This is the first of a three-part series examining the function and structure of Red Sox ownership and governance.
How's this for a formula?
1) Take a baseball team that inspires passion bordering on zealotry.
2) Put it through hell (Take 1), the most spectacular September collapse in baseball history. Fire the most successful and perhaps popular manager in franchise history.
3) Hire perhaps the most controversial manager in modern franchise history as his replacement.
4) Put it through hell (Take 2), the worst season suffered by a proud franchise in nearly 50 years. Trade away several centerpiece players in an acknowledgment that the entire roster blueprint had gone horribly awry. Fire the other manager.
5) At the conclusion of that second, year-long exploration of the underworld, amidst an organizational effort to address the mistakes of the recent past and move forward, watch as the most successful (now-ex-)manager in Red Sox history co-authors a book in which his attempts to shed some illuminating history on the organization's successes during his tenure are completely overshadowed by one bull's-eye after another that he fired at the dunk tank in which his former employers are sitting.
Back in January and February, the leaders of the Red Sox ownership group -- principal owner John Henry, chairman Tom Werner and CEO/president Larry Lucchino -- faced this uncomfortable reality. And to a degree, they will face it again starting on Thursday, when Terry Francona returns to Fenway Park as the manager of the Indians.
There is an inevitability to the prospect of another round of very similar questions and curiosities -- Do the Sox owners care? Have you talked to your former employers? Did the Red Sox pay too much attention to revenue streams as opposed to wins and losses? -- to the ones that prevailed four months ago, when "Francona: The Red Sox Years" was published and leapt atop the New York Times bestseller lists. Indeed, it's already begun.
Yet as head-turning as some of the anecdotes in the book authored by Francona and Boston Globe columnist Dan Shaughnessy proved, they didn't necessarily afford an understanding of how the Red Sox actually operate and, specifically, the role (in theory and practice) of the much-criticized owners.
Perhaps the fact that there isn't necessarily a clearly defined public sense of the proper roles of owners in governance and operation of a sports team helps to explain why criticisms directed at them can border on paradoxical. In the case of the Sox owners, this offseason brought alternate -- or sometimes simultaneous -- charges that they were too removed from the running of the baseball operation and that they were clumsily asserting themselves too frequently in a fashion that created the near-ruination of the franchise on the field.
"How can you meddle too much if you're distracted?" Henry mused. "Someone said you've had three managers in three years. Well, yes, but we've also had three managers in 10 years."
Who's right and who's wrong? It's almost impossible to say without first understanding the nature of the ownership group -- its structure and intended function as it relates to the Red Sox.
Here, then, based on numerous interviews conducted over the last three months, is an attempt to demystify the Red Sox ownership group.
THE INVOLVEMENT OF JOHN HENRY AND TOM WERNER
There is little question of Lucchino's involvement in the Red Sox. He is ultimately at the top of the food chain, responsible for all matters related to the club whether in terms of baseball operations, the fan experience, marketing or Fenway Park. The precise roles of his two bosses are slightly less obvious.
Werner and Henry did not start as partners in pursuit of the Red Sox. While Werner was indeed trying to organize a group to buy the Sox, Henry was focused on trying to acquire the Angels in the summer of 2001. Both were working with Lucchino -- whom they had admired from afar in their prior ownership capacities -- in their efforts to acquire those respective franchises.
But at a certain point, when Henry recognized that a deal for the Halos wasn't gong to happen, he met with Werner to discuss the possibility of collaboration on the pursuit of the Red Sox. The grounds for partnership became evident immediately, driven both by the natural affinity between the two men as well as the size of the investment that would be necessary to acquire the franchise and its 80 percent share of NESN.
Multiple industry sources suggest that Henry has an ownership stake of approximately 40 percent, with Werner originally having been at less than 10 percent (increasing to approximately 10 percent through subsequent purchase of shares). Presently, those sources said, Werner is not the second-largest partner in terms of shareholdings. Lucchino has a much smaller ownership stake than either of them.
In terms of governance of the Red Sox, every sports league requires there to be one person assigned final say in an organization -- there needed to be a principal owner, and Henry (the largest investor in the club) was it, with Werner (who was the lead figure in NESV before Henry joined it) serving as chairman of the Red Sox. Still, the working relationship between the two is such that they engage in constant dialogue and reach a consensus on nearly every decision involving the Red Sox.
