Archive for Business of Baseball
6:08pm: Manfred has been elected the 10th commissioner in baseball history, according to multiple reports. Bill Shaikin says the final vote was 30-0. Apparently the other eight teams didn’t flip, they just realized they wouldn’t win. Randy Levine told reporters the Yankees were strong Manfred supporters from the start.
5:00pm: Via Jon Heyman: MLB COO Rob Manfred fell one vote short of being elected MLB’s next commissioner at the quarterly owners’ meetings today. He received 22 of 30 votes with the other eight going to Red Sox chairman Tom Werner. MLB executive Tim Brosnan voluntarily dropped out of the running earlier today. Bud Selig is retiring in January.
The owners are currently working to resolve the situation, according to Heyman. The Yankees were said to be supporting Manfred due to his relationship with the players’ union. Werner is considered an old school type who is likely to attempt to strong-arm the union into getting a favorable deal for the owners when the current Collective Bargaining Agreement expires following the 2016 season. That would greatly increase the chances of a work stoppage. Selig has made it clear he wants Manfred to replace him, but it appears there is still some politicking to be done.
Via Ken Davidoff: The Yankees are likely to support MLB COO Rob Manfred as baseball’s next commissioner. Manfred is up for the job along with MLB executive vice president of business Tim Brosnan and Red Sox chairman Tom Werner. Richard Sandomir and Michael Schmidt note Brewers owner Mark Attanasio and Rays owner Stuart Sternberg were also interviewed for the job but not nominated. Manfred and Werner are considered the favorites with Brosnan lagging behind.
Davidoff says the Yankees figure to support Manfred because of his relationship with the players’ union and the belief that he’ll be able to keep both big and small market teams happy going forward. Manfred spearheaded MLB’s investigation into Biogenesis and testified against Alex Rodriguez during his appeal, though I highly doubt that has anything to do with the team’s willingness to support him. Supporting Manfred is all about what Yankees ownership believes is best for their billions of dollars, not a grudge against A-Rod.
The owners will vote on the next commissioner this Thursday at the quarterly meetings, and a candidate needs 23 of 30 votes to be elected. There’s a chance no one will be elected on Thursday and the search for Bud Selig’s replacement will continue for another few weeks. Selig is retiring in January.
From the obvious news department: ticket sales receive the highest bump in games started by Masahiro Tanaka than any other pitcher in baseball, according to Brian Costa. Data released by StubHub says sales on the secondary market increase 73% when Tanaka is on the mound. Justin Verlander (69%) is second and Jeff Samardzija (68%) is third. The drop-off to the fourth place pitcher is pretty big — Chris Sale is at 29%.
When the Yankees signed Tanaka over the winter, it was obvious his appeal extended beyond his on-field impact. The Yankees know firsthand how marketable and profitable international players can be, especially Japanese players after having megastars like Hideki Matsui and Ichiro Suzuki spent time in the Bronx. Just how much extra cash they make due to these players is unknown but I’m sure it’s substantial. That 73% bump in ticket sales is just a piece of the revenue-generating Tanaka pie.
Forbes published their list of the 50 most valuable sports franchises in the world yesterday, with the Yankees coming in fourth at $2.5 billion. They trail only European soccer clubs Real Madrid ($3.44 billion), Barcelona ($3.2 billion), and Manchester United ($2.81 billion). The Dallas Cowboys are fifth at $2.3 billion and the Dodgers are sixth at $2 billion.
“The Yankees are the most valuable non-soccer team in the world with a worth of $2.5 billion,” writes Kurt Badenhausen. “TV is driving the value of the Bronx Bombers. Fox exercised its option to increase its ownership of the Yankees’ regional sports network, YES, to 80% earlier this year (Yankees Global Enterprises, which is majority owned by the Steinbrenner family retains 20%). As part of the deal, the programming rights fee for the Yankees starts at $105 million (including the amortized value of a $400 million upfront payment) and will hit $350 million a year by 2042.”
The Yankees were ranked as the most valuable franchise in baseball by Forbes for the 17th consecutive year back in March. Forbes estimated the team’s value at $2.3 billion in 2013, $1.85 billion in 2012, $1.7 billion in 2011, and $1.6 billion in 2010, so it’s going nowhere but up despite the mediocrity on the field for the last season and a half. I can’t imagine what the asking price would be if the Steinbrenners ever decided to sell the Yankees. Maybe $4 billion?
The Yankees have extended their player development contract with the Triple-A Scranton franchise through 2018, the team announced. The four-year extension is the maximum allowed. “We are excited. When we brought the franchise affiliation here in 2007, we told everyone we were here to stay and we meant business. We couldn’t be in a better place,” said Brian Cashman in a statement.
