Forbes, Bloomberg Battle It Out on MLB Team Valuations

Right around Opening Day, Forbes publishes its annual report on MLB team valuations. There is information on team revenues, debt, net income, and overall franchise value. The 2013 valuations, published in March, relied on 2012 numbers, plus a bit of forecasting about teams likely to land new, lucrative local TV contracts soon.

Now Bloomberg Business is getting into the act. A few weeks ago, Bloomberg published its own MLB team valuations, along with a terrific infographic comparing each team to the 29 others. Bloomberg also dug a bit deeper, and broke down each team’s revenue into gate receipts, concessions, sponsorships, and media rights. Bloomberg also used 2012 numbers, but reflected higher revenue and valuation figures than Forbes’ report from earlier this year.

We’ll get to the numbers in a second, but first a few words about the reliability of these valuations. The Forbes author doesn’t specify his sources. We don’t know if any teams or the league cooperated or provided information. We don’t know what secondary sources he may have relied on if teams didn’t cooperate. Bloomberg, on the other hand, is clear on where it obtained the information in its report:

Data for franchise valuations were provided by sports bankers, media consultants, municipalities, financial statements and people familiar with team operations. Calculations were compiled for the 2012 season and made available to each team and MLB for review and comment. Four teams didn’t return calls or e-mails. Sixteen declined to comment.

That means ten teams did provide at least some comment. Indeed, representatives from the A’s and the Giants told Bloomberg their team valuations were too low.

The fact that Bloomberg reported its sources and Forbes didn’t doesn’t make Bloomberg’s numbers inherently more reliable. Without access to the financial reports each team sends to MLB or to MLB’s own financial records, Forbes and Bloomberg are estimating. There’s some hard data and a lot of educated guesswork. Read the numbers with those caveats in mind.

One more thing. Forbes’ team valuations do not include any equity the team owns in a local sports programming channel. So, for example, the Yankees’ stake in the YES Network is excluded from the team’s valuation. In Forbes’ view, if the TV equity can be valued and sold separately, then it shouldn’t be included in the franchise valuation. Bloomberg takes the opposite view. Those teams that own a slice of their TV broadcaster see substantially higher valuations in the Bloomberg report, as compared to Forbes.

Let’s start with the valuation numbers, following Bloomberg’s rankings.

Team Bloomberg Franchise Value Bloomberg TV Equity Forbes Franchise Value
1 Yankees $3,280,000,000 $932,000,000 $2,300,000,000
2 Dodgers $2,100,000,000 $0 $1,615,000,000
3 Red Sox $2,060,000,000 $675,000,000 $1,312,000,000
4 Mets $2,050,000,000 $1,165,000,000 $811,000,000
5 Cubs $1,230,000,000 $181,000,000 $1,000,000,000
6 Giants $1,230,000,000 $230,000,000 $786,000,000
7 Orioles $1,120,000,000 $432,000,000 $618,000,000
8 Angels $1,090,000,000 $160,000,000 $718,000,000
9 Phillies $1,040,000,000 $0 $893,000,000
10 Rangers $1,010,000,000 $120,000,000 $764,000,000
11 White Sox $960,000,000 $226,000,000 $692,000,000
12 Blue Jays $950,000,000 $236,000,000 $568,000,000
13 Nationals $850,000,000 $108,000,000 $631,000,000
14 Tigers $830,000,000 $0 $643,000,000
15 Cardinals $805,000,000 $0 $716,000,000
16 Astros $800,000,000 $139,000,000 $626,000,000
17 Braves $760,000,000 $0 $629,000,000
18 Mariners $720,000,000 $0 $644,000,000
19 Twins $700,000,000 $0 $578,000,000
20 Padres $685,000,000 $43,000,000 $600,000,000
21 Reds $680,000,000 $0 $546,000,000
22 Brewers $615,000,000 $0 $562,000,000
23 Pirates $610,000,000 $0 $479,000,000
24 D’Backs $600,000,000 $0 $584,000,000
25 Marlins $595,000,000 $0 $520,000,000
26 A’s $590,000,000 $0 $468,000,000
27 Rockies $580,000,000 $0 $537,000,000
28 Indians $545,000,000 $0 $559,000,000
29 Royals $540,000,000 $0 $457,000,000
30 Rays $530,000,000 $0 $451,000,000

