Prospectus Q&A: John Henry

John Henry took over as owner of the Boston Red Sox after the 2001 season, replacing outgoing chairman John Harrington. He made news this off-season by hiring Bill James to the front office and naming 28-year-old Theo Epstein as general manager. The former commodities trader made his fortune by following market trends and leveraging his interest in math. He recently chatted with BP about his goals for the Sox, his views on ownership and his thoughts on Red Sox Nation.

Baseball Prospectus: After the extended search, what made you decide to choose Theo Epstein for GM?

John Henry: All along we discussed Theo as a possible candidate and believed with conviction that he would one day become the general manager of the Red Sox. Theo was very keen on J.P. (Ricciardi) and on Billy (Beane). Even though their relative youth would have perhaps greatly prolonged his ascension to the helm, he was adamant about pursuing both of them. He put his personal ambitions aside for what he saw as the best interests of the Red Sox organization. But when J.P. and Billy were finally out of the picture, we saw Theo, himself, as the best choice for the long-term. We knew if we brought anyone else in, that person would have been in the position of helping prepare Theo for the job. We knew Theo was very close to being ready. On the day before it was announced we all agreed that making the transition now was the best option. This was really Larry's (Lucchino) call and he knew he could bring in enough of a brain trust to surround him that Theo could essentially act as the chairman of the brain trust and make the final decisions that needed to be made.

Theo is a great listener. We knew he didn't have an ego that would preclude him from listening to more seasoned baseball professionals. We also knew his intelligence, philosophy and instincts would enable him to make informed decisions in our long-term best interests.

BP: Do you think Epstein needs to do more than a better-known GM would to negotiate with players and agents initially, to overcome issues of age bias on the other side of the table?

JH: No, not at all. However, by his very nature he will do more than just about anyone else. He is indefatigable. My greatest concern for him is that he will work considerably more hours than he should over the coming years.

BP: Epstein comes from a player development background. Meanwhile the Sox farm system has struggled to churn out impact players in recent years. Does Epstein's hiring indicate you plan to invest more heavily in player-development or other "unseen" but potentially beneficial areas?

JH: Yes, we have voiced our commitment to this from day one.

BP: In the Yankees you obviously have a formidable opponent, both revenue- and personnel-wise. What kind of new, high-risk, high-reward areas are the Sox looking at to find advantages over the Yankees?

JH: In every transaction you must attempt to lower your risk and increase your potential to succeed. Every deal, every decision at this level has risk. You cannot shield yourself from risk. You cannot win with a long-term, conservative tone.

BP: By now I'm sure you've felt the brunt of the Boston media's presence. How have you dealt with that media pressure? Is it something you enjoy, or just tolerate?

JH: It is a part of the landscape and a part of the job. It is the direct result of the passion for baseball in New England – the very reason we sought to get involved here. With the Marlins and with the Red Sox, I have had a very open and satisfying relationship with the media.

A lot of the criticism of media in sports, entertainment and in politics is misplaced in my opinion. Many people in the spotlight, so to speak, don't often think about the responsibility journalists have to their constituency – in our case to our fans. The media is the conduit to those who are paying for everything – the fans. So I always respect the right of the media to have access and to try to accurately get out to their readers, viewers and listeners what is happening.

BP: The Red Sox have in recent years forged a bad reputation for medical care of its players in recent years after several botched diagnoses and general complaints. How can the team overcome its bad reputation for medical care of their players?

JH: We have heard this and we have addressed it – I hope fully. There is too much riding on the health of players to have issues in this regard and I believe we addressed that in 2002.

BP: When you came into the Marlins' picture, were you informed of Wayne Huzienga's position, that he'd control stadium revenue and make Marlins' ownership a difficult proposition, profit-wise? Assuming you did, why did you buy the Marlins, knowing the extremely difficult situation the franchise was in?

