

  Not even a local media handler could help much with the press’s invective. The same day McDonough’s column appeared in the Globe, the Boston Herald’s Tony Massarotti wrote disparagingly that the Henry-Werner group had already hinted that they’d likely cut player payroll. What’s more, they wanted to renovate Fenway Park, “which most everyone knows is preposterous.” Eleven days later, a page one Herald story claimed, inaccurately, that the “Werner bid” was “losing steam” because of defecting investors. “Even as Werner’s group loses steam, New York cable tycoon Charles Dolan and a group of powerful [Boston] businessmen led by Joe O’Donnell and Steve Karp have emerged more clearly as bidding finalists, industry sources say,” the story read.*

  The growing press chorus became so deafening it almost worked. “At one point, I just said [to John Harrington and Justin Morreale], ‘We should just sell it to the O’Donnell group,’ ” says Daniel Goldberg. Dolan’s leak meant all the bidding groups knew they’d need to put up at least $695 million. “Everyone was basically at the same point [in their bids], and since the dollars were pretty much the same, we don’t need to keep fighting all this relentless press. Let’s just sell it to the local guys. And there was a general consensus that that made sense.”

  There was one problem with that plan. Contrary to what McDonough and all of O’Donnell’s other cheerleaders were claiming, O’Donnell and Karp had not put together a substantial financial package for the Red Sox. In fact, according to Goldberg and Morreale, they weren’t willing to put up enough money to buy the team. “As soon as we started pushing back on their financials, it became clear they were pretty much hoping to get the team and then raise the money once they had it in hand. Maybe they could have done that, but we didn’t want to find out,” says Goldberg. Indeed, out of all of the four most competitive bidders still left in the game—Miles Prentice, Charles Dolan, O’Donnell and Karp, and the Henry-Werner group—the O’Donnell group’s bid seemed to be on the shakiest financial footing.

  Henry, meanwhile, was reading the same newspaper articles that had succeeded in convincing Harrington, Goldberg, and Morreale to try to find a way to sell the team to O’Donnell and Karp. Just as it became clear to the Red Sox that O’Donnell didn’t have enough commitments to submit a fully financed bid, Henry and his advisors had concluded they were unlikely to get the team unless they found a way to join forces with the local favorites. Now Henry’s good relationship with Bud Selig came into play, as Henry suggested to Selig that his group and O’Donnell’s group be allowed to discuss joining forces. “We didn’t think we’d get the team otherwise,” Henry says. “And the commissioner really liked the idea. It would solve the problem of the carpetbaggers versus the local guys. It was from [Major League Baseball’s] perspective the best of all worlds, and it’d remove the controversy.” Despite a previous rule that prohibited any conversations between rival bidding groups, Harrington and his lawyers, at Selig’s urging, agreed to let the two sides speak. “The press, everybody, was just relentless about the ‘local owners,’ how could they get the team. It was constant,” says Goldberg. “We knew John Henry could obviously be approved [by baseball] because he had been approved with the Marlins”—and because Selig had told them so—“and this would solve the financial issues on the Karp-O’Donnell side. So we thought we’d try to marry these two groups and see if they could work it out.”

  In the last weeks before the final bids were due, Joe O’Donnell, Steve Karp, John Henry, Tom Werner, and Larry Lucchino met several times to see if they could join forces. It seemed, at first, like an uphill battle. O’Donnell’s advocates had been virulently disparaging the other bidding groups for months. Recently, allies of O’Donnell’s had even hired private investigators to poke around in Henry’s life. “I was getting these phone calls from all over the United States from people [the investigator] was trying to get stuff from about my personal life, old girlfriends, business stuff, whatever,” says Henry. Beyond their personal disputes, there were disagreements about where the Red Sox would play their home games: Henry and Werner wanted to try to find a way to stay at Fenway, O’Donnell and Karp were committed to building a new stadium on the waterfront, and Lucchino wanted to run focus groups and find out what the community wanted. (Karp and Lucchino clashed frequently while discussing the ballpark issue. At one point, according to several eyewitnesses, Karp began screaming at Lucchino. “We know this town, we know Boston, this is our city,” he shouted. Referring to Lucchino’s proposed focus groups, he said, “We don’t need to talk to anybody!”)