For many top tier teams, the Forbes valuation number added to the TV Equity number gets close to the Bloomberg valuation number. Given how Forbes excluded the TV equity piece, that makes sense. Bloomberg has some teams at a significantly higher valuation without a TV equity piece — the Dodgers, Phillies, and Tigers, as prime examples. The Dodgers’ valuation is likely influenced by the expected TV deal with Time Warner to launch SportsNet LA. That deal — announced early this year as $7 billion to $8 billion over 25 years — may very well push the Dodgers ahead of the Yankees in 2014.

The lower tier teams see an even bigger value differential from Bloomberg, as compared to Forbes, and it’s not clear why. Both Forbes and Bloomberg look at the enterprise value — the price at which a team would sell in an arms’ length transaction. Team-generated revenue is the key factor, followed by shared MLB revenue, market-size, ballpark value, and brand value.

On the revenue side, the Forbes and Bloomberg are relatively close for the bottom half of teams. The larger differential is at the top. Much larger, in some cases.

Team Bloomberg Revenue Forbes Revenue
1 Yankees $570,000,000 $471,000,000
2 Red Sox $405,000,000 $336,000,000
3 Dodgers $325,000,000 $245,000,000
4 Cubs $320,000,000 $274,000,000
5 Phillies $315,000,000 $279,000,000
6 Giants $300,000,000 $262,000,000
7 Angels $275,000,000 $239,000,000
8 Mets $265,000,000 $232,000,000
9 Rangers $260,000,000 $239,000,000
10 Cardinals $250,000,000 $239,000,000
11 Tigers $245,000,000 $238,000,000
12 Nationals $230,000,000 $225,000,000
13 White Sox $225,000,000 $216,000,000
14 Mariners $225,000,000 $215,000,000
15 Braves $225,000,000 $225,000,000
16 Twins $215,000,000 $214,000,000
17 Orioles $210,000,000 $206,000,000
18 Blue Jays $210,000,000 $203,000,000
19 Astros $205,000,000 $196,000,000
20 Brewers $205,000,000 $201,000,000
21 Reds $205,000,000 $202,000,000
22 Marlins $200,000,000 $195,000,000
23 Padres $195,000,000 $189,000,000
24 D’Backs $195,000,000 $195,000,000
25 Rockies $195,000,000 $199,000,000
26 Indians $190,000,000 $186,000,000
27 Pirates $185,000,000 $178,000,000
28 Royals $180,000,000 $169,000,000
29 A’s $175,000,000 $173,000,000
30 Rays $175,000,000 $167,000,000

That’s a nearly $100 million differential in the Yankees’ revenue, $80 million for the Dodgers, $60 million for the Red Sox, $45 million for the Cubs, and $35 for the Phillies and Giants. Without more details from Forbes and Bloomberg, we’re left to wonder how they could have reached such wildly different revenue estimates for these teams.

Dig into the details. See how your team stacks up. By Opening Day 2014, we’ll have entirely new numbers from Forbes to play with.

 




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Wendy's baseball writing has also been published by Sports on Earth. ESPN.com, SB Nation, The Score, Bay Area Sports Guy, The Classical and San Francisco Magazine. Wendy practiced law for 18 years before beginning her writing career. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.


43 Responses to “Forbes, Bloomberg Battle It Out on MLB Team Valuations”

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  1. JCC says:

    Just two points:

    1) Here’s the classic takedown of Forbes valuations, at least as far as hockey http://www.mc79hockey.com/?p=4784

    2) It should be noted that one of the editorial guys who worked on the Bloomberg valuations, the one who wrote up the main article, used to work for Forbes. When there, he played a part in one of the silliest sports-value articles of its era, one that Forbes doesn’t have up anymore, but that lives on in Google cache http://webcache.googleusercontent.com/search?q=cache:Pkn9Dd5bbPgJ:www.forbes.com/2007/03/02/sports-greatest-gms-biz-cz_jg_0302gms.html+&cd=1&hl=en&ct=clnk&gl=us Deadspin explained what went wrong http://deadspin.com/241399/kevin-mchale-is-the-best-general-manager-in-the-history-of-sports

    So, yeah, these measures could have some validity, but until teams actually open their books, I barely trust the inputs and methodology of either set.

