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Thursday, March 24, 2016

Forbes: Baseball’s most valuable teams

The New York Yankees, worth at least $3.4 billion, have held MLB’s top spot since our first estimation of team values in 1998. That $3.4 billion represents just the enterprise value of the team and its stadium economics. But in reality, a big reason why someone would be willing to pay seven times revenue for the Yankees instead of, say, the MLB average of five times revenue, is the ability to extend the team’s brand, acumen and relationships beyond baseball into ventures such as Legends Hospitality, the YES Network, Major League Soccer and college football (full disclosure: I am co-host of Forbes SportsMoney on the YES Network).....

That said, with 2016 the last year of the CBA, I would expect the next labor pact to have two significant changes: The revenue sharing formula will be more specific in terms of how those teams who get money use it. Over the same span, the top five takers from Major League Baseball’s revenue-sharing system–the Miami Marlins, Tampa Bay Rays, Kansas City Royals, Oakland Athletics, and San Diego Padres–have received a combined $642 million. Yet only the Padres rank better than 25th in payroll over that period at 20th. Instead of payroll, some owners have been using money to pay off debt or buy more shares of their team. And the $189 million payroll ceiling will be increased to at least $200 million.

But it’s a delicate balance. The World Series champion Kansas City Royals have used their revenue-sharing proceeds from the richer teams smartly by building a strong major league roster and a highly-regarded minor league system. It’s important for baseball to have small-market teams capable of competing for the series. The value of the Royals jumped 24% this year, to $865 million. The new CBA does not want to do damage to such success.

Pretty lofty values for a dying sport.

RoyalsRetro (AG#1F) Posted: March 24, 2016 at 10:51 AM | 25 comment(s)
  Beats: forbes, franchise values, revenues, yankees

 

 

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