SBD/March 24, 2011/Franchises

Yankees Top Forbes' MLB Team Valuations For 14th Straight Year

The Yankees are MLB's "most valuable team for the 14th straight year," rising in value 6% to $1.7B, according to Kurt Badenhausen as part of FORBES' annual valuations. In '98, the gap between the Yankees and the No. 2 Orioles was 12%; today, the Yankees are 86% more valuable than the No. 2 Red Sox. The average MLB franchise is now worth $523M, an "all-time high and 7% more than last year." All of the league's teams "rose in value except for three:" the Mets, Padres and Indians. The increase in team values is the "result of greater revenue for teams playing in new stadiums." Overall, revenue for MLB's 30 teams increased 4% to $6.1B. Total operating income (earnings before interest, taxes, depreciation and amortization) fell 5% to $494M "as rising stadium (rent and operating costs) and team (marketing and player development) expenses ate into profits." The Padres ranked as the "most profitable team," with an operating income of $37M last year. The Padres "benefited from a revenue-sharing check of more than" $30M. Thanks to more than $400M "sent from high-revenue to low-revenue teams," several clubs with low attendance "were able to post operating profits of at least" $10M, including the Pirates ($25M), Royals ($10M), A's ($23M) and Marlins ($20M). Only three teams had a negative operating income last year: the Tigers (-$29M), Mets (-$6M) and Red Sox (-$1M) (FORBES.com, 3/23).

RK
TEAM
VALUE
1-YR
% +/-
DEBT/
VALUE
REVENUE
OPERATING
INCOME
1
Yankees
$1.7B
6%
4%
$427M
$25.7M
2
Red Sox
$912M
5%
26%
$272M
-$1.1M
3
Dodgers
$800M
10%
54%
$246M
$32.8M
4
Cubs
$773M
6%
75%
$258M
$23.4M
5
Mets
$747M
-13%
60%
$233M
-$6.2M
6
Phillies
$609M
13%
29%
$239M
$8.9M
7
Giants
$563M
16%
21%
$230M
$29.9M
8
Rangers
$561M
25%
66%
$206M
$22.6M
9
Angels
$554M
6%
10%
$222M
$11.8M
10
White Sox
$526M
13%
8%
$210M
$27.6M
11
Cardinals
$518M
6%
53%
$207M
$19.8M
12
Twins
$490M
21%
20%
$213M
$26.5M
13
Braves
$482M
7%
0%
$201M
$22.2M
14
Astros
$474M
5%
12%
$197M
$14.4M
15
Mariners
$449M
2%
15%
$204M
$9.9M
16
Nationals
$417M
8%
60%
$194M
$36.6M
17
Rockies
$414M
8%
19%
$188M
$16.3M
18
Orioles
$411M
9%
37%
$175M
$25.5M
19
Padres
$406M
0%
49%
$159M
$37.2M
20
D'Backs
$396M
4%
25%
$180M
$6.2M
21
Tigers
$385M
3%
55%
$192M
-$29.1M
22
Brewers
$376M
7%
32%
$179M
$12.4M
23
Reds
$375M
13%
11%
$179M
$20.1M
24
Marlins
$360M
13%
40%
$143M
$20.2M
25
Indians
$353M
-10%
31%
$168M
$12.1M
26
Royals
$351M
3%
14%
$160M
$10.3M
27
Blue Jays
$337M
3%
0%
$168M
$3.6M
28
Rays
$331M
5%
35%
$166M
$6.8M
29
A's
$307M
4%
29%
$161M
$23.2M
30
Pirates
$304M
5%
42%
$160M
$24.6M








BRAVES ON THE BLOCK? FORBES wrote it "appears as though Liberty Media is preparing to unload the Braves." The tax advantages to Liberty's purchase of the Braves from Time Warner Cable in '07 "expire after five years and ownership has slashed player payroll from $102 million to $84 million since 2008 despite higher revenue" (FORBES.com, 3/23). Liberty Media "has not announced any plans to unload the Atlanta team," but Liberty Chair John Malone is "famous for making use of tax advantages, and he has said Liberty Media doesn't consider the baseball team a strategic asset" (BIZJOURNALS.com, 3/23).

FOR WHAT IT'S WORTH ... In San Diego, Bill Center reports Padres President & COO Tom Garfinkel yesterday "took exception" to Forbes' contention that the Padres "had a major league-leading operating income of $37 million last season." Garfinkel: "The financial numbers in the Forbes article are inaccurate. I'm not sure where they get financial numbers for 30 private businesses without simply manufacturing them. The team lost money on a cash basis in 2010." Garfinkel added of Forbes, "Their valuation methodology is flawed and their numbers are inaccurate. Therefore, their valuation conclusions have no merit" (SAN DIEGO UNION-TRIBUNE, 3/24). Meanwhile, in N.Y., Josh Kosman cites a source following the bidding process for a stake in the Mets as saying that Forbes' $747M valuation of the club "sounds just about right." The team "attracted only 2.6 million fans last year," and the source predicted that the total "will drop to 2.25 million this year." The source added that such a slide "would mean a $60 million loss" (N.Y. POST, 3/24). Smith College sports economist Andrew Zimbalist, when asked if the Forbes report would impact efforts to sell a minority stake in the Mets, said, "These numbers have a little bit of currency in the sports world. Owners will look at them and will cite them, but after they look at them and cite them they'll make their own judgments about what a team is worth" (NEWSDAY, 3/24).

DARK CLOUD OF DEBT: FORBES.com's Burke & Vardi write there is a "dark cloud threatening" MLB. The Mets and Dodgers, "two of the most important franchises in baseball, are in financial turmoil because of the debt-fueled financial recklessness of their owners, left unchecked by the league." The Mets' mess "has already affected the value of the team ... down 13% from last year, the biggest drop of any MLB franchise." And while the value of the Dodgers is up from $727M to $800M, the team's debt load is a "whopping 54% of its overall worth." MLB Commissioner Bud Selig "now faces the possibility of becoming known as 'the Debt Commissioner' for the ballooning of franchise IOUs under his tenure and for letting teams sidestep league rules on debt limits." One MLB exec with knowledge of the Mets' and Dodgers' finances said, "This is a very serious issue. These are two of the flagship franchises in all of sports. This situation is going to infect all of baseball." But MLB Exec VP/Labor Relations & HR Rob Manfred "claims the league watches the debt of its members closely." Manfred: "Nobody outside the game knows what was done or not done with respect to any individual club" (FORBES, 4/'11 issue).
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