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  2. ALane says:

    Bloomberg has some teams at a significantly higher valuation without a TV equity piece.

    Could some of the difference concerning the Philadelphia value be that their current TV contract expires in 2015 and is currently only in the $30 million range?

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  3. Colin Pating says:

    A lot of the Dodgers’ revenue difference is probably due to when the articles were published. The Dodgers had very low attendance in McCourt’s last year, and league highs this year.

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  4. True North says:

    The Bloomberg and Forbes numbers are very questionable.

    Let’s compare the Jays and Red Sox in regards to TV equity.

    The Red Sox RSN is NESN which has a subscriber base of 4 million and annual revenues of $ 241 million in 2012. The Sox averaged TV viewership of about 173,000 households ( 242,000 viewers in 2013)and are 80% owned by the Red Sox parent company with the other 20% owned by the Bruins. For this Bloomberg gives them an equity stake of $675 million for NESN.

    The Blue Jays RSN is Rogers Sportsnet, they have a subscriber base of 9.3 million and in 2012 had revenues of $312 million. The RSN is 100% owned by the parent company Rogers, the Jays average about 500,000 viewers /game and for this Bloomberg gives them a TV equity stake of $ 236 million.

    It may be cold up here in Canada, but we do have televisions broadcasting to our Igloos, even in the summer for baseball.

    http://paidcontent.org/2012/03/10/419-why-arent-more-people-cutting-the-cord-regional-sports-networks/

    c.ca/eng/publications/reports/BrAnalysis/psp2012/individual/194.htm

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    • SK says:

      a major difference is that NESN is a subsidiary of the Red Sox where as the Blue Jays are a subsidiary of Rogers.

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      • Mike Green says:

        I don’t see that as a major difference. The question is whether a significant part of Rogers Sports Network revenue can be attributed to events other than Blue Jay baseball. Presumably it would have to be much more than 20% for the Bloomberg TV equity figures to make any sense.

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      • True North says:

        True enough, but the revenue generated from the Blue Jays TV viewership has to go somewhere. In fact Rogers media executives openly brag that if the team can be successful on the field they can get to the 1 million mark/game which is a lot of advertising revenue ( remember they have most of Canada , except Quebec as their market). I think Rogers is open to putting more money into the Blue Jays payroll because of this.

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        • True North says:

          I think Mike clarifies it quite well, certainly in the summer between the actual games ( mostly in prime time), the pre/post game shows and the Jays in 30 minutes replay on all 6 of their platforms there is a lot of content ( not to mention in their half hour sports news shows, where they often go back live to the stadium for interviews and analysis.

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  5. Jetrer says:

    I don’t think there is a nearly $100M differential in Yankee revenue.
    Forbes reported Yankee revenue net of Revenue Sharing. It appears the Bloomberg revenue sharing might be pre-revenue sharing.
    Bloomberg reports revenue sharing separately (a $97M to the Yankees) which would wipe out almost the entire difference between the 2.
    If this is the case (that Bloomberg’s revenue number’s are pre-revenue sharing), that would explain a great deal of the discrepancy in the large market teams.
    Although if this was true, Forbes valuations for the small market teams’ revenues should be consistently higher than Bloomberg’s, which they aren’t, so I’m not sure exactly what’s going on there.

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  6. Sweet Brown says:

    Wendy, your pieces on the business of baseball are excellent. Thank you. A question struck me recently that I think you could probably answer. Here it is: Baseball TV deals have gotten highly valuable because people watch games in realtime, and therefore cannot skip the advertisements. So knowing that their audience will have to suffer through watching ads, the cable channel can charge more for ad slots during games. Baseball teams know this, and so they charge cable channels more for the rights to show baseball games. It’s all logical, until you watch the ads during baseball games. They have to be some of the worst ads on TV. All local car dealerships and catheters. If these ad slots are so valuable, why do they get filled by the bottom of the barrel? Thanks.