"When I met Tom, we really realized over the course of two or three days that we hit it off right away and realized we would enjoy working together," said Henry. "The rules say you have to have a control person, so I was the control person. But on a day-to-day basis, over the last 12 years, we really have run Fenway Sports Group as a partnership -- the two of us in conjunction with our partners, who I think get more involved and more information than any partnership in sports history -- we really do run it as a partnership, which is what's made it so damned enjoyable. And we have different strengths, so we work on different things, but so much of what we do is working together.
"We've never had a disagreement. We have had areas where we've had differing opinions on some issues, but if I have a difference with Tom on something, I'm determined and he's determined to see the other viewpoint because we have tremendous respect for one another. We pretty much do everything together."
Indeed, it is telling that Henry and Werner share an office at JetBlue Park in the team's spring training facility in Fort Myers, Fla. While they have separate offices in Fenway Park, the nature of their work together is comprehensive. In some ways, for Werner, it evokes the model that he's experienced in his life as a television producer.
"I come from a school of having been in a collaborative business all my life. I've made extremely successful television shows, and it's a very collaborative medium," said Werner. "You have to have good writers, you have to have good actors, you have to have good editors. You have to have a team. So, I really believe in the team approach, but in that team, people need to know what their roles are and have it very clear.
"It would be a mistake for me to go into the scouting room and tell Ben Cherington that, based on this video, I think this athlete should be drafted as opposed to that athlete. You should hire people who are the best at what they do and give them the opportunity to succeed or fail. There have to be measures by which you value a performance, but you have to give them the opportunity to succeed," he said. "That doesn't mean that you can't set parameters or ask questions -- and that's not just in the budget sense, though everyone should operate within a budget -- but it's also, what is your philosophy?"
Over time, as Fenway Sports Group has grown into a much larger entity than the original corporation -- New England Sports Venture -- that purchased the Red Sox and NESN, Henry and Werner have both invested an increasing amount of their time and energy into the function of the Red Sox and FSG. Werner's involvement in television has dwindled dramatically; Henry actually closed his financial business at the end of last year.
Werner was subject to some of the most withering scrutiny in Francona's book, portrayed as a marginal figure without a meaningful role in the organization. And there are those who have worked with the Red Sox on a number of issues, from financial to baseball operations, who concur in that assessment, particularly as it pertains to baseball operations.
"He has no relevance to baseball operations," said one industry source. "He's fighting to be relevant. He doesn't have a defined role."
Others take umbrage at such characterizations, on multiple levels. First and perhaps foremost, because of the nature of his collaboration with Henry, Werner's imprint exists, in some respect, in anything that might be publicly viewed as a matter involving the Red Sox principal owner. The idea of separating the operational responsibilities of Henry and Werner, suggest many in the organization, is misleading, the notion of his irrelevance false.
"The characterization I've seen in the book of Tom Werner is completely unfair and unwarranted and I think mean-spirited in many ways," said Red Sox COO Sam Kennedy. "Tom is the guy who, first of all, put the group together to acquire the Red Sox and NESN from the Yawkey Trust. He had the idea that the platform this group was built on could save Fenway Park.
"Tom has been an owner and an operator of a Major League Baseball club since 1990. I attend MLB owners' meetings. He's one of the most respected guys in all of Major League Baseball. He worked with commissioner [Bud] Selig to create the wild card. He has been the driving force behind the Red Sox Foundation. He is involved in every single business, baseball and community decision that gets made here with the Red Sox. To say that he is a marginal figure, it's inaccurate and not true. It was disappointing to read that. I think John alluded to this, it's just not true. I can tell you, he spends a lot of his waking hours on Red Sox matters -- baseball, business and community -- and he's been a great resource for Larry, for me, for John."
Werner, according to one industry source, has played a role as "a social broker in the organization," with another industry source suggesting that he played a key role in bringing back former GM Theo Epstein after his resignation in 2005.
While there is a hierarchy inside of the Sox that features Henry at the top of the organization chart, it is telling, perhaps, that for Fenway Sports Group (the umbrella organization of which the Sox are a subsidiary), Henry and Werner are co-managing partners, underscoring the depth of their collaborative approach. Together, they take responsibility for putting in place the various presidents of the different subsidiaries who have day-to-day operational control of FSG's holdings.
