A couple days back, Badger commented that the owners profiting from the sale of their franchises would offset any occasional temporary annual operating loss. Currently there are two franchises that are in the process of being sold: The Los Angeles Angels and The Washington Nationals.
On May 15, 2003, Arte Moreno purchased the Angels for $183.5MM. In their most recent study, Forbes has valued the Angels at $2.2B. In 20 years, Moreno is going to bank $2B on a less than $200MM asset cost. That is an excellent return, even for a team that never got to the WS while he was owner. In the early years of his ownership, LAA did get to the playoffs:
- 2004 – Lost ALDS
- 2005 – Lost ALCS
- 2007 – Lost ALDS
- 2008 – Lost ALDS
- 2009 – Lost ALCS
- 2014 – Lost ALDS (3 games to 0)
The Angels have been to the playoffs one time since 2009, and they have not won a playoff game since 2009. They have made some improvements this winter, but not enough to catch Houston, and probably good enough to only beat out the A’s in the AL West. It is time for Arte to pack it in with a $2B profit on his investment.
The Lerner family purchased the Washington Nationals for $450MM in 2006. Also in the most recent study, Forbes has valued the franchise at $2B. The Nats have won a WS since the Lerner family purchased the team. $1.5B gain on sale. While not as profitable as the potential return on the sale of the Angels, it is still an outstanding return.
The two flagship franchises were last sold in a 40 year gap. On January 3, 1973, George Steinbrenner purchased the New York Yankees for $10 million from Columbia Broadcasting System. Forbes has valued the New York Yankees franchise at $6B. There are undercurrents that the Steinbrenner might be considering selling the historic franchise.
On March 27, 2012, the Guggenheim Baseball Management purchased the Los Angeles Dodgers from Frank McCourt for a record price of $2 billion, the highest ever paid for a professional sports team at the time. While even driving the Dodgers into bankruptcy proceedings, McCourt made a fortune on his purchase and sale. Forbes has now valued the franchise at $4.07B. $2B return on $2B investment in 11 years. I doubt the value is going to decrease.
On the other side of the franchise values, the most recent sale was the Miami Marlins. August 2017 Bruce Sherman bought the Miami Marlins for $1.2 billion. He brought in New York Yankees legend Derek Jeter as a minority investor and CEO to help turn around the struggling baseball team. That marriage did not last long and Sherman bought out Jeter in February 2022.
A month before the 2017 purchase, the Sherman-Jeter group put out Project Wolverine to lure investors. Per Forbes,
“…the financial model ran the team’s P&L statement from 2016 through 2027 and projected that the Marlins would be generating operating income (in the sense of earnings before interest, taxes, depreciation and amortization) of $23 million and $33 million in 2018 and 2019, respectively. Profits would hit $48 million in 2021. The value of the Marlins would be $2.1 billion by now, according to Project Wolverine.”
Never happened. It was a Looney Tunes projection.
Forbes’ latest valuations had the value of the Marlins pegged at just $990 million, and their data shows the Marlins losing money each of the past four years. During the 2020 season (published in 2021) the Marlins lost $55 million. In the five years of his ownership, the value of the Marlins has actually decreased.
Bruce Sherman with a net worth of $500MM does not have the wealth that most owners have. It is a little more difficult for him to pour his own money like Steve Cohen can. Sherman is on an island without much help. Most of his top baseball people have left, and what is left is not very experienced at the highest levels.
Outside of Sherman, most teams are fundamentally sound financially, and yes it is hard to imagine how their investments will not grow significantly.
2021 Revenues and Franchise Value (per Forbes)
Ranking MLB Teams With Highest Revenue Generated
|#No.||Teams||Annual Revenue||Team Value|
|1||Los Angeles Dodgers||$565 million||$4.07 billion|
|2||New York Yankees||$482 million||$6 billion|
|3||Boston Red Sox||$479 million||$3.9 billion|
|4||Atlanta Braves||$443 million||$2.1 billion|
|5||Chicago Cubs||$425 million||$3.8 billion|
|6||Houston Astros||$388 million||$1.98 billion|
|7||Texas Rangers||$387 million||$2.05 billion|
|8||San Francisco Giants||$384 million||$3.5 billion|
|9||Los Angeles Angels||$331 million||$2.2 billion|
|10||Philadelphia Phillies||$323 million||$2.3 billion|
|11||Washington Nationals||$322 million||$2 billion|
|12||Seattle Mariners||$313 million||$1.7 billion|
|13||New York Mets||$302 million||$2.65 billion|
|14||St Louis Cardinals||$287 million||$2.45 billion|
|15||San Diego Padres||$282 million||$1.57 billion|
|16||Colorado Rockies||$270 million||$1.38 billion|
|17||Milwaukee Brewers||$269 million||$1.28 billion|
|18||Minnesota Twins||$268 million||$1.39 billion|
|19||Detroit Tigers||$268 million||$1.4 billion|
|20||Cleveland Guardians||$267 million||$1.3 billion|
|21||Arizona Diamondbacks||$267 million||$1.38 billion|
|22||Cincinnati Reds||$266 million||$1.19 billion|
|23||Kansas City Royals||$263 million||$1.11 billion|
|24||Chicago White Sox||$258 million||$1.76 billion|
|25||Pittsburgh Pirates||$258 million||$1.32 billion|
|26||Tampa Bay Rays||$252 million||$1.1 billion|
|27||Baltimore Orioles||$251 million||$1.37 billion|
|28||Toronto Blue Jays||$238 million||$1.78 billion|
|29||Oakland Athletics||$208 million||$1.18 billion|
|30||Miami Marlins||$240 million||$0.99 billion|
Dodgers starting 5 #AlwaysLA pic.twitter.com/lIybntYBrz
— DΛVΣ (@DoyersDave) December 29, 2022
In the last post STB posted the following:
I would not be interested in Grisham, but I would like Ha-Seong Kim. He is excellent defensively at SS or 2B, makes contact, a 3.7 fWAR (5.1 bWAR), with a 107 OPS+. He is affordable with salaries due for the next two years at $15MM with a $2MM buyout of the 2025 $7MM mutual option. The AAV is $7MM. He will absolutely opt out after 2024.