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    • quincy0191 says:

      I’m not Wendy, but I’d say it’s about the nature of baseball. Most of the baseball audience is local, so there’s relatively little value for national advertisers and their high-production-value ads. For example, it’s difficult to watch a game between the Dodgers and Giants in Atlanta with ads; either you live in the local area and watch on TV with ads, or you don’t and watch on MLB.tv without ads. You can buy out-of-market channels from a lot of providers, but most people just get MLB.tv I’d say.

      The nationally televised games tend to have more typical ads from national companies, because they can reach a larger audience (they don’t do all that well, but much better than just a locally televised game). It’s not worth it for a national advertiser to buy ad space in 30 different local markets instead of one national run, and of course local advertisers aren’t interested in wasting their money on national spots. So local broadcasts = local ads.

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      • Sweet Brown says:

        Ok, I agree with you. Local games = local ads. But then this breaks down the logic of why baseball broadcasts have gotten so valuable. If you can only sell ad slots to used car dealers and ambulance chasers, then why is broadcasting the game worth so much?

        And I disagree that nationally broadcast games have superior ads. Maybe rather than being 95% cars and medical malpractice locally, they’re 60% nationally, with the different made up by beer and liquour.

        So I guess my question really gets back to the fundamental of why have these TV deals gotten so huge? I’m sure it’s in one of Wendy’s past articles. I guess I’ll read through them again.

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        • It's really quite simple says:

          There are 81 home games in Baseball. 8 in the NFL.

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        • BSLJeffLong says:

          It’s not about the ads. Those are icing on the cake. The value is in the subscriber fees that must be paid by everyone who has the RSN in their TV package. These can range from $1.50 to $3+ per home per month.

          Also, local advertisers do spend for ads, but oftentimes those are negotiated as part of larger sponsorship packages with the team which helps sell in-stadium ads, appearance fees for players, etc.

          If you take True North’s number from above – the Red Sox have a subscriber base of 4 Million. That means over $140M annually just from subscriber fees (despite the fact that only 173K people watch any given game.

          4,000,000 subscribers * $4/mo. * 12 mo./yr. = $144,000,000

          In the case of True North’s numbers above, that is roughly 60% of the RSN’s total revenue, guaranteed before selling a single ad.

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        • joser says:

          BSLJeffLong has it nailed. ESPN’s fee is by far the biggest slice of your cable bill (and they also ensure you’ll get every other Disney-owned property as part of the package whether you want them or not) and the other sports channels take their pound of flesh too. Which is why we’ve seen the debut of things like Fox One and the various college “Conference” channels.

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    • Wendy Thurm says:

      A very good question. Not sure what market you are in. In the Bay Area, commercials during Giants games are not med mal attorneys. More high end local business stuff. The bigger the market, the more high end the commercials, I think. That’s why bigger markets can command higher local TV deals than smaller ones.

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      • 5w30 says:

        But, Wendy did you see the commercials on Sports Net New York [SNY] during the last Mets season? Bankruptcy, workmens compensation attorneys, that sort of thing. The Mets couldn’t sell advertising to high-enders, so were stuck with dreck, as they are now. And a lot of cheap promos for bad shows.

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        • Marcus Tullius Cicero says:

          Bankruptcy lawyers and workmen’s compensation attorneys seem like exactly what the Mets need.

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        • Eric R says:

          About 80-85% of the cable ads are sold by the networks and the balance by your local cable company.

          So, most of the ads you see on ESPN are bought for the whole country to see and then a small number are available to the regional and local businesses.

          The small local businesses are almost certainly buying from that smaller 10-15% portion, since they probably can’t afford to spend the money to cover the whole region SNY covers and probably don’t want to anyway.

          A service business in Albany certainly doesn’t want to pay for people to see their ad in Buffalo, let alone NYC if those markets aren’t likely to drive much if any business.

          A single 30 second spot in Albany might be $30, but full-footprint is probably more like $10k+. That smaller market advertiser can get a spot in 150 games probably for less than a single spot that airs regionally.

          Given that– you local ambulance chasers getting a lot of airtime more reflects the local cable sales office ability to sell in your market.

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    • Rule of Law says:

      You’re ignoring the most pertinent question: Why does Bo Jackson use 5-Hour Energy?

