Apr
08

Forbes: Yanks now worth $1.6 billion

By

The Yankees, baseball’s World Champions, are now worth nearly twice as much as the next most valuable franchise, according to Forbes Magazine. In its annual Business of Baseball report, released last night, Forbes pegged the value of the New York Yankees at a cool $1.6 billion, and more surprisingly, the business mag claims the team turned a profit of nearly $25 million in 2009 after six straight seasons of operating in the red.

Hot on the heels of the franchises’ 27th World Series title and with a new stadium raking in the bucks, the Yanks saw their value increase by more than seven percent over 2009. The Red Sox, at $870 million, are ranked number two, and the Mets ($858 million), Dodgers ($727 million) and Cubs ($726 million) round out the top five. The Pirates and A’s, both valued are under $300 million, are MLB’s two cheapest clubs right now.

According to Forbes, the Yanks’ valuation breakdown is as follows: The Yanks’ sport value — that aspect attributable to revenue shared among all teams — is $146 million. The team’s position as New York’s leading franchise lends it $839 million in value. The new stadium contributes $287 million, and brand management — that famous interlocking NY — is worth $328 million on paper. The team, wrote Forbes, also “boast[s] the richest cable deal in baseball and have begun to make money from their new concession business, Legends Hospitality Management, a partnership with the Dallas Cowboys and Goldman Sachs.”

On the revenue side, the Yanks enjoyed great success at their new home. With player obligations, according to Forbes, totaling $240 million, the team enjoyed $319 million in gate receipts and $440 million in overall stadium revenue used for debt payments. The team’s reported profit before interest, taxes, depreciation and amortization checks in at a healthy $24 million, good for tenth in the game. Overall, the Marlins again led the field with a profit in excess of $46 million, and the Red Sox were second at $40 million.

For the Yankees, this report paints a rosy picture. The team had been operating at significant deficits for much of the luxury tax era in the 2000s, but with a new stadium and more success, the franchise has managed to turn a profit. There is however a cloud to this silver lining: The team’s debt/value ratio is 89 percent, second only to the debt-riddled Texas Rangers. The Yankees owe debt on stadium construction bonds and on previous years’ revenue outcomes.

So as we delve into these numbers, it’s worth revisiting the Yanks’ claims of a budget for 2010. For much of the winter, we heard talk about the Yanks’ attention to the bottom line. Brian Cashman adhered to the budget set by the team’s Front Office, and with an eye toward flexibility closer to the July trade deadline, the team was unwilling to stretch that budget.

With a profit, it is possible that the Yanks could have invested more in the team this winter, but at the same time, the franchise owes payment on a significant chunk of debt. As baseball is definitely a business, the team has to keep an eye on both the product on the field and its balance sheet. With the information from Forbes, we have a snapshot of the Yankees as they play out the start of the 2010 season and a better understanding of the economics behind it. The team has never been more valuable, and you can bet that the rest of baseball is well aware of this economic reality.

Categories : News

60 Comments»

  1. Andy in Sunny Daytona says:

    $25 Million? That could pay for 15 Jesus Montero’s and a Cyclops Mateo.

  2. pat says:

    MUAHAHAHAHAHAHAHA

  3. Chris says:

    It’s times like this I wonder what fans would say if the Yankees followed the lead of the Marlins, and pocketed the revenues. So, instead of bitching about the size of the payroll, would they bitch that they just take $150 million in profit and put it in the bank?

    • Rick in Boston says:

      I think we would see huge problems with the small market clubs. A number of them rely on the Yankees to make profit.

      • Thomas says:

        Plus what would Mark Attanasio complain about?

        • Steve H says:

          Being forced to buy the Milwaukee Brewers and then having 10 million Brewers fans move out of state?

          Oh wait, that’s not how it happened, so he knew exactly what he was getting into? Hmmm.

          • rbizzler says:

            Plus as someone pointed out in the original Attanasio thread, the value of his franchise has gone up by well over 100 million bones since he bought the team.

            Methinks his Yankee related rhetoric is posturing before the next CBA talks.