  Over a series of meetings, however, the two sides began to bridge their personal differences. Henry found that, despite everything, he liked O’Donnell and Karp. The issue, ultimately, was going to be one of control, and as he had done a month earlier with Tom Werner, Henry said that if he was going to be responsible for putting up the most money, he wanted to have the final authority over the team. With a week to go before final bids were due, the two groups assembled one last time to see if they could work things out. “At that point,” Henry says, “we’re all sitting there and I just figured, ‘Forget it. It’s not going to happen.’ ” Henry hadn’t yet realized that O’Donnell and Karp likely weren’t willing to put up the money to do the deal on their own.*

  Even as the two former rival bidding groups were meeting, John Harrington was trying to firm up support among the team’s seven limited partners, who collectively controlled 23 shares of the team, more than half of which would have to approve a new owner. Since Harrington himself owned one share, and the Yawkey Trust controlled three, Harrington needed the votes of partners who controlled at least eight more shares in order to sell the team to the bidding group of his choosing. He started with the Aramark Corporation, which controlled 7.5 shares; if Harrington was able to win the concessionaire’s support, he’d only need to sway the owner of one more share. The week the bids were due, Harrington negotiated an eight-year extension of Aramark’s food-and-beer contracts, which were set to expire after the 2003 season, and also granted the Philadelphia-based company a contract for the team’s premium services, which included Fenway’s luxury boxes. Harrington’s lawyers would say later both that the Aramark deal was simply a good business opportunity for the team that happened to occur the week the team was going to be sold and that it was an effort to ensure that Aramark would not try to block any bidding group with Joe O’Donnell in it out of a fear O’Donnell would install his own concessions company.

  Henry and O’Donnell found out about the Aramark contract while they were in what they both assumed would be their make-or-break meeting. Henry was shocked. “At that point, Joe and I are looking to buy the team,” says Henry. “In the middle of this, they make a deal with Aramark? We’re spending a lot of money to buy this team, and we don’t have the ability to determine who the concessionaire is going to be? It was outrageous.”

  Another person involved with the sale is more blunt. “They ran the sale the way they ran the team,” says a businessman who had intimate knowledge of the entire sale process but wishes to remain anonymous because he still has dealings with Harrington. “It was like, ‘Fuck you.’ Harrington was arrogant. They had such arrogance.”

  At his wit’s end, Henry apologized for getting everyone together. Since he and O’Donnell still had not been able to agree on the issue of control, he said he’d simply bow out and let Werner and Lucchino see if they could work out a deal with O’Donnell and Ka
rp on their own. Just as Henry was about to get up to leave, O’Donnell spoke up. “I want to do this deal,” he said. “I want you to be the control guy, and I want to be your partner.”

  Henry was taken aback.

  “You’re a good fucking guy,” O’Donnell said. “Let’s make this work.” Eventually, they agreed: While Henry, as the group’s largest investor, would be the team’s control person, O’Donnell would represent the Red Sox at American League meetings. On the night of Monday, December 17, the newly formed partnership set out for Boston’s Grille 23 and celebrated their union with steak and champagne.

  With just two days left before the bids were due, the groups still had to figure out how their investments would be divided up. Each group, Henry assumed, would be responsible for roughly half of the $695 million bid. It was then, with the hours ticking until the final bids were due, that John Henry and Tom Werner discovered what John Harrington had realized the week before: Joe O’Donnell and Steve Karp weren’t keen on putting up a lot of their own money. They were willing to guarantee an investment of only $75 million and, according to Henry, “hope for the rest.” “I took the position that that wasn’t going to work,” Henry says. “I wanted to see the money on the table.”

