Forbes: Yanks now worth $1.6 billionBy
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.