After a lengthy affiliation with the Columbus Clippers, the Yankees moved their Triple-A franchise to Scranton for the 2007 season and they’ve been there ever since. It’s a win-win relationship. The Bombers get to keep their extra players 90 minutes away and the Scranton franchise gets the marketing and business perks of being associated with the Yankees. Definite no-brainer and the extension was just a formality. There were no rumblings of moving the Triple-A squad elsewhere.
Forbes released their annual franchise valuations yesterday, and for the 17th straight year, the Yankees are the most valuable franchise in the game. At $2.5 billion, they are more valuable than any other franchise in American sports (Dallas Cowboys are second at $2.3 billion) and $500M more valuable than the Dodgers, who rank second among MLB clubs. The Red Sox are third at $1.5 billion while the Rays bring up the rear at $485M.
“Including the annual average of the $400 million upfront payment the team got for agreeing to sell its controlling stake in the YES Network, to News Corp (now 21st Century Fox), the team raked in over $100 million in cable money last season, by far the most in baseball,” said the write-up. “Even after kicking in $95 million towards the league’s 34% local revenue sharing pool and their $64 million PILOT bond payments for Yankee Stadium last season, the Bronx Bombers led the league in revenue ($461 million).”
The Yankees lost nearly $60M in ticket sales last year and their revenue dropped by $10M overall, so the franchise’s value did not increase as much as it could have with a strong season. Forbes estimated the team’s value at $2.3 billion in 2013, $1.85 billion in 2012, $1.7 billion in 2011, and $1.6 billion in 2010. Bloomberg estimated the franchise’s value at $3.3 billion back in October, for what it’s worth.
Via Brian Costa: The Yankees lost approximately $58M in ticket revenue this past season according to publicly available financial documents the team must file with the city as part of the bonds agreement for the construction of the new Yankee Stadium. Ticket sales and suite licenses totaled $295M in 2013, down from $353M in 2012, $377M in 2011, and $384M in 2010. The team attributes the revenue drop solely to missing the postseason.
“What this clearly shows is that the Yankees’ whole financial equation is built around winning. If you take that away, they become mere mortals from a financial standpoint,” said Vince Gennaro, president of SABR and consultant to MLB teams. That $58M, which doesn’t include lost concession revenue, is greater than what the club would reportedly save by getting under the luxury tax threshold in a given year. That might explain why the team has suddenly reversed course and gone on a spending spree after talking about getting under the threshold (and making moves to make it possible) for the last two years.
Via Susan Latham Carr: The Yankees have reached an agreement to relocate their High-A Florida State League affiliate out of Tampa and up the road a hundred miles or so to Ocala. We first heard the team was in talks with the city of Ocala last December, after plans with Orlando fell through. “I think it makes a lot of sense. It’s a good quality-of-life-type venue,” said Ocala mayor Kent Guinn.
The agreement is in place but the deal is not yet final. Staff will present the agreement to the Ocala City Council tomorrow, where they will also discuss plans for a new $45 million facility. The new building will be used for more than just baseball and will be paid for by a half-cent sales tax increase over the next ten years. The tax hike and several other things must be voted on before the deal is finalized. Preliminary polls show the public is in favor of the deal. If everything goes smoothly, the relocation could be complete in time for Opening Day 2016.
Josh Leventhal says the relocation of the High-A squad will not change anything regarding Spring Training. The Yankees still have 12 years remaining on a 30-year contract that locks them into Steinbrenner Field in Tampa for Spring Training. The Yankees are looking to move their High-A affiliate out of Tampa to improve the market. They currently have to compete with the Rays, the NHL’s Tampa Bay Lightning, and various collegiate sports. High-A Tampa averaged 1,827 fans per game this past season, fourth highest in the historically attendance-starved FSL.
Via Peter Schwartz: The Yankees are currently valued at an estimated $3.28 billion, the highest of any franchise. The Dodgers are a (very) distant second at $2.1 billion. “The Yankees are as successful as you can possibly be,” said Lee Berke, a sports media consultant. “It’s the culmination of a perfect storm coming together: the nation’s number one market, professional sports’ most successful team and tremendously savvy and aggressive ownership.”
That $3.28 billion is broken down into the team itself ($2.09 billion), stakes in the YES Network ($932M) and MLB Advanced Media ($110M, same for every team), and related businesses ($148M) like Legends Hospitality. The team’s net loss in revenue sharing was $97M last year. The full breakdown, including revenue sources and whatnot, is available in this fancy infographic. The value of the Yankees has nothing but go up in recent years, from $1.6 billion in April 2010 to $1.7 billion in March 2011 to $1.8 billion in March 2012 to $2.3 billion in March 2013. What, you didn’t think the Yankees were losing money, did you?