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  7. quincy0191 says:

    I’m currently working at Bloomberg Sports, and was asked to evaluate Bloomberg’s numbers for our site back when they were first published. I can’t provide any insight to where the final figures come from (because I don’t know, not because of any secrets or anything) but I thought their numbers were a little low, mostly due to economic principles at work in the sports industry.

    In general, I do like Bloomberg’s numbers a bit more than Forbes (again, leaving bias out of it), because they’re more transparent, they’re more recent, and they line up a little more with the method of evaluation I feel is appropriate. The point about including network valuation is critical; a huge part of the Yankees’ value is in YES, and the franchise has intentionally de-valued itself in exchange for greater growth in their network (I guarantee they’re selling their TV rights to YES for less than they’re worth, both for YES’s benefit and because of the revenue-sharing rules).

    Still, it’d be nice to see someone try to take barriers to entry or the safety net of the commissioner’s office into account when valuing a team. Baseball teams don’t operate or gain value like traditional businesses. There’s no question that the sell price of the Yankees would greatly exceed $3.3 billion if the Steinbrenners put them up; I’d guess it would be somewhere closer to the $8-10 billion range. That’s a pretty substantial difference.

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  8. Pirates Hurdles says:

    I am somewhat surprised that to see a 50% increase in revenue above the lowest revenue team, you have to go all the way up to the 8th highest revenue team. That suggests that most of MLB is playing with an adequately similar revenue pool. Its really just NYY and BOS that stand out as being disproportionally advantaged.

    I’m not sure this is remotely accurate though, how can revenues be so similar when teams like LAA, LAD, and TEX have huge annual TV contracts?

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    • Spencer D says:

      There are other things that comprise revenue. The Yankees might not have had the highest attendance, but they can earn far more from attendance because tickets, food, and extras are far more expensive than anywhere else.

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      • Pirates Hurdles says:

        Yeah, that’s my point. I find it hard to believe that revenue is so tightly grouped because there are so many different sources. Just look at TV as an example. The Pirates may get $15million a year at high estimates while the Angels get $150 million a year in there giant deal. Something is missing unless revenue is narrowly defined here. I find it hard to believe that the Pirates revenue stream is only 50% less than the NY Mets or Texas.

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  9. doff123 says:

    the white sox have a higher TV contract value than the cubs–I can only imagine this is because Rinesdorf owns 40 pct of CSN Chicago because he owns the Bulls. So shouldn’t part of that value, then, be going to the Bulls? Or maybe I’m misunderstanding something. Do the Sox perhaps get extra revenues from having more games on CSN vs. the Cubs legacy contract with WGN?

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  10. Charlie says:

    Poor Tom Ricketts?

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    • stan says:

      The Cubs payroll has been shrinking significantly since the Ricketts family took over. They are crying poor in getting zoning variances from the City and trying to get out of contracts with the rooftop owners, yet their revenues are 4th in the league no matter which valuation you use. I realize that the Cubs are spending a lot of money in trying to get young talent into the organization any way they can, but that doesn’t even account for the drop in payroll, much less the revenues they were already getting.

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  11. joser says:

    Forbe’s objection to including RSN equity seems rather arbitrary. The Yankees don’t have any parking revenue because they effectively “sold it off” as part of their stadium deal; back when he was running the Dodgers into the ground, McCourt had packaged the parking, ticketing, and various other revenue streams into separate companies and borrowed against them, so in a worst case (for the Dodgers) those could’ve been sold off as part of his divorce settlement. All of those things could be separate businesses, so if they’re included the TV rights should be too.

    The accounting might be a little muddier for the RSNs — particularly the ones that are the home to multiple teams in multiple sports — but sorting out and assigning value is what accounting is supposed to do. You don’t just throw your hands up and say you’re not going to include it.

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  12. Jake MacGregor says:

    I am struck by the seemingly inverse relationship between valuation and making the playoffs last year. The Red Sox, of course, are the exception.

    BUT the preponderance of teams that made it into the playoffs were # 14 and below:

    #14 Tigers
    #15 Cards
    #17 Braves
    #21 Reds
    #23 Pirates
    #26 A’s
    #28 Indians
    #30 Rays

    only top value teams that made into the tournament

    #2 Dodgers
    #3 Red Sox
    #10 Rangers (sort of, they lost play in)

    final unrelated thought: Odd isn’t it that TBS and Braves affiliation was demolished and now that is the model.