Meanwhile, Werner, Henry and Lucchino are largely responsible for representing the Sox at a league-wide level, with different responsibilities to various Major League Baseball committees and boards.
"There are local issues, but we fight every day on behalf of the Red Sox on a number of Major League Baseball issues," said Werner. "They are many and they are complicated. John, Larry and I serve on multiple boards in baseball -- I serve on enterprises and on the MLB Network board, John is on the executive council and the BAM board, Larry is on the international committee. So we're not just -- I don't know if the word is consumed -- but we're not just working on local issues in New England. We're dealing with Major League Baseball rules, and some of them, as you can imagine, are quite thorny."
Werner suggests that he and Henry meet with members of the baseball operations staff in the Red Sox offices on a regular basis, perhaps not as frequently as weekly, but regularly. Though Henry and Werner work remotely the majority of the time, they both maintain offices inside Fenway Park.
"I have [former Red Sox CEO] John Harrington's old office. The day he turned over the reins, he was sitting at the desk and handed me his pen with a warm smile," Henry wrote in an email. "I still have it. Red ink. I work more of my hours though in my home offices in Florida and in Brookline. But there is nothing like driving into Fenway Park to go to work. I am thankful every day that I get to do that. It's one big reason why these rumors of a potential sale of the Red Sox are so laughable. At the risk of a double negative, I don't know of anyone, personally, who works for the Red Sox that doesn't feel extraordinarily blessed to be working there."
Henry suggests that his passion and enthusiasm for his job remains undiminished in the face of the criticism that he has faced. While the principal owner is described as having a "genuine and endearing enthusiasm" for baseball, a lament offered by multiple individuals who have worked with him is that his unassuming and sometimes socially reserved presence comes across as "an absence of assertiveness in managerial decisions."
"He has no leadership skills and no people skills," noted one person who has worked with him. "If he'd just returned Tito's calls, the book would have been written differently. He extended an olive branch but then let it fall from the tree instead of building upon it. I think that's a character flaw."
Henry has shrugged off most of the questions about his personality, suggesting that in the aftermath of the book, he felt lucky to have been subject to less brutal (and, in his view, unfair) criticism than either Werner or Lucchino.
In terms of leadership, Henry entrusts considerable responsibility to Lucchino, who as club president and CEO can be viewed as most responsible for the operations of the club.
"I'm the day-to-day working stiff. I'm the guy who goes to work every day at Fenway Park. I'm proud of that fact," Lucchino said of his role in relation to Werner and Henry. "We each have distinct titles and roles, yet work very much as a unit governed more by consensus than by fiat."
That said, in the aftermath of the Sox' struggles over recent years -- which featured, Henry suggests, a philosophical drift away from the core principles that led to the Sox' greatest successes -- the principal owner suggested repeatedly that he has started to take a more "hands-on" approach to the circumstances currently facing the organization.
"We have a baseball organization that extends all the way to the Dominican Summer League, the Gulf Coast League and Instructional League. I'm statistically oriented, so I follow what goes on even at those levels," Henry wrote in an email. "But what's most important is to be focused on decisions that are important to our success on the field for the long term. I've always done that. As results haven't been what we've wanted over the past couple of years, I've questioned a lot more than I have in the past. I like what I am seeing and hearing this year."
THE IMPACT OF OTHER LIMITED PARTNERS
Henry and Werner have the titles. While there is a wealth of highly regarded businessmen among the team's constellation of limited partners -- an ensemble that Henry characterized fondly as getting "more involved and more information than any partnership in sports history" -- that group has limited impact on the operations of the Sox.
The limited partners do vote on capital issues such as Fenway Park renovations and purchases of Fenway Sports Group assets, whether real estate or something larger such as the Liverpool Football Club. Still, according to sources, the partners have no real impact on day-to-day decision-making.
The limited role of the partners represents in no small part on the size of the group. In addition to Henry, Werner, Lucchino and vice chairmen Philip Morse and David Ginsberg, there are 14 limited partners. Ultimately, suggested one team official, it would be too onerous to try to involve the partners on day-to-day matters related to the operation of the club.
"It's unrealistic to think we would try to run the business with a committee approach," said the official.
