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State of the Screens

More Than A Pastime: MLB Franchise Values Continue To Set Records

By July 30, 2020November 15th, 2021No Comments

Blue light special: Some economists predict that the value of baseball franchises could drop by as much as 20%!

The bull case for increasing franchise values: The average Major League Baseball franchise increased by 4% YoY to $1.9B!

MLB franchise value (YoY growth) according to Forbes:
1) 
2018 – $1.65B
2) 
2019 – $1.78B (↑ 8%)
3) 2020 – $1.85B (↑ 4%)

Top five MLB franchises by value (YoY growth):
1) 
New York Yankees – $5.0B (↑ 9%)
2) Los Angeles Dodgers – $3.4B (↑ 3%)
3) Boston Red Sox – $3.3B (↑ 3%)
4) Chicago Cubs – $3.2B (↑ 3%)
5) San Francisco Giants – $3.1B (↑ 3%)

The bear case for increasing franchise values: The current sale of the New York Mets could be the canary in the coal mine.

Bids by Steve Cohen for the New York Mets (% change):
1) 
Feb-2020 – $2.6B
2) 
Jul-2020 – $2.0B (↓ 23%)

Quote from Marc Ganis – President @ Sportscorp Ltd:
“Baseball team values are a question mark.  There’s always been a gap between what somebody who is selling thinks a team is worth and somebody who might be buying thinks it’s worth. That gap is greater today. There’s an expectation among prospective buyers that there’s a meaningful reduction in value across the board.” 

Bottom line: The Ricketts family purchased the Chicago Cubs during the 2009 financial crisis for a then-record of $700M.  That franchise is now worth $3.2B!

Growth comparison between 2009 and today:
1) 
S&P 500 (minus dividends) – ≈ 2.5X
2) 
Chicago Cubs – 4.6X

Big question #1: What is driving this increase in franchise value?

Quick answer: Total revenue and profits are growing despite a drop in both attendance and TV viewership.

Total revenue (YoY growth) for Major League Baseball:
1) 1992 – $1.2B
2) 2007 – $6.1B
3)
 2018 – $10.3B
4) 2019 – $10.5B (↑ 3%)

Average team profit (YoY growth) for Major League Baseball:
1) 2017 – $29M
2) 2018 – $40M (↑ 27%)
3) 2019 – $50M (↑ 25%)

Big question #2: How does Major League Baseball make money?

Source of revenue for Major League Baseball:
1) 
Game Day – $4.1B (39%)
2) National – $3.1B (29%)
3) Local Media – $2.2B (21%)
4) Sponsorship – $1.1B (11%)

More #1: MLB Playoff Expansion for 2020 Creates More Valuable TV Inventory

More #2: Turner keeps swinging with MLB

More #3: MLB Sees Record $10.7 Billion In Revenues For 2019

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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