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MLB Worth $36 Billion As Team Values Hit Record $1.2 Billion Average
If Major League Baseball traded on a stock exchange it would be worth $36 billion. The average baseball team is now worth $1.2 billion, 48% more than a year ago, the biggest year-over-year increase since we began tracking team values in 1998. A record 15 MLB teams are now worth at least $1 billion, up from five in 2014.
The New York Yankees are worth the most, $3.2 billion, and are tied with the NFL’s Dallas Cowboys as the most valuable U.S. sports team (Spanish soccer club Real Madrid, worth $3.44 billion, is the most valuable in the world). The Yankees have been the most valuable baseball team each of the 18 years Forbes has valued MLB franchises since 1998. During the 2014 season, the Bronx Bombers generated a record $508 million of revenue after deducting PILOT bond payments of $78 million and the $90 million the team contributed to baseball’s revenue-sharing system. The team raked in over $100 million in local television rights payments, and Derek Jeter’s last season in pinstripes goosed ticket and merchandise sales.
The Los Angeles Dodgers, worth $2.4 billion, land in second place three years after Guggenheim Baseball Management bought the team and Dodger Stadium for $2 billion from Frank McCourt. The Dodgers raked in more than $120 million in television money last season, the the most in baseball, as part of the team’s 25-year, $8.35 billion deal with Time Warner Cable. The team also leads MLB in attendance, with 3.78 million fans coming through the turnstiles during the regular season.
The San Francisco Giants had the biggest year-over-year gain, doubling in value, to $2 billion. The Giants’ three World Series titles over the past five seasons have helped the team nearly double revenue, to $387 million–with much of the increase coming from sponsors like Adobe, Coca-Cola, Diageo, Lexus, MillerCoors, Oracle, Safeway, StubHub, State Farm and Yahoo. Since 2011, the Giants have been among the top four teams in attendance and with the launch of the Social Media Café at AT&T Park in 2013 are among the leaders in using social media to enhance fans’ stadium experience.
The owners of the Giants are planning on leveraging the team’s strong brand by developing Mission Rock, an urban community that is expected to be ready by 2020. The project includes office space for businesses,residential buildings, renovation of a historic pier, pedestrian-only alleys and green streets, recreational and cultural facilities and restaurants and retail stores.
The St. Louis Cardinals are baseball’s biggest anomaly. Despite playing in one of the smallest markets, the Cardinals are MLB’s sixth most valuable team, worth $1.4 billion. During the 19 seasons Bill DeWitt has owned them, the Cardinals have posted a winning record 16 times and have been in four World Series, winning the title in 2011 and 2006. Since moving into their new stadium in 2006 the team has never finished below sixth in attendance and has placed second the past two seasons. The Cardinals also pull in baseball’s highest local television ratings. And with Ballpark Village, the Cardinals have made the area near Busch Stadium a destination for dining and entertainment.
Revenue growth and higher enterprise ratios (enterprise value divided by revenue) account for the rapid escalation in overall team values.
Television money is driving the sport’s top line growth. In 2014, broadcasting and cable money accounted for $2.88 billion, or 37% of baseball’s $7.86 billion of revenue. Just five years earlier, television proceeds were $1.73 billion, or 29% of the sport’s $5.91 billion of revenue. During the past five years, mega cable deals for the Dodgers, Seattle Mariners and Los Angeles Angels of Anaheim have kicked in, and last season MLB began new national broadcasting deals with ESPN, Fox and TBS that will pay a total of $12.4 billion over eight years–more than double the previous contracts
More television cash in on the way. The Texas Rangers begin a $3 billion, 20-year cable deal this season (the team received a $100 million signing bonus in 2012). In 2016, the Philadelphia Phillies start a $5 billion, 25-year deal and the Arizona Diamondbacks begin a new cable deal that is reportedlyworth $1.5 billion over 20 years. Meanwhile, the St. Louis Cardinals are in the midst ofnegotiating a richer cable deal.
Higher enterprise ratios are being fueled by the stock market’s six-year bull run (which has inflated asset values and created a lot more potential buyers than sellers of teams), baseball’s unmatched inventory of live, DVR-proof content, real estate development around stadiums, higher profitability (which reduces the need for capital calls) and the incredible success of Major League Baseball Advanced Media, the sports’ digital arm that is equally owned by the league’s 30 teams.
MLBAM most recently developed MLB.com’s Statcast, which debuted at the 2014 All-Star Game. Statcast is a transformative tracking technology measuring every play that will revolutionize live broadcasts of Major League Baseball games to every screen from the computer to the television to the tablet to the smartphone. MLBAM also has a powerful video technology that supports partners such as HBO, ESPN and WWE, a business growing so fast there are reports of MLB spinning off a separate tech arm from MLBAM at a $5 billion valuation. In 2014, MLBAM generated an estimated $800 million in revenue and around $400 million in operating income. In total, MLBAM could be worth more than $10 billion.
Transaction scorecard: In 2009, the Ricketts family paid $845 million for the Cubs, Wrigley Field, 25% of Comcast SportsNet Chicago and some nearby real estate. The deal valued the Cubs at three times revenue. In February, the family sold small pieces of these assets for an enterprise value of $2.25 billion. The value placed on the Cubs alone was $1.8 billion—six times revenue–the highest-valuation ever created by the purchase of a non-controlling interest in a sports team. Like the Cardinals and Giants, the Cubs are also developing the land near their stadium as a destination place.
Overall, baseball has never been as big or as profitable.
Last season, average revenue per team hit $262 million, 11% more than 2013 and one-third higher than five seasons ago. In 2014 the average baseball team posted operating income (in the sense of earnings before interest, taxes, depreciation and amortization) of $21 million on revenue of $262 million. The second most profitable season since Forbes began tracking team values in 1998 was 2009, when operating income averaged $17.4 million. The players, too, have done well: the average opening day payroll has increased 27%, to $113 million, during the past five seasons.
Our team values are enterprise values (equity plus net debt) based on the revenue multiples of past transactions. We make adjustments for teams getting new ballparks, like the Atlanta Braves. The enterprise values exclude equity teams have in non-baseball assets, such as real estate, regional sports networks or stadium businesses. The revenue figures we show for each team include all money the team gets, including tickets and premium seating, media, concessions and merchandise, licensing and other distributions from MLB’s central fund, as well as non-baseball stadium events like concerts and soccer games. Revenue are net of annual stadium debt service for which the team is responsible, as well as money teams receive, or pay, as part of the league’s local revenue-sharing system. Luxury payroll tax figures paid to MLB are subtracted from the team’s operating income.
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Originally Posted by Mase of Base
