Apr
23

Forbes: Yanks worth $1.5 billion

By

Despite a bad economy, the Yankees are still worth a pretty penny. (Graph via The Biz of Baseball)

It’s good to be rich, and in the world of baseball, no one has the potential to be as rich as the Yankees.

Forbes, everyone’s favorite money magazine, released their annual valuation of baseball teams this week, and unsurprisingly, the Yankees are at the top of the list. According to Forbes, with the revenue from the wildly successful YES Network and a new state-of-the-art stadium, the team is now worth $1.5 billion, nearly $600 million more than the Mets, baseball’s second most valuable team.

The Yankees dominate the list nearly across the board. In addition to the $1.5 billion valuation, the team saw their market value increase by 15 percent over 2008. It is by far the largest increase among baseball teams, and as ten teams saw their value decline, the Yanks’ increase and the Mets’ 11 percent jump are largely responsible for the overall one percent increase in the value of baseball teams.

The Yanks also draw in $375 million in operating revenue, and while their net income is in the red at -$3.7 million, the Yankees entity is profitable due to the rest of their holdings. That negative number is due to revenue sharing, and while it probably won’t turn significantly positive, that money won’t be going to fund other teams in the short term.

In what is by far the clearest explanation of the revenue sharing process, Forbes’ writers Michael K. Ozanian and Kurt Badenhausen break down the Yanks’ net negative income:

The new stadium also means the Yankees will have to hand over a lower percentage of their revenue to rivals. Yes, the team’s stadium revenue–tickets, suites, advertising, concessions–is likely to go up by more than $100 million this season.

But MLB permits teams to deduct stadium-operating and debt expenses from revenue before calculating the amount the league will take from them to subsidize other teams. Last season the Yankees had to hand over $95 million to the league so it could be distributed to teams like the Florida Marlins, Pittsburgh Pirates, Kansas City Royals and Tampa Bay Rays. In the new stadium the Yankees’ deductible expenses will be around $100 million, enough to wipe out the windfall in revenue.

Meanwhile, the strangest list is the one of teams by operating income. This is the only iteration not topped by the Yankees, but the Yankees fund this list. As Maury Brown makes abundantly clear in his write-up of the Forbes list, the Marlins are atop this list because Jeffrey Loria is basically pocketing the money. “With a slap to the face of the revenue-sharing system, and a clear sign that Jeffery Loria loves living on welfare, he has now officially gotten the Marlins for free,” Brown notes. The Forbes article says that Loria has received more money in revenue sharing payments than he had to pay out to buy the team.

On the bottom of that list, meanwhile, is Detroit. The Tigers play in one of the areas hardest hit by the current economic crisis, and it’s clearly impacting their bottom line. It will be interesting to see how this list shapes up over the next few years. Baseball is holding steady thanks to the strength of the top of the list, but if more teams see their income and value slip, the sport will have to reassess its economics.

After the jump, some lists.


Most Valuable MLB Teams

Team Value ($MIL)
Yankees $1,500
Mets $912
Red Sox $833
Dodgers $722
Cubs $700
Angels $509
Phillies $496
Cardinals $486
Giants $471
White Sox $450

Most Profitable MLB Teams

Team Value ($MIL)
Marlins $43.7
Nationals $42.6
Cubs $29.7
Rays $29.4
Twins $26.8
A's $26.2
Red Sox $25.7
Rockies $24.5
Mets $23.5
Padres $22.9

Categories : News

18 Comments»

  1. A.D. says:

    Nats & Marlins fans should be at least a little upset that their ownership isn’t better investing in the organization.

  2. So basically if I ever want to own a baseball team it won’t be the yankees.

  3. Ed says:

    The Nats and Marlins are really interesting cases. Not only do they top the list in raw profit, but the percent of revenue that is profit.

    Nats profit margin – 23%
    Marlins – 31%

    I didn’t run all the numbers, but I think the next highest is the Rays at 18%. Eyeballing it, most teams fall into the 10-18% range.

  4. GG says:

    These valuations mean absolutely nothing, especially in the case of the Yanks. Only way to figure out the market would be to actually have bidders, and it could be a lot less…or it could be a lot more.

  5. Gordon Bauer says:

    “the team is now worth $1.5 billion, nearly $600 million more than the Mets, baseball’s second most valuable team.”

    So essentially:

    The team is now worth $1.5 billion, nearly (the Los Angeles Angels + 100 million dollars) more than the Mets, baseball’s second most valuable team.”

    Crazy.

  6. Tony says:

    Haters that say we have such a hefty payroll to it’s roster has almost no argument, as the Yanks spending ways greatly contributes to the financial success they’ve had. Other owners simply do not choose to invest in their team and keep the capital.

  7. Sweet Dick Willie says:

    …with the revenue from the wildly successful YES Network…

    Which will undoubtedly become even more wildly successful due to its relationship with RAB!

  8. VO says:

    So basically you can buy the Mets, and Angels for a little less than the Yankees.

  9. William says:

    The Forbes analysis of the revenue sharing isn’t entirely accurate (or at least it is misleading). It seems to imply that last’s year revenue sharing bill will be wiped out by the deduction, but what will really be wiped out is the additional amount that would otherwise be due as a result of increased revenue. If Forbes is right, the Yankees revenue sharing bill be the same. Even though that sounds like a great deal, it should also be remembered that the team is now leveraged on almost 1:1 basis, so debt payments will now make up a much larger expense.

  10. [...] a playoff series; they’ve won two World Series titles since 1993; they are the game’s top profit-maker; and they have the city of Miami building them a stadium. Yet, all is not well in the state of [...]

  11. [...] also up considerably from 2012 ($1.85B), especially with regards to 2011 ($1.6B) and 2010 ($1.5B). You can thank the YES Network and the new Yankee Stadium for [...]

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