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Phil Arvia Column About Eddie Einhorn


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http://www.dailysouthtown.com/southtown/co...ia/x04-ard1.htm

 

 

 

Einhorn: Sox owners plan to stay the course

 

Wednesday, February 4, 2004

 

In the context of a man who has stared down more than his share of health problems the last few years, it's good to hear Eddie Einhorn isn't planning on going anywhere anytime soon.

 

In the context of his place in the investors group that owns the White Sox, fans might be disappointed to hear the same.

 

"I read the papers, I see people say you shouldn't have a budget, we should sell the team and all that," Einhorn said. "I don't believe in that. I believe you should do what we've tried to do."

 

And will continue to try to do, as far as Einhorn and team chairman Jerry Reinsdorf are concerned.

 

"He's never talked to me about getting out for any reason," Einhorn said of Reinsdorf. "If you like something, stay with it.

 

"I don't want to get out, either — even though I have a more limited role, I like doing it."

 

Einhorn was in an expansive mood at last weekend's SoxFest, so I took advantage. The Sox's vice chairman, who was the club's public point man as president and CEO for the first 10 years of the Reinsdorf era, chatted about a number of topics, from TV deals old and new, to the Sox's books and the one he's writing, to his health and that of ownership's financial plan.

 

Taking the last first, it's safe to say the plan includes continuing to own the Sox.

 

"I don't think we have an obligation to get out if we want to run it the way we want to run it," said Einhorn, who heard suggestions to the contrary from fans during SoxFest. "I don't think the fans have suffered, because there's no guarantee that you're going to win by spending money.

 

"We've been competitive. Sometimes we're not as competitive as we want to be, but we've been competitive over the years.

 

"When you're in it this long — we're like the third-oldest ownership in baseball — you're going to take a lot of hits along the way because it's hard to win."

 

Harder, some might argue, when you're spending less than half of what the Yankees and Red Sox are spending, or a little more than two-thirds of what the Cubs are spending.

 

"You're relating that to something that I don't know is true anymore," Einhorn said. "It helps to have more. But I don't know that just having it guarantees you're going to win. I think that's what people need to understand.

 

"The Mets are the best example, because they finished dead last and had to redo their whole team."

 

The Sox aren't about to redo their approach. They will work within a budget, not worry about making money but try not to lose much.

 

"We have a philosophy to try to run it at even," Einhorn said. "We haven't paid a dividend in 24 years.

 

"Our group isn't in business to lose the kind of money that Arizona loses and the Dodgers lose — $40 (million) to $50 million a year. We're not in that business. The Cubs aren't in that business.

 

"Jerry's philosophy is we try to run it, most of the time, on an even basis.

 

"I feel the same way. As much as I want to win, I wouldn't have any fun being in this business if I ran a team to lose money just to win — or with the hope of winning. I don't think that's a good way to run a team."

 

Not that Einhorn is running the Sox. That's Reinsdorf's job, and has been since Einhorn more or less rode off into the sunset in 1990.

 

Though many believe Einhorn was sent away because Reinsdorf, incredibly it seems now, had emerged as the lesser of two public relations evils, Einhorn said his departure was planned all along.

 

"When I originally got into this deal, I wasn't even supposed to come here," Einhorn, a lifelong New Jersey resident, said. "I was head of sports at CBS in New York. When Jerry came to me to get into this, I was supposed to be the adviser from outside.

 

"There were some changes in the ownership group, Jerry wasn't through with his business yet, so I kind of got called out to run it. I never intended to do it forever.

 

"For 10 years, I was the president. I just decided, well, that's enough. I've got other things to do. I had a television business, my family. I decided to go home.

 

"And, to be honest, it's very tough doing a two-man act in sports. You can't be Del Webb and Dan Topping (the owners who sold the Yankees to CBS in 1965 for $11.2 million). Somebody's got to be the bottom-line guy."

 

Since stepping aside, Einhorn, 68, has battled health problems off and on. He began dealing with the early stages of kidney disease in 1993, underwent treatment for prostate cancer in 2000, had a kidney transplant in 2002 and had health problems related to that procedure as recently as last baseball season.

