Friday, April 20, 2012
Fenway renovations paying off immensely
By Kristi Dosh
It’s hard to believe, with all the celebrations surrounding Fenway Park’s 100th year, that a mere 10 years ago many people were talking about tearing down the ballpark. The thinking was that the new Boston Red Sox owners would need a modern stadium to generate the kind of money that would make buying the team a smart business move.
Yet Fenway was saved from the wrecking ball and modernized by a $285 million, 10-year renovation that also added 3,500 seats. The modernization kept the park’s historic bones, though, so much so that last month, Fenway was added to the National Register of Historic Places.
Lest anyone think that’s merely a feel-good honor, the designation means millions of dollars -- about $40 million -- to the Red Sox organization. The designation makes the Red Sox eligible for federal tax credits equal to 20 percent of certain funds spent on the stadium preservation and renovations -- even though they occurred over the past 10 years. The team was already eligible for a 20 percent state tax credit, worth another $40 million, $11 million of which it received during the course of renovations. Future renovations also could receive tax credits.
The ownership consortium led by John Henry has made out extremely well on its investment in 2002. In '02, Forbes estimated the team’s value at $426 million. Today? It’s worth an estimated $1 billion.
Many teams have seen such increases due to lucrative local television deals and co-owned networks, like the Red Sox’s NESN. But the Sox's growth is more pronounced when considering revenues and operating income, which includes categories like ticket and sponsorship income. In 2002, Forbes estimated such revenue at $152 million; today, it’s $310 million. Operating income no longer has the team in the red. In 2002, the team lost an estimated $11.4 million. In its latest valuations, Forbes lists operating income for the Red Sox at $25.4 million, good enough for seventh in Major League Baseball.
The National Register of Historic Places designation does carry some restrictions for the team; any work done to the park in the future must be reviewed to determine its effect on the historic nature of the park. But the designation doesn’t carry the heavier restrictions of national landmark status.
Wrigley Field is eligible for such a designation, but team owners have not pursued it.
Unlike the Red Sox, the Cubs have said they have been hamstrung by Wrigley’s local landmark status. For example, while the Red Sox were able to increase revenue by placing signage on the Green Monster in recent years, Wrigley’s ivy-covered walls and center-field scoreboard are protected in a way that prohibits advertising. The team estimates it loses about $30 million a year as a result.
Although the Red Sox do not have local landmark status, the team did submit all renovation plans to the Boston Landmarks Commission for review.