        • Rick in Boston says:

          Not sure. Maybe if House goes off the air? His brother is the exec. producer for it.

  4. Rose says:

    The Pirates and A’s, both valued are under $300 million, are MLB’s two cheapest clubs right now.

    The Pirates have been around since 1887! And the Athletics have been a team (albeit, moved around a bit) since 1901…

    Two of the oldest teams in baseball are worth the least amount.

    Pretty sad…

    • YankeesJunkie says:

      Well that is what happens when your club has been poorly managed and or their is no interest in the team.

      • rbizzler says:

        And in the A’s case they have a terrible facility that does little to draw in casual fans for the ‘day at the ballpark’ experience. At least Pittsburgh has PNC Park which is a gorgeous stadium and a great place to see a game, regardless of the quality of product on the field.

    • vin says:

      We should all chip in and buy the Pirates. They’ve got a new ballpark, an established fan base, and a lengthy history. I’d bet that with some competent leadership they could be in that 600 million range. Of course not making the playoffs in nearly 2 decades has really hurt them.

      • A.D. says:

        Apparently downtown Pitt has been buzzing with their victories to start the season. The desire to go watch good baseball is there, just not the good baseball.

        • Thomas says:

          At least Huntington is starting to get the team back on track. for the first time in a decade the Pirates actually have a future.

        • rbizzler says:

          I went to a Pirates game at PNC last season when the Pirates were out of it and had traded away all of the fan favorites and they still drew a decent crowd.

          If MLB was smart (big if) they would steer the Pirates to Mark Cuban, who has expressed desire to own his hometown Pirates.

      • king of fruitless hypotheticals says:

        hey no offense to anybody that lives in whatever state pittsburgh is in, but what would they think if moved the yankee AAA team to pittsburgh?

        they have problems with field drainage, seats, parking…if we just buy the pirates we can use who we want from their team for our NYY, trade a few in nice bundles, then move the SWB Yanks to pittsburgh…

  5. Mike Z says:

    The New York Yankee$: 1.6 Billion and worth every penny.

  6. Jammy Jammers says:

    The Dolans better act fast!

  7. vin says:

    From the 2nd Forbes link:

    “The average Major League Baseball team is now worth $491 million, 2% more than last year. In 2009, smack in the middle of the worst economy in seven decades, baseball’s 30 franchises turned in a record-high operating income (earnings before interest, taxes, depreciation and amortization) of $522 million, an average of $17.4 million per team.”

    MLB seems to be doing a few things right.

  8. bexarama says:

    The Yankees are bad for baseball.

  9. Kevin M. says:

    Don’t forget that we added a sizeable amount of revenue by going to the World Series last year. I suspect our deep run into the playoffs and all the added home gates (8 extra games I believe) is responsible for probably ALL of the profits.

    The team almost certainly would have lost money without a trip to the playoffs.

  10. mustang says:

    This is impossible we all know that the Yankees are always in the red Forbes must have the numbers all wrong.
    LMAO

    Maybe they can raise the “budget” by $5 or $10 next year.

    • Mattingly's Love Child says:

      Or maybe they can continue to be smart and pay down some of that debt. You increase the budget by $5M, does that include the luxury tax payments? If so, then basically you’re increasing the payroll by $10M. What can the Yanks really get for $5M that would be worth $10M?

      I’d rather they focused on not being the Rangers, with creditors calling looking for payback….

  11. Mike HC says:

    NIce recap.

    I would think the first year of a new stadium had more of an impact on the bottom line than the winning did, but obviously both played a major role.

  12. Ben, out of curiosity, do you have any idea what the depreciation numbers might look like for 2009? I imagine they’re depreciating the new stadium already, right?

  13. Everyone had an operating income last year except Detroit, who lost $30M. Arizona also lost $600K.

  14. mustang says:

    “the team has to keep an eye on both the product on the field and its balance sheet.”

    Damn should I go with the $8000 Ceramic Brakes option on my Porsche 911 or not.
    Damn budget !!!!