 

At SoxFest, however, Einhorn appeared to be in good shape and was clearly in fine spirits.

 

"I feel great, I don't even take a nap these days," Einhorn said. "I've got a lot of energy. I'm busy.

 

"I'm writing a book on the 40th anniversary of when I started my TVS company on college basketball."

 

TVS grew to be the leading syndicator of sports programming in the 1970s, spurred in part by Einhorn's staging of what some consider the greatest college basketball game ever, between UCLA and Houston at the Astrodome in 1968.

 

No. 2 Houston, behind 39 points from Elvin Hayes, beat No. 1 UCLA and Lew Alcindor 71-69 in the first nationally televised regular-season college basketball game ever.

 

"No one's ever written a book on the Houston-UCLA game, believe it or not, and I did that 36 years ago last (month)," Einhorn said. "I just interviewed John Wooden, Guy Lewis, Elvin Hayes ... the guys who are left from my era.

 

"I love it, because I kind of walked away from the game 25 years ago to get into this."

 

Einhorn hopes to have the book out next year. By then, Sox fans will be well-familiarized with what might be called a new version of Einhorn's other sports broadcasting innovation.

 

Comcast SportsNet Chicago will launch Oct. 1 and will carry Sox, Bulls, Cubs and Blackhawks games.

 

In the early days of their Sox ownership, Einhorn and Reinsdorf launched SportsVision, a pay channel offering Sox, Bulls, Blackhawks and Sting games. The biggest problem was that most of the Chicago area was not yet wired for cable.

 

For those of you too young to imagine such a backward time, SportsVision came into homes via a scrambled, over-the-air signal. Subscribers paid a monthly fee for a box that descrambled the image, a technology pioneered in Chicago by a movie service known as ON-TV.

 

SportsVision lost millions and was sold in 1984 to what would become Fox Sports Net.

 

"We started all this," Einhorn said. "I wish we could've hung on with our SportsVision from years ago.

 

"In those days, this was not the city to start in. I wish I was in Boston, because Boston was able to hang onto theirs.

 

"Chicago wasn't cable. We had to come up with this thing with over-the-air, this whole technical thing that was very difficult in a market that had free television for all those years. SportsVision had to go with ON-TV instead of the regular cable route. It made it more complicated, and then we ran out of money.

 

"At that time, you had to invest to keep it going, and with the salary crunch in baseball, we just decided it was better to sell the rights and keep the money in the players. We'd have had to make too big an investment."

 

Perhaps ironically, Einhorn, who made his fortune in TV and who, according to his bio in the Sox media guide, is recognized as the architect of baseball's first billion-dollar TV contract, didn't have much of a role in the Comcast deal.

 

"Jerry and I talked about it," Einhorn said. "They negotiated a good deal. It's a different deal than we could've done 24 years ago.

 

"The whole thing is much bigger now, the players are different. They own all the cable systems.

 

"It's a good deal for what it is now."

 

Good deals for Sox fans, Einhorn said, have been tougher to come by this year.

 

"The breaks we got last year we didn't get this year," Einhorn said, comparing the three-way trade to acquire Bartolo Colon to the failed bid to land Nomar Garciaparra. "There were logjams, other deals pending."

 

Speaking of Colon, Einhorn revived an old Sox management guideline when addressing the rotund pitcher's decision to sign with Anaheim.

 

"We were in it," he said. "A guy offers four years, that's not a prudent thing to do, I'm sorry — to sign a pitcher for four years who's had some problems.

 

"The guy in California, he wants to do it and he's got his reasons, but I don't think that's a prudent thing for us to do."

 

Nor, Einhorn contended, is it a prudent thing for Sox fans to write their team off so soon.

 

"I think we'll be competitive this year," he said. "I'd like to have a little more flexibility, and I think we'll get it. You know we're going to make some moves later."

 

Moves that risk big money? Probably not.

 

"It's the philosophy, and I think it's a good one," Einhorn said. "If we lose, we're not going to lose a lot."

 

Phil Arvia can be reached at [email protected] or (708) 633-5949.

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I think I still have my "black box" descrambler from those days. Hmm, maybe I will put it on eBay as a collectors item . . .