I am just not sure that the Padres and LAD match up trade wise. SD has pitching prospects, but not at the level of Miller or Stone, but I would not offer either for Kim. They need catching, but Kim is not worth either Cartaya or Rushing. Kim is not worth a top 100 player. I think I would trade Maddux Bruns, Jose Ramos and a lottery ticket. It may take one of Jorbit Vivas or Eddys Leonard to eliminate a 40 man spot for Kim. I would not include Amaya because I think Amaya could grow into a Kim, just not this year.
It will be interesting to watch how the collapse of the RSN (Regional Sports Network) market impacts revenue.
Interestingly, the Trade Simulator has Grisham and Kim fairly close in value, so I’m going to say again that I really don’t like their value system. They have Grisham at about 18 and Kim at about 21.
Kim would match up with Stone even up. We aren’t doing that.
I don’t think there is any way they do Bruns, Ramos and a lottery ticket. The Simulator would tell you it should be Bruns, Ramos and Pepiot.
I expect to come here tomorrow morning and see that Fred (Bum Fred, not Vogel Fred) has suggested CT3 and Muncy. I bet Preller would be more than happy to do that, although it would add a lot to his payroll.
I agree that Preller would not accept Bruns, Ramos, and a lottery ticket, but you asked what would I offer. That is all I would offer. I like Kim, just not enough to give up top 100 prospect.
I won’t have to bring up their names as you already did. Am I living vicariously in your head?
There’s lots of empty space in there Fred. You’ll have plenty of room to roam around.
I’m getting more lazy all the time so I doubt you will notice me in there but Jung and Darwin have both said unexpected thoughts can and will leak out of our subconscious so beware.
I have come to expect the unexpected thoughts. I often find them more interesting than what I come up with on my own.
Reed DFA’d to make room on the 40 man for JD Martinez.
Very interesting post today Jeff. Worthy of much discussion. You already know what I think.
I have wondered if this missile will eventually stall out and what that might look like. But the entertainment industry seems to sustaining momentum. People need to be entertained and will pay whatever it takes. And looking at your numbers another thought comes to mind – the rich get richer. The moment I realized this is profoundly out of whack? When the unctuous Frank McCourt declared bankruptcy then walked away with over a billion. What a world.
And he kept almost all of it after divorcing who the LA Times’ Simmons called size 0.
Hello Bobby. I look forward to commenting here. Grab Mushers Pop and bring him with you. Oh those lakers.
Sandy is the Greatest
Here is a good summary of Dodgers rotation
I don’t trust Gonsolin to finish without issues. I can’t help but think he’s a TJ candidate. I look forward to what Syndergaard and May will bring. And as you know I’m a Miller fan. I think he’s gonna kick the door down this year.
It’s already been said but it bears repeating–It’s Miller Time!
Happy Birthday to Sandy Koufax, 83 years young today.
Very informative article, Jeff!
I enjoy your insights back from your posts on LADT. I think both sites are entertaining.
The Forbes info shows the Mets annual revenue for 2021 at $302 million. Although their revenue has likely increased in 2022, their current payroll including Correa and the luxury tax is estimated at $500 million for 2023. Not many businesses can operate long term when their payroll is 1.6 times their revenue.
I understand that Cohen has almost unlimited resources, but only a few other teams can get close to the Mets payroll. This will create an even larger gap between the top 5-10 teams and the rest of the league. The majority of owners will be forced to operate on payrolls less than half of the Mets or forced to sell teams to Bezos, Musk, or other multi-billionaires. The players and agents may benefit in the short run, but most fans will not enjoy the competitive imbalance.
Thank you for coming by. I apologize for the delay in approving your first post. There should not be a delay in the future.
Happy New Year!!
Please don’t buy the Dodgers Elon. The way you have thinned out Twitter you probably would get rid of Cody, Justin, Joc, Kike’, AJ, Cory…
Steve Cohen was a finalist in the Dodgers bid when Guggs purchased the franchise.