From the stadium to the race track?
Red Sox owner reportedly in talks to buy stake in Roush NASCAR team
John Henry is shopping for a cool new toy to go with his baseball team, the Boston Red Sox, and his 164-foot yacht, the Iroquois. And he may have found it.
Henry, a well-known NASCAR junkie, was in Loudon, N.H., for the Sylvania 300 Sunday as a guest of Roush racing team owner Jack Roush. Sitting on top of the pit box in Chase contender Mark Martin's AAA Ford Fusion pit, Henry, a data geek, must have been in heaven: A front-row seat to the No. 1 spectator sport in America, access to timing scoring information used by the race team and a DirecTV satellite feed of the race broadcast. He and Roush, his host, wore identical straw hats.
The two may soon be on the same team. The Red Sox ownership, through its fast-growing sports marketing subsidiary, the Fenway Sports Group, has been looking for a way into the NASCAR money machine. Roush may be the ticket. But it won't come cheap.
According to multiple executives briefed on the negotiations, Fenway Sports Group is in talks to buy as much as 50 percent of privately held Roush Racing, the class of NASCAR, for something north of $50 million. No deal is imminent, these executives cautioned, and the negotiations, which have started and stopped before, could still falter.
Both the Fenway Sports Group and Roush Racing confirmed the talks, but both said there is no agreement. Geoff Smith, president of Roush Racing, called the Red Sox unit "attractive partners" because of its marketing capabilities, particularly in the Northeast. Said Mike Dee, president of Fenway Sports Group: "If these discussions are fruitful, we will be happy to talk about them."
Henry is a racing nut. He co-founded a Bedford company called iRacing.com Motorsports Simulations, which is developing the next generation of a computer-simulated racing game, and spends hours "simracing" in his spare time against other executives in a league they call "Red Sox Racing." He has been spotted often at NASCAR events.
In Roush, Henry and his partners would be buying into NASCAR's top team. Last year Roush-owned cars won 15 races -- more than any other team in the Nextel Cup Circuit. This year Roush has five cars competing in the Nextel Cup, and two drivers, Matt Kenseth and Martin, in the running for the championship. The two finished 10th and 11th in Loudon last weekend as Henry looked on.
Roush is a big business. Its parent company, Roush Industries Inc., based in Livonia, Mich., near Detroit, has 2,000 employees worldwide and sales last year of $480 million. The company was founded in 1976, and today includes engineering, product development, and manufacturing for the automotive and aerospace industries. The racing business, with sales of about $190 million and 500 employees, is run out of North Carolina. Jack Roush, who is 64, narrowly escaped death five years ago when he plunged his private plane into an Alabama pond.
The Roush deal is part the strategy by Red Sox ownership -- a partnership called New England Sports Ventures -- to diversify its revenue beyond baseball and New England Sports Network. Fenway Sports Group is a key to that effort. Its best-known client is Boston College's sports teams; it also negotiated a deal this year for Lumber Liquidators to become title sponsor of a truck for the NASCAR Craftsman Truck series.
For the Red Sox, these non-baseball opportunities are particularly valuable because they are not subject to Major League Baseball's revenue-sharing tax. But they also raise dicey questions for Henry & Co. For instance, if the Red Sox owners can spend $50 million on a NASCAR team, why can the Yankees outspend them by $75 million a year for players? And why should taxpayers kick in for improvements around Fenway Park?
Some of the limited partners have been asking questions, too. If the Red Sox can spend big on a NASCAR team and Kenmore Square real estate -- thanks to revenue that has exploded by $100 million since Henry bought the team in 2001 -- why can't they make distributions to the partners? No one has left the partnership since Henry put the group together, but at least one limited partner has recently explored selling his shares. (The New York Times Co., which owns the Globe, holds the second-largest stake in New England Sports Ventures, behind only Henry.)
All reasonable questions. Gentlemen, start your engines.