Ya know Tex it's pretty funny.. back before Eddie got sick he was a pretty straight shooter in the press. He appeared to hate the public aspect of the job - which he admits to in a round about way here - but I don't ever remember this $$ crap being such a hush, hush issue. Now all of a sudden the goal is to run an "even" accounting? Do they not complile a yearly plan? Do they not give their staple employees raises? It doesn't make sense. How do you NOT pay dividends for 24 years (read - make no profit) and continue to operate efficiently? How do you suffer a DECREASE in profit (read - lose $$ because the fans stay away) and continue to employ (if not raise the number of) employees? Or are we to believe that all those employees are still working at 1990'ish pay rates?

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I thought the part about not paying a dividend was hillarious, that means absolutely nothing. Microsoft didn't pay a dividend until a couple of yrs ago either but had/has literally billions of $$$ in reserves. For all we know the Sox could have $50-60 mil in reserve and will continue building it up but won't pay it in a dividend til just before they sell.

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I thought the part about not paying a dividend was hillarious, that means absolutely nothing. Microsoft didn't pay a dividend until a couple of yrs ago either but had/has literally billions of $$$ in reserves. For all we know the Sox could have $50-60 mil in reserve and will continue building it up but won't pay it in a dividend til just before they sell.

Exactly!! We accrue for IC bonuses all year long. Sometimes they get paid, sometimes they don't (performance based ones). It means nothing.

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I don't understand this philosophy. In the business world, in order for companies to turn things around like the sox are trying to do, you know you have to suffer a loss. It may be a loss in a quarter or maybe the whole year. Either way you have to do this. If our owners don't understand this then we will never get things turned around. YOu have to spend money to eventually make money. You lose this one year, but it pays itself off in the up coming years. Why don't these guys understand that? Not Wirtz, McCaskey, or Reinsdorf.

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So they have no interest in taking a risk...

 

The only way we'll ever see a WS, it seems, is if we can somehow find 9 guys who happen to have career years all at once.  :headshake

And at the same time, hope that the big spenders don't have 3 or 4 position players having career years!

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Exactly!! We accrue for IC bonuses all year long. Sometimes they get paid, sometimes they don't (performance based ones). It means nothing.

Right! Or say the insurance settlement on Frank in '01(which they probably didn't get til '02) there's another $8 mil in the kitty. And the $9 mil they get from the TNT TV deal starting last yr? They didn't increase payroll that much last yr, in fact according to Rex they cut it by $6 mil.

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Right! Or say the insurance settlement on Frank in '01(which they probably didn't get til '02) there's another $8 mil in the kitty. And the $9 mil they get from the TNT TV deal starting last yr? They didn't increase payroll that much last yr, in fact according to Rex they cut it by $6 mil.

I never even thought about the settlement on Frank.. where the hell did that money go..? :headshake

 

 

 

 

 

P.S... that's rhetorical.

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Ya know Tex it's pretty funny.. back before Eddie got sick he was a pretty straight shooter in the press. He appeared to hate the public aspect of the job - which he admits to in a round about way here - but I don't ever remember this $$ crap being such a hush, hush issue. Now all of a sudden the goal is to run an "even" accounting? Do they not complile a yearly plan? Do they not give their staple employees raises? It doesn't make sense. How do you NOT pay dividends for 24 years (read - make no profit) and continue to operate efficiently? How do you suffer a DECREASE in profit (read - lose $$ because the fans stay away) and continue to employ (if not raise the number of) employees? Or are we to believe that all those employees are still working at 1990'ish pay rates?

to an extent thats exactly how they are running the team..even accounting..they set up the '00 payroll to break even..but won the division and better attendance than expected..so the next year they increaded payroll by 33 million...which was probably the profit margin for '00...the last 2 years attendance was below expectations so they cut the payroll a little..

 

but thats going on a year to year basis..what they are not figuring into the equation is the increase in net worth over the 20 somes years they owned the team...if they bought it for like 30 million and its now worth 300 million , then they should be willing to run in the 10 -15 million in the red each year...it would then truly be "even accounting"...

 

because when they sell the team they would get back all those millions they went over each year..breaking even..

