The problem I am having is that 'foo bar' is has a space in it so I can't split the scalar returned from readline() by spaces.

So don't. Learn about the m// operator, read `perldoc perlop' and `perldoc perlre'.

if(
    $line =~
        /^ ( \w+ ) # word
           \s+
           ( .+? )
           \s+
           ( \w+ )
        $/
  ) {
    my( $command, $something, $lastword ) = ( $1, $2 , $3 );
}
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