JH: Yes, I was very aware of the situation. But you cannot blame Wayne for the economic mess that exists with the Marlins. It was a mistake to place a franchise in South Florida in a football stadium without ballpark revenues and without a roof. Wayne had the same lease with the Robbie family that I had with him. I knew going in that the future of the franchise was dependent on a public/private partnership to build a ballpark. What I did not realize was that each year one person in the state hierarchy could single-handedly defeat you even if you had the votes, which we did, in the legislature. The last year after we won by a huge margin in the house, one man blocked us from getting to a vote in the senate. It was very, very frustrating and unfortunate. I also learned that those without a constituency can make a name for themselves simply by opposing you even if they were privately comparing what they were doing to a random, drive-by shooting.

Overall, however, the three years I spent owning the Marlins were terrific. Ultimately, we could have built our own stadium, and we discussed and studied doing so, but that would have consigned the franchise to huge mortgage payments that would have eliminated any chance of competitiveness on the field for three decades.

BP: Were you promised future ownership of another team by the commissioner as a future perk for taking on the Marlins?

JH: No. The commissioner actually preferred someone else at the time. But after he got to know me and worked with me he thought I was a good owner down there. He certainly did everything in his power to help us get a ballpark built there. He was as frustrated with the process as I was.

BP: How involved are the owners in reviewing the applications of potential new owners to buy teams? Is there some kind of clause that makes following the commissioner's party line (i.e. lobbying for publicly-built stadiums) a pre-requisite for team ownership?

JH: No, not at all. The owners' first concern is whether or not an incoming owner has the financial wherewithal to operate and backstop a major league franchise. Once that concern is satisfied, owners are researched to find out what their history of community involvement has been, what abilities they have organizationally, what their business plan for the franchise is, how the purchase is structured, who are the partners – all of this in addition to serious inquiry into the ethical, legal, media, credit, related-party backgrounds etc. Many factors are looked at over a period of many months and more often than you might imagine, people are turned down as prospective owners even after they have a deal to purchase a team.

BP: What's your vision of baseball-franchise ownership? Is it just another business, to be run as a bottom-line operation, or does it come with a different set of rules?

JH: Baseball certainly has a different set of rules from other businesses. How many businesses require you to pay highly significant sums to your competitors so they have a better chance to beat you? Running a baseball franchise is, as the commissioner has pointed out to me, more like running a social institution than a business. The community does not care about the bottom line. The community cares about the impact you make. They primarily care as we do about winning, but again they also care about winning off the field. In New England, the Red Sox are part of the basic, everyday fabric of life. The mood of the city of Boston is different the day after a win than it is the day after a loss. It's that much an integral part of life. I am extraordinarily fortunate to be a part of something that matters so much to so many, that brings so much passion and enthusiasm.

BP: When you invested in the Yankees, then the Marlins and now Red Sox, did you approach each one as another business proposition, or do you see the benefits as more intangible (i.e. personal enjoyment, making a bigger name for yourself outside Wall Street, etc.)?

JH: None of those ventures were a business proposition for me. I have a fiduciary responsibility to our partners, but our partners are unified in the desire to win a championship. When we went out to obtain Cliff Floyd, Alan Embree and Bob Howry last summer despite the fact we were facing a large loss, not one of our investors hesitated to push for it. No one objected. In fact, they were very excited about the moves.

We'd like to make money. Who doesn't want to make money on an investment? But that's not what drives you to own a team or drives you after you own a team. We want to bring a championship home to New England. That drives every person from the ushers to the chairman. We're all a part of an epic struggle that is played out everyday from mid-February when camp opens until the busy off-season begins in November right back through to mid-February again. There is no rest until we win. And come to think of it, when we do there will be no rest thereafter. It is an epic challenge, again. I feel very, very lucky to be a part of it.

BP: How involved do you intend to be in player matters? Do you feel team owners should be more involved in consulting on personnel decisions with the GM and the rest of the front office?

JH: The important thing is to have the right people making these decisions. I have certain strengths with regard to financial analyses and these days most major decisions involve those types of analyses, so no doubt I will play a role. But I have very little expertise in analyzing players and trades from a baseball perspective. I am well aware of my limitations. I believe that awareness, more than any other single factor, has made me successful.