 

sad thing is if they actually practiced even accounting the extra 10-15 a season over the years probably would have got us a championship sometime in his tenure

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to an extent thats exactly how they are running the team..even accounting..they set up the '00 payroll to break even..but won the division and better attendance than expected..so the next year they increaded payroll by 33 million...which was probably the profit margin for '00...the last 2 years attendance was below expectations so they cut the payroll a little..

 

but thats going on a year to year basis..what they are not figuring into the equation is the increase in net worth over the 20 somes years they owned the team...if they bought it for like 30 million and its now worth 300 million , then they should be willing to run in the 10 -15 million in the red each year...it would then truly be "even accounting"...

 

because when they sell the team they would get back all those millions they went over each year..breaking even..

 

sad thing is if they actually practiced even accounting the extra 10-15 a season  over the years probably would have got us a championship sometime in his tenure

They can't factor in inflation when setting an operating budget.

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Well I guess we have actually heard from someone at the very top for a change. We have never heard anything from Jerry Reinsdorf, but now Eddie Einhorn does surface to give the owners point of view. It may be pure hogwash to some, insightful to others, but at least there can be no doubt about how the owners look at the issue of baseball economics. I am not surprised about what is reported and I think we all probably knew what the ownership would say. Doesn't make it any easier to take, but in a pure business sense it does. They don't want to lose money, just want to be competitive (whatever that means to them) and take their business losses off their income taxes. I am sure they have that part down to a science. No dividends for 24 years? I am sure that the limited partnership group throws whatever they make back into some type of "pot" and writes off everything they can as a business loss.

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Well I guess we have actually heard from someone at the very top for a change. We have never heard anything from Jerry Reinsdorf, but now Eddie Einhorn does surface to give the owners point of view. It may be pure hogwash to some, insightful to others, but at least there can be no doubt about how the owners look at the issue of baseball economics. I am not surprised about what is reported and I think we all probably knew what the ownership would say. Doesn't make it any easier to take, but in a pure business sense it does. They don't want to lose money, just want to be competitive (whatever that means to them) and take their business losses off their income taxes. I am sure they have that part down to a science. No dividends for 24 years? I am sure that the limited partnership group throws whatever they make back into some type of "pot" and writes off everything they can as a business loss.

I don't see how this makes sense. If they say they are not making money then why are they still the owners? They are not trying to win but stay at a competitive level, then why are they still the owners? When you own something you usually want to make money and be the best. In this case our owners don't want a part of either?

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I don't understand this philosophy. In the business world, in order for companies to turn things around like the sox are trying to do, you know you have to suffer a loss. It may be a loss in a quarter or maybe the whole year. Either way you have to do this. If our owners don't understand this then we will never get things turned around. YOu have to spend money to eventually make money. You lose this one year, but it pays itself off in the up coming years. Why don't these guys understand that? Not Wirtz, McCaskey, or Reinsdorf.

I do not think you can compare a sports franchise with other businesses. First of all, in the real world, you do not have to lose money for a quarter to make money. You will have expenses of course but most small businesses can not withstand a couple quarters worth of loses. Most corporate boards would be breathing down the neck of a CEO who isn't showing a profit every quarter. Businesses need to plan for future expansion, structure their debt load in a manner which enables them to operate, etc. But this really doesn't amount to anything with a baseball team.

 

Most owners have made a pile of money before getting into sports. I can believe some owners plan to continue to invest every year and operate at a loss. "Hey, I made $46,00,000 at my day job, so I will give the team and extra $12,000,000 to get a player. Others will try and break even, and I"m certain a few will try and make some money. This is, for some, a hobby, albeit a very expensive hobby.

 

Do we care what the Sox bankroll is if we win? Get to the playoffs every few years and I could give a s*** if it costs you money or you make money. Baseball doesn't have an artificial salary cap, they operate like all of the businesses we work at. Free market. You can spend as much as your business situation will allow. Baseball workers are like us, free to cut the biggest and best deal possible. If your company came to you and said we could improve market share by 3% if you took a pay cut and we hired Jaime Smith, would you say Sure! Let's do it!? Likewise, it's tough to fault a player for not doing the same.