Said another: "The partners are like a third party. It's irrelevant if there's dissent."
Henry himself acknowledged in February that some of the Red Sox partners were dissatisfied with the involvement of Fenway Sports Group -- the umbrella entity that includes the Red Sox as part of its holdings -- in the ownership and running of Liverpool FC.
Still, there are aspects in which the club does rely more heavily on partners. For instance, Henry noted that one of the partners plays a considerable role in the running of Liverpool.
WHAT IS THE PROPER ROLE OF OWNERSHIP IN THE RUNNING OF A BASEBALL TEAM?
It's a trick question.
There is no singular definition of a proper role of an owner in the running of a baseball team, a notion underscored by Henry's diversity of experiences in an ownership capacity. His entry into baseball ownership came as a limited partner with the Yankees in 1991, when they were governed by the top-down model of George Steinbrenner. When Henry bought the Marlins in 1999, he had no partners, and so he organized "partnership meetings" on a quarterly basis with season-ticket holders.
Then, finally, he ended up in Boston, part of a governing triumvirate with more than a dozen limited partners who meet periodically but who, operationally, have little say in the day-to-day operations of the franchise.
Those are three very different dynamics that prevailed with regard to Henry's relationship with a club, something that hints at a broader truth -- namely, that there is no single definition of what a principal owner does or should do. Rather, every ownership situation is distinct, a reflection of organizational structure, experience in baseball, the challenges unique to a given marketplace, the personalities involved.
"There is no one single best role [for ownership]. There is no simple formula regarding the proper role of ownership," said Lucchino. "It varies from city to city, from situation to situation, depending on the problems confronting the franchise, depending on the experience of the respective ownership representatives.
"To simplify it, you can have in one extreme the George Steinbrenner model, where every and all decisions emanated from his desk. That's not a model that's not necessarily commonplace, but it's one that existed for many years in that particular market and that particular circumstance. ... Then there are others at the extreme, far side of the other spectrum, who are hands-off, laissez-faire, passive to an extreme. ... The notion that there is a single formula, a one-size-fits-all, is unfounded, inappropriate."
The notion of stewardship is invoked frequently among the members of the ownership group, a suggestion of responsibility to an organization and its fans rather than simply treating it as a possession whose success is judged in impersonal terms.
"People are counting on you to make sure the team has the right philosophy and is doing the right thing, in many areas," said Henry. "You have a responsibility."
"They're more sort of stewards, custodians and leaders of the organization for a defined period of time. It's something that John and Tom and Larry in the early days talked a lot about," added Kennedy, the COO. "Look, the Red Sox and Fenway Park were here a long time before we got here and they're going to be here for a long time after we're gone. So, they have this genuine appreciation for this opportunity. I think that stems from the fact that they were in smaller markets -- Florida and San Diego, respectively -- and in Larry's case, San Diego and Baltimore.
"When you get to Boston, it is the ultimate when it comes to baseball. They have this recognition that they are stewards of a great franchise."
That notion implies various civic obligations and responsibilities to the people of New England. Still, on another level, the distinction between ownership and stewardship can seem minimal, especially when asking what those who are characterized as stewards or owners can do on behalf of the team. They can channel money into the operation while also providing direction to all aspects of the organization.
"Ultimately, from where I sit as an employee, the most important thing they can supply are resources," said Kennedy. "That doesn't mean just writing checks. Financial resources, yes, are extremely important. But intellectual resources are equally as important. The ability to map out a plan and a direction and a vision for the organization and for the team. That's what they did collectively in the winter of '01-02 when we all arrived. That's really their No. 1 responsibility, to provide the resources to the front office both financially and intellectually to set the course for what we want to achieve as a group, as a team."
Of course, the notion of course-setting is open to interpretation. As Lucchino points out, there are wildly different models for how to run an organization. There's the erstwhile Steinbrennerian vision of a top-down baseball operation where the owner offers constant feedback (to use the term generously) regarding all baseball decisions, whether on the field, roster moves or business concerns.
In the case of the Red Sox ownership group, there is a greater belief in collaboration and delegation -- with the most important task facing the owners being to hire the right people for their jobs.
"It is our responsibility to ensure that the organization has the right people in place," said Henry."Together we focus on ensuring that we have the proper resources in place to compete for championships. You cannot divorce financial considerations from sports teams because they constitute a critical resource needed to compete on the field. It's easy to question a focus on finances, but any MLB club that does not is going to struggle over the long term. ...