    I’d enjoy Susan’s thoughts on why the inverse relationship twixt value and performance.

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    • Ruki Motomiya says:

      You’d probably need to look over multiple years to see if it holds true or if this year was an anomaly.

      But the value in top dollar isn’t that you get to the playoffs, but that you do so consistantly (For example, even the Yankees don’t win it all every year, but they are in contention to do so pretty much every year: Even in the year with injuries and declining talent, the Yankees went 85-77).

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      • Dylan says:

        Yet perennial contender Cardinals are middle of the pack value-wise? I don’t understand that ranking.

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        • Spencer Dean says:

          St. Louis is one of the smallest media markets in the country.

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        • Antonio Bananas says:

          St. Louis itself is a small media market, but look at the Cards broadcast territory. It’s ENRORMOUS. It covers several stats and includes many other well-sized cities like Memphis.

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        • http://en.wikipedia.org/wiki/File:MLB_Blackout_Areas.png
          This may be outdated but just look at how big STLs territory is. A lot of it is shared but it’s shared with teams they are more popular than such as the Royals, Astros, and Rangers. I live in southern missouri, the cards are very popular in southern MO, southern IL, arkansas, and oklahoma.

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        • Mr Punch says:

          Sure, but if the Red Sox were in the NL Central they’d win almost every year, including some when the Cards won the World Series (like 2006). The competition matters. What you’re really seeing here is the historical incompetence of the Cubs.

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    • pft says:

      I expect revenue sharing and the draft have a lot to do with this.

      Also, the luxury tax now being linked with revenue sharing rebates have pretty much added a defacto salary cap and put the Yankees out of the free agent market to save 60 million a year in salary/tax/rebates. This is about 2% of their massive valuation which is in excess of 3 billion at the risk of almost as much revenue if they don’t compete, and given valuation is about 4-5 x revenue dollars it potentially reduces their value. Their salary + tax seems well within 50% of revenues which is the industry standard. So no idea why they feel the need to risk competitiveness, revenue and valuation (actually I have a few ideas which I will spare you) by cutting salary.

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  13. joser says:

    Always read anything you write, Ms Thurm. With respect to TV money, have you looked into the CSN Houston bankruptcy and have any insight?

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    • Wendy Thurm says:

      I have been following the situation in Houston. David Barron at the Houston Chronicle has done excellent reporting so far. I will write about it when I feel I have something to add.

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  14. Jake MacGregor says:

    okay, my Parkinson’s disease caused me to replace Wendy with Susan (Slusser) … apologies Wendy as i adore your writing.

    Regards

    Jake

    PS … and to all fellow Marines – Happy Birthday!

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  15. pft says:

    Interesting the Red Sox are ranked 7th in media rights. The Cubs get more for media rights. Talk about a revenue sharing dodge.

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  16. RobM says:

    I think Bloomberg’s approach makes more sense, even though I’m not sure how much to trust the numbers from either. Sure, a team could be sold minus its TV revnue, but it would substantially reduce the value of the team to the point where they would have to be added back in. It would be as if a business went up for sale, but the buyer was basically told up front that the bulk of the profits, if not all the profits, would not be included. Who would buy the business?

    Using the Yankees as an example. They have segregated the majority of their profits into separate LLC’s that are hidden from MLB. The bulk of YES TV revenues as well as the consessions business do not appear as part of the Yankees baseball team beyond some below-market licensing agreements between the Yankees ball club and YES Global Enterprises, or whatever the name of the parent organization is. Yet those businesses can’t exist without the Yankees. The Steinbrenners couldn’t sell the Yankees at a fair price without also selling the profitable portions of the business. And if they decided to say “screw it”, we’re only selling the ballclub and keeping the profits for ourselves, that decision would ultimately hurt the Yankees ballclub who suddenly wouldn’t have access to the revenues required to be competitive, which in turn would hurt the profitble businesses as TV ratings would drop, advertising dollars decrease, concessions would drop, etc. So the two have to be linked. The current setup is designed to shield the Yankees revenue from revenue sharing and the prying eyes of MLB.

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