 

We have what we have with Jerry squared. I would love to see Cuban buy the team, I think he would throw everything into trying to win like he has with the Mav's. I also think he would take seriously the contest for fan loyalty in Chicago. But it will not happen. There are only a handful of owners in all of sports who are that focused on winning and have the resources.

 

I believe the Sox payroll would be much higher if we were the only team in Chicago and had the revenues to justify it. I do not think Sox ownership is making millions in cash every season. There riches as based on the value of a baseball franchise rising. Something you really can not spend until you sell.

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I don't understand this philosophy. In the business world, in order for companies to turn things around like the sox are trying to do, you know you have to suffer a loss. It may be a loss in a quarter or maybe the whole year. Either way you have to do this. If our owners don't understand this then we will never get things turned around. YOu have to spend money to eventually make money. You lose this one year, but it pays itself off in the up coming years. Why don't these guys understand that? Not Wirtz, McCaskey, or Reinsdorf.

Sorry but the Mccaskeys do not qualify as beoig cheap anymore. Every team has a salary cap, and the Bears pay as much if not more than most teams. Purely in terms of salaries, the Bears were #5 last year or so.

 

Now, this does not particularly apply to Wirtz either because the Hawks are in the top 15 in salary every year (including this year). They have had major injuries (Daze, Zham, TBo etc) that has killed them this year. Wirtz will NEVER spend like Illitch from the Dead wings, but remember Illitch does not spend anything for the Tigers (IRod not withstanding). And once the salary situation clears up some in hockey, Wirtz will get us to contend again like we were in the early 90s. Also, hockey is very much unlike baseball in that you CANNOT win by throwing money.....you cannot even in baseball, but in baseball it is easier to win by throwing money than by not throwing it (see Yankees, Bo Sox etc). In hockey, except for Detroit and Colorado, teams like the Devils, Ducks, Wild, Blues are all middle of the road in terms of $.

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Sorry but the Mccaskeys do not qualify as beoig cheap anymore. Every team has a salary cap, and the Bears pay as much if not more than most teams. Purely in terms of salaries, the Bears were #5 last year or so.

 

Now, this does not particularly apply to Wirtz either because the Hawks are in the top 15 in salary every year (including this year). They have had major injuries (Daze, Zham, TBo etc) that has killed them this year. Wirtz will NEVER spend like Illitch from the Dead wings, but remember Illitch does not spend anything for the Tigers (IRod not withstanding). And once the salary situation clears up some in hockey, Wirtz will get us to contend again like we were in the early 90s. Also, hockey is very much unlike baseball in that you CANNOT win by throwing money.....you cannot even in baseball, but in baseball it is easier to win by throwing money than by not throwing it (see Yankees, Bo Sox etc). In hockey, except for Detroit and Colorado, teams like the Devils, Ducks, Wild, Blues are all middle of the road in terms of $.

You have a lot more faith in our owners than I do.

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I do not think you can compare a sports franchise with other businesses. First of all, in the real world, you do not have to lose money for a quarter to make money. You will have expenses of course but most small businesses can not withstand a couple quarters worth of loses. Most corporate boards would be breathing down the neck of a CEO who isn't showing a profit every quarter. Businesses need to plan for future expansion, structure their debt load in a manner which enables them to operate, etc. But this really doesn't amount to anything with a baseball team.

 

Most owners have made a pile of money before getting into sports. I can believe some owners plan to continue to invest every year and operate at a loss. "Hey, I made $46,00,000 at my day job, so I will give the team and extra $12,000,000 to get a player. Others will try and break even, and I"m certain a few will try and make some money. This is, for some, a hobby, albeit a very expensive hobby.

 

Do we care what the Sox bankroll is if we win? Get to the playoffs every few years and I could give a s*** if it costs you money or you make money. Baseball doesn't have an artificial salary cap, they operate like all of the businesses we work at. Free market. You can spend as much as your business situation will allow. Baseball workers are like us, free to cut the biggest and best deal possible. If your company came to you and said we could improve market share by 3% if you took a pay cut and we hired Jaime Smith, would you say Sure! Let's do it!? Likewise, it's tough to fault a player for not doing the same.