"But in the end, to me, my primary role is to ask the question every day, 'What aren't we doing to improve our chances of winning the next championship?' I've done that for 11 years, and there's a certain discipline that is derived from that. What drives us every day at this point is that third ring."
HOW DECISIONS ARE MADE: WHERE ARE THE OWNERS INVOLVED?
At an operational level, one can characterize six different levels of decisions in the organization, some of which require ownership input, some of which do not.
First level: A decision that can be implemented without further discussion with bosses. For instance, the hiring of someone in ticket sales won't be vetted through Henry or Werner. The Red Sox can implement such a hire without ownership involvement.
Second level: A decision about which owners are told as a kind of fait accompli. For instance, if there is a sponsorship agreement negotiated by Kennedy, he will tell Henry, Werner and Lucchino, though their input won't be necessary.
Third level: A decision about which owners are informed and given a heads-up before it is finalized. A lower-level trade, for instance, might feature an opportunity for ownership consent and input before it is finalized. Still, this might be an area of limited input.
Fourth level: A decision on which the owners' opinions will be sought at the outset before moving forward. For instance, ticket pricing decisions necessarily will involve ownership feedback at the outset (rather than a rubber stamp) before moving forward.
Fifth level: Collaboration and involvement from the outset. The trade between the Red Sox and Dodgers last August represented a notable and significant demonstration of such a case. The conversation started between Dodgers president Stan Kasten and his Red Sox peer, Lucchino. From the outset, and throughout the entirety of the deal, it necessarily involved not only the entire baseball operations department but also the full attention of the ownership group.
Sixth level: Ownership suggest or initiates a program for the club and the front office executes it. Often times, these ownership-directed programs (in the case of the Red Sox) will relate to charitable undertakings, such as Werner's Run to Home Base. The instances of ownership-mandated baseball operations decisions are virtually non-existent. Indeed, the instances of owner fiat are virtually non-existent, in part because of the philosophical commitment on the part of the organization to collaboration and consensus-building.
A few years ago, the book "The Wisdom of Crowds" circulated through all levels of the organization to underscore the notion that widespread, rigorous debate among many people with different perspectives yields demonstrably better outcomes than decisions made with a narrower input base. Virtually all of the decision-makers in the Sox -- from the owners to the staffers in various departments -- embrace that vision.
And so, there are rarely mandates. There are ideas put forth, but there's an expectation that people will be open to changing their mind based on dialogue with colleagues. Perhaps that explains why there are rarely dictates emanating from Henry or Werner. The emphasis is more often on dialogue than commands.
Lucchino characterized the function of the Red Sox ownership group as one of offering "advice and consent," though with the caveat that such a default role on questions facing the organization "does not preclude the occasional suggestion or question or exploration." It's a model that the owners view as having been the basis for considerable success over the first eight seasons of their tenure, and one that they believe can continue to work going forward.
"We've accomplished a lot. We've done a lot of what we set out to do when we so naively -- when I said early on that these were our guiding principles," said Werner. "We said we would be good citizens in the community -- and we've given tens of millions of dollars away and started programs. We said we would bring multiple world championships to Boston. I think people thought we were being somewhat cocky. We said we would preserve Fenway Park, which I think we've done -- we've expanded it but we've preserved what makes it so special and beloved.
"Obviously, every season hasn't been perfect, but even in total, I think our win-loss record has been the second best in baseball since we've taken over. So of course there's been some bumps along the way. Nobody is happy about the on-field performance in 2012. But it's a very competitive business. There are 29 other teams trying to beat your brains in. I've been very pleased with both the results and with the personal experience of working with John and Larry for the Red Sox."
There is a vulnerability to the visibility engendered by their positions. As the visible stewards of a franchise, Henry and Werner are subject to forms of criticism that wouldn't be imaginable if they retired to private lives.
But they accept the arrows because the lofty perch where they sit offers a rather fascinating vantage point on an undertaking that they love.
"This is what we signed up for," Henry wrote. "I don't think there is a baseball fan alive who wouldn't want to own a Major League Baseball club."
Coming Friday: Part 2 -- Fenway Sports Group, NESN and the Liverpool question