There’s good money in bad baseball

The Minnesota Twins last season lost 103 games, often played in a half-empty stadium, and made a ton of cash.

Forbes, in its annual ranking of Major League Baseball team value, pegs the Twins’ value as $1.025 billion, a 13 percent increase over 2015. The team made nearly $30 million last season, about average for the league.

If you can’t lose money owning the Minnesota Twins, you can’t lose money, although five teams did, according to Forbes.

The Detroit Tigers (-$36.4 million), Los Angeles Dodgers (-$20.5 million), Miami Marlins (-$2.2 million), Baltimore Orioles (-$2.1 million) and Kansas City Royals (-$0.9 million) had operating losses last season. Mostof them also were playoff or near-playoff caliber.

When looking over the numbers, keep in mind that revenue and operating income figures measure cash in versus cash out for the 2016 season (including playoffs) and are net of revenue sharing, stadium debt payments and MLB’s luxury payroll tax.

Team values are enterprise values (equity plus net debt). Revenue and expenses of team-owned real estate (stadiums, stores, parking lots, etc.) owned by the team are included in our valuations, but the value of the real estate itself is excluded.

We also do not include the value of regional sports networks owned by teams or their profits or losses. But we do include the rights fees (and pro-rated upfront bonuses) the RSNs pay the teams.

Not surprisingly, the Yankees are the most valuable team at $3.7 billion.

But even the small market teams make money. The average annual increase in value for a baseball team is about 11 percent since 1998. Over that time, Forbes says, the stock market has averaged a 3.5 percent increase in value per year.

“Baseball is in the middle of a golden age in which its popularity and financial position have never been more secure,” economist Roger Noll told Forbes.

By the way, LeBron James is still more valuable than almost any other team in the world, Forbes says.

  • Gary F

    And they place they do business in is heavily subsided by the government. Just think how much more profitable Whole Foods, Target, or Cabelas would be if the taxpayers built their place of doing business.

    • Not subsidized. Owned.

      • Gary F

        yep.

    • Mike Worcester

      I was thinking along the same lines. What would their bottom double line look like if they had to include the bond costs, maintenance, depreciation, etc. on the facilities which they use? How many teams would then be showing a positive dollar balance? I’d be curious to know. (Somewhere out there, some smart economics prof has probably crunched this I would think.)

    • Postal Customer

      A lot of businesses are subsidized in the form of tax breaks.

    • Tim

      All three of those companies have received plenty of government subsidies over the years.

      For example, Target received $60M to build their Minneapolis HQ, and several million to build their Brooklyn Park campus (with the promise that it would drive a lot of other development, which never happened). And those are just two local examples.

      Cabela’s is notorious for it as well — there’s been a bitter, long-running fight between them and Gander Mountain over it, actually, which the latter obviously has lost. Whole Foods has gotten in on the action too, as have pretty much most companies above a certain size, and many smaller ones.

  • Zachary

    Think we NewsCutters could pool together and buy a scrappy down-on-their-luck baseball team, then with a series of hijinks and comic misunderstandings, turn them, in some sort of wacky fashion, from a bunch of lovable losers into a pennant winning team?

  • Jack Ungerleider

    It’s interesting that the Dodgers (1st on the highest payroll list) and the Tigers (4th) are the only two teams to lose in the 10’s of millions. If I’m understanding the first quoted paragraph that loss may be related to MLB’s luxury tax.

    The trend in payrolls seems to be up this year. The local nine went from a rank of 18 with a payroll just under $100 million last year to a rank of 22 while increasing the payroll by $9 million.

  • lindblomeagles

    Have a question for baseball. If they are in the middle of a golden age, why are they concerned about losing younger viewers? Will they make more money if they speed the game up?