  Sometime past eight in the evening on December 19, about 12 hours before the final bids were due, O’Donnell and Karp called Henry at his lawyer’s office in New York. Throughout the day, the two groups had been exchanging faxes and emails, and as the day progressed, Henry had grown more concerned. O’Donnell and Karp kept reducing their financial commitments, and Henry knew he would need to personally come up with whatever money his group’s bid needed at the end of the day.

  Now O’Donnell and Karp said they were pulling out entirely. “We can’t live with giving up control,” the two men told Henry before asking him if he and Werner still planned on making a bid the next morning. According to sources within the Boston banking community, O’Donnell and Karp spent much of the evening placing frenzied phone calls to local banks in an effort to find someone who would guarantee the bulk of the money they needed to finance their own bid.

  It wasn’t until around midnight that Werner arrived, fresh from a dinner he’d attended with Katie Couric at the White House. President Bush, who’d gotten to known Werner when Werner owned the Padres and Bush owned the Rangers and had personally lobbied Bud Selig on behalf of O’Donnell, had been ecstatic that Werner was part of a partnership that would include O’Donnell. Now, Henry and Werner decided they had to call Selig and tell him the partnership had fallen apart. Selig was momentarily shocked into silence by the news.

  “I’m stunned,” Selig said. “Stunned. I don’t know what to say. Figure out what you’re going to do and call me back, will you? I’m going to sleep on the couch so I don’t wake [my wife]. Call me back.”

  With less than nine hours left before bids were due, Henry now had to raise hundreds of millions of dollars—the money he’d thought O’Donnell and Karp would be putting up—or lay it out himself. After staying up all night figuring out what to do about their bid, Henry and Werner headed to New Jersey’s Teterboro Airport, where they took Henry’s plane to Boston. A frenzied three weeks was heading into its final hours.

  *A Dolan-owned Red Sox team would provide the “wildest chapter [yet] in the history of the Red Sox–Yankees rivalry,” wrote Peter Gammons at the time. Dolan would give “Red Sox fans an owner who hates The Boss more than any of them hate any Yankee.”

  *In 2004, O’Donnell rechristened his company the Boston Culinary Group.

  †It’s likely hard for people not from Boston to understand the power McDonough had in the city. When he died at age 67 in 2003, his body was laid out in FleetCenter, where the Boston Celtics play, so people could file by to pay their respects. Boston mayor Tom Menino, Massachusetts governor Mitt Romney, and National Football League commissioner Paul Tagliabue were among those who came.

  *Throughout much of the sale process, the Herald was the hardest on the Werner-Otten, then the Henry-Werner, bid. Within Boston media circles, some have assumed this was because Herald publisher Patrick Purcell was upset about the prospect of the investment of The New York Times Company, which owns The Boston Globe.

  *Justin Morreale and Daniel Goldberg were of the opinion that O’Donnell and Karp didn’t have the money to do the deal. People close to O’Donnell who are familiar with his financial situation insist he simply did not want to put up so much of his personal fortune. Neither O’Donnell nor Karp responded to repeated verbal and written requests for comment for this book, although close associates of both men did speak to me on background. In March 2006, Boston magazine listed Steve Karp as tied for the eighth richest Bostonian, with an estimated net worth of $1.6 billion. Joe O’Donnell was listed at number 24, with an estimated net worth of $725 million.

  Chapter 12

  December 20, 2001

  ON THURSDAY, DECEMBER 20,The Boston Globe’s lead story announced that, despite the fact that final bids weren’t due until 9:00 A.M., the Red Sox sale had been all but finalized. “Boston Red Sox chief John Harrington will recommend today that the team’s next owner should be a newly combined group led by two former rival bidders, Florida financier John Henry and Boston Concessions head Joseph O’Donnell, according to an executive close to the sales process,” Meg Vaillancourt and Steve Bailey’s article began. Daniel Goldberg read the piece on his way in to his office. Vaillancourt and Bailey, he thought, seemed to have the story pretty much right. Frank McCourt and Jeremy Jacobs had both dropped out in the days before the final bids were due, and Goldberg assumed that a joint Henry-O’Donnell bid would at least match any of the other offers. When he got to work, Goldberg was going to assemble the final bids before bringing them over to the Red Sox offices at Fenway Park, where the limited partners would vote on who would be the next owner of the team.