  15. Acording to Forbes, the Yanks’ valuation breakdown is as follows: The Yanks’ sport value ??that aspect attributable to revenue shared among all teams ??is $146 million.

    I’m sorry, I can’t follow this. Does this mean our revenue sharing number in 09 was $146M?

  16. dark side of the goon says:

    On last night’s MLB highlights there was almost no one at the Royals game. That is sad. Just sad.

    • Nigel Bangs says:

      I saw that, too. Really unfortunate. If there were no Yankees I think I’d like the Royals. Great stadium, great unis. Nice history there, too.

  17. 28 next year says:

    does this include the revenue from YES Network and Yankee Global Enterprises?

    • I don’t believe so. That money isn’t solely the Yanks. Some of it belongs to Goldman Sachs. Some of it goes to Yankees Global Enterprises, the holding company for both the team and YES. It’s a bit of a complicated financial picture that no one has really explored publicly yet.

    • CalinCT says:

      No. At least, they shouldn’t have….I’d be shocked if they did.

      YES is owned by YGE (who also own the Yanks), Goldman Sachs, and Ray Champman (former owner of the Nets, who did not sell his stake when he sold the team). The YGE group only owns about 40% of YES.

      Their cable deal should only consider the fee paid by YES to the Yanks (which is considerable….more than they were getting from MSG, even adjusting for inflation) as revenue.

      I’m also unclear if the YANKEES (the team) own Legends Hospitality or if YGE owns it (with the Cowboys and Goldman Sachs). If YGE owns it…that revenue and profit also shouldn’t be considered as “Yankees Revenue” because it’s not…and shouldn’t really be factored into the value of the Yankees team because there’s no onus that it be sold WITH the team (ditto with YES, as witnessed by what happened when Chapman sold the Nets).

  18. Rick says:

    The debt/value percentage doesn’t mean a whole lot. That would be close to zero if the Yankees would have completely publicly financed their new stadium which they very easily could have. If they would have done so, they’d be turning an insane profit right now. I’m sure the city is much appreciative of that.

    • king of fruitless hypotheticals says:

      …that doesnt make any sense. the Yanks owe a bajillion dollars for the construction of the stadium. if they’d used corporate bonds instead of special purpose muni bonds they’d owe…still a bajillion dollars. the rate would be 1-1.5% higher, but that’s not going to bankrupt them.

  19. Rick says:

    And another thing. The team NEVER loses money. They may say they lose money in their accounting books but I can assure you from several very credible sources that they never lose money; ever.

    • A.D. says:

      If they lose on books with what Forbes looks at, it doesn’t include the revenue YES is making, just the physical team.

      • king of fruitless hypotheticals says:

        i wasn’t a journalism major in college (neither msm nor ‘new’ media) but i can tell you will a high degree of confidence that while the voices inside your head are several they are not credible.

    • Chris says:

      Forbes indicates the debt/value ratio is 89%, implying $1.4 billion of debt. I don’t know the interest rates on the loans and bonds, but interest expense could be at least $75 or $80 million. The profit estimated by Forbes is EBITDA, earnings before interest, taxes, and depreciation. So, one could see how an outsider with limited info could come up with a projected loss given the magnitude of the interest expense and the depreciation on the new stadium. According to the Forbes article, YES pays $84 million per year to the Yanks for broadcast rights, so I assume this is included in the revenue/profit estimate. It also paid a $100 million dividend to the Yanks. I don’t know how that is handled in the calculations.

      • CalinCT says:

        The Yanks technically don’t own YES (as in, it’s not a holding of the TEAM ,itself, but of their ownership group) so any dividend paid by YES to it’s ownership shouldn’t, rightly, be included in valuation of the team.

  20. MikeD says:

    Not sure I believe Forbes’ numbers since MLB teams don’t open their books. This is all just a guess.

    • It’s not just a guess. The authors have discussed in the past the way they compile data. It involves working with teams, league officials and investment bankers to piece together an accurate picture of the club’s finances. It’s not 100 percent transparent because, as you said, they don’t open their books, but it’s as clear a picture as we can realistically expect.

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