 

We have what we have with Jerry squared. I would love to see Cuban buy the team, I think he would throw everything into trying to win like he has with the Mav's. I also think he would take seriously the contest for fan loyalty in Chicago. But it will not happen. There are only a handful of owners in all of sports who are that focused on winning and have the resources.

 

I believe the Sox payroll would be much higher if we were the only team in Chicago and had the revenues to justify it. I do not think Sox ownership is making millions in cash every season. There riches as based on the value of a baseball franchise rising.  Something you really can not spend until you sell.

I never said that they would lose money continuously. I did say that in order to turn something around you expect loses. We are trying to turn things around aren't we? I don't agree that our payroll would be higher if we were the only team in town. Most likely fans would go no matter what, so the owners wouldn't feel the need to spend. Why spend if the fans come in no matter what?

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I believe the Sox payroll would be much higher if we were the only team in Chicago and had the revenues to justify it. I do not think Sox ownership is making millions in cash every season. There riches as based on the value of a baseball franchise rising.  Something you really can not spend until you sell.

If what Eddie says here is the truth, and truly the way they run the business, then this is exactly right. Baseball is still the love of many regardless of the strike. If there wasn't a choice there would definitely be more revenue in the Sox kitty.

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Wirtz is a puzzle. Certainly he knows he could make more money by selling home tv rights, yet he doesn't do that.

I keep hearing this joke about maybe it's better they aren't on TV since they suck so bad and would make people sick :lol:

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I see what the Hidalgo Killer Bees are doing to build a fan base where there was none and it is amazing. They will do everything but have a player come to your door and take you to the game.

 

Of all minor leaguen teams, they are in the top 25 in attendance in the US. And they are less than 10 miles from Mexico. The only ise down here is in a margarita

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If what Eddie says here is the truth, and truly the way they run the business, then this is exactly right. Baseball is still the love of many regardless of the strike. If there wasn't a choice there would definitely be more revenue in the Sox kitty.

If is the key word there. Things always tend to change when you see more dollar signs coming your way.

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Ok screw the money part...these are the quotes that hit me the hardest....

 

"I don't think we have an obligation to get out if we want to run it the way we want to run it," said Einhorn, who heard suggestions to the contrary from fans during SoxFest. "I don't think the fans have suffered, because there's no guarantee that you're going to win by spending money.

 

I think you do have an obligation to get out. We have suffered...Mediocre is not acceptable. Since 1959 we have been involved in the ALCS twice. TWICE!!!!!!!!!!!!!! and this is competitive??? No there isn't a guarantee the sox will win by spending money, but there is a better chance. We all know there are no guarantees in life, but getting better players gives you a better opportunity to win. That Einhorn quote explains just how backwards their logic is....and it pisses me off that they don't see it. That is liike going to a gay bar to pick up chicks and offering your reason as "well there's no gurantees that I'd pick one up at a straight bar" So you go to a place where it's nearly impossible?? That's what the sox have done....we are at a place where it's almost impossible for us to win. Yeah it can be done...I mean the sun shines on a dogs ass now and then, but chances are it ain't gonna happen. We are not put in a position for it too happen.

 

"We've been competitive. Sometimes we're not as competitive as we want to be, but we've been competitive over the years.

"When you're in it this long — we're like the third-oldest ownership in baseball — you're going to take a lot of hits along the way because it's hard to win."

 

We haven't been competitive. See above rant. We won he division 3 times since 59. How is that competitive? When I played sports competitive wasn't good enough for me. If you're overmatched, then yeah it feels good to hang and be competitive. So is that we Einhorn is saying. We are overmatched and we should feel good as fans because we are competitive?? And the way I see it is, when you're in it this long we have had even more of a chance to win.

 

 

"You're relating that to something that I don't know is true anymore," Einhorn said. "It helps to have more. But I don't know that just having it guarantees you're going to win. I think that's what people need to understand.

 

Again with this guarantee s***...We know it doesn't guarantee anything..but it lets us get excited about the chance. It gives us a better opportunity to win.

 

 

That whole article makes me want to :puke Cause I know this is the sentiment all the way from the top.

 

New sox slogan "2004 Being competive for you"

 

 

Sorry for the Rant!!!!

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