  Soon after arriving at work, Goldberg heard from Creighton Condon, who called to say that the proposed merger of the Henry-O’Donnell groups wasn’t going to happen, and that Henry and Werner were raising their $406 million bid for the Yawkey Trust’s share of the team to $410 million, to go along with their $250 million bid for the limiteds’ shares. Including the team’s $40 million in debt, that meant their total bid would be for $700 million, more than twice the record $320 million Larry Dolan had paid for the Indians almost two years earlier. A little while later, Charles Dolan’s lawyer called to increase his bid for the limiteds’ shares to $250 million from $230 million. Dolan was also bidding $410 for the Trust’s portion of the team, so he was at $700 million as well. Miles Prentice also had a bid in, for $750 million, but Prentice’s bid was contingent on his firming up his financing with the New York–based Quadrangle Group and the media giant Comcast. After going over Prentice’s offer sheet, Goldberg became concerned that Prentice, despite offering the most money, hadn’t followed the rules of the sale. “He could have bid two billion dollars and it wouldn’t have been acceptable,” he said later that week. Some of Prentice’s funding had contingencies and not all of his investors had been preapproved, a requirement in the sale process.* “This was a cash-only sale, and all of the bidders had to prove they had their financing in place,” Goldberg says. “Prentice clearly didn’t.” Goldberg was only waiting for word from the O’Donnell group. Finally, he checked his voicemail. He had a message waiting.

  “Dan, this is Kitt,” a voice said. Kitt Sawitsky was one of O’Donnell’s lawyers. “It’s about one on Thursday morning. I want you to know that the discussions with Werner and Henry’s group have fallen apart essentially on the controlling interest and we don’t think that they’re going to be revived, so that’s over.” Goldberg knew that already; now, he assumed, he’d get O’Donnell and Karp’s bid. He was wrong.

  “We’re also sending you a letter revoking our offer”—O’Donnell and Karp had submitted their own bid for the team on Monday, December 17—“both by hand and fax, and if you have any questions, feel free to call me in the morning.”<
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  “There was no explanation,” Goldberg says, although he assumed the pair had been unable to come up with enough money to cobble together a bid. He told Justin Morreale what had happened, and the two men drove over to Fenway Park to go over the final bids with John Harrington. At eleven o’clock, Harrington began his presentation to the team’s limited partners by explaining that the Henry-O’Donnell partnership had fallen apart, and that Joe O’Donnell and Steve Karp had withdrawn their bid for the team. He then gave a brief summary of the three remaining bids. At this point, Harrington decided not to make a recommendation himself; instead, he went over the contingencies and conditions of the various deals, then left the room to let the partners discuss the situation alone.

  The limiteds began by focusing on the Prentice bid. Initially, there was a desire to try to find a way to make it work; after all, the $50 million more would mean a significant windfall for everyone who owned a stake in the team. (During the day, Prentice called and actually increased his bid.) “The limited partners are sophisticated business people,” said Sam Tamposi, a New Hampshire businessman whose family owned about 2.4 percent of the team. “We certainly did not want to leave any money on the table.” But they came to agree with what Goldberg and Morreale had already decided: The absence of binding financial commitments attached to Prentice’s bid made it too risky. In a letter Tamposi wrote about two weeks after the sale, he said that the partners decided that day that if they “gamble for the long dollar, we subject ourselves to the vagaries of financing that might never come together…a lengthy approval process or possibly lack of approval, and a host of other…pitfalls and problems that might occur over time.”