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20 April 2006

$54 million? Not bad for one year

Forbes finally released their annual team valuation list today. The usual suspects are at the top of the food chain, with the Yankees being the first team to surpass the $1 billion mark. The Washington Nationals had the biggest gain, jumping all the way to #6 with its $440 million value. That figure is in line with the expected sales price of still-ownerless franchise. Other low-revenue teams got a big boost as well, including the A's, who jumped from $180 million to $234 million in the calendar year the Wolff/Fisher group has owned the team. This rapid appreciation is due to the continuance of lucrative national TV deals and revenue sharing.

It gets more interesting when looking at how these numbers break down. Forbes usually gets the figures pretty close since franchise sale prices tend to come very close to Forbes' appraisals, so it should be pretty easy to accept these values even with the limited information MLB and the teams make available. Take a look at how the A's and Giants compare:
  • Franchise value: A's - $234 million (+26% change), Giants - $410 million (+8% change)
  • Debt-to-value ratio (less than 40% preferred): A's - 38%, Giants - 37%
  • Wins-to-player cost ratio (% relative to per average wins-per-dollar of salary): A's - 116, Giants - 76
  • Market value: A's - $73 million, Giants - $155 million
  • Brand management: A's - $21 million, Giants - $50 million
  • Season ticket rolls: A's - 8,000, Giants - 28,000
What do these numbers mean to you, the baseball consuming public? Not much if you're looking for huge future payroll increases. These are not liquid or cash figures. And don't be fooled by the Giants' debt-to-value ratio. Other teams with higher debt have ancillary assets they can sell off to reduce the load, the Giants don't unless Magowan and Co. are willing to dig deep into their own portfolios.

On the other hand, the market value and brand management numbers are telling. In both cases, the Giants more than double the A's. The Giants have 350% more season ticket holders, though that could change drastically for the worse next season. This raises more than a few questions, such as:
  • How much are the A's and Giants tapping into their relative markets, and the Bay Area as a whole?
  • Are the A's low values due more to the stadium, ineffective marketing, or other factors?
  • How much of a difference will a new ballpark for the A's really make in the grand scheme of things?
Should the A's get a ballpark built soon and ink better media deals, they could see a surge similar to what the *ahem* Anaheim Angels experienced.

12 comments:

Georob said...

Well, so much for the A's having a quick start to pump up ticket sales. What I fear now is that these early losses will send them into their usual Spring tailspin and that fans and sportswriters will once again "write them off" before they inevitably come out of their slump.

It almost makes you wonder if we'd be better off with a young team that comes out of the gate firing at all cylinders, even if it means peaking too early and being out of the race in August.

Such a team would be a disappointment for sure, but might just contribute more to the revenue stream by enabling more advance ticket sales for the entire season.

Pennants are never won in April, but I think a lot of fans subliminially think so, at least those with disposable income.

Kenny said...

It's not the mediocre April that kills the A's, it's the horrible May.

Jeff said...

Thanks Kenny,

For the reminder....I am going to go find a bridge now....or a really tall building will do.

swirlinabc said...

Expect the Giants season ticket sales to take a plunge next year. As part of the deal with Phone-Co Park, season ticket holders were protected in their season tickets prices for 7 years. This is the last year of the protection. Next season, there is supposed to be a dramatic increase in their prices. If Balco Bonds retires after this season and the Giants still manage to not contend for a pennant, I think there will be some very interesting comparisons between the teams.

Georob said...

Again I say: Put yourself in Peter Magowan's shoes and you'll realize that there's no way that the Giants will just turn San Jose over to the A's without a huge fight, a hugh price, or both. Cry all you want about the territorial rights being unfair(I'm the first to agree, Tony) the fact remains that they DO exist, for better or worse.

We also know that the Giants(or A's, for the that matter) can never sue MLB per the league agreement. But what about all the investors that helped finance Pac Bell Park who were assured that no competitor would set foot in Santa Clara County? What's to stop them?

Bleacher Dave said...

What is the definition of brand managment and market value? I didn't see those in the on-line article.

Marine Layer said...

Market: Portion of franchise's value attributable to its city and market size.

Brand Management: Portion of franchise's value attributable to the management of its brand.

Doesn't tell you much, does it? Forbes doesn't say how they arrive at these numbers, but I imagine some combination of the market value number bizjournals creates and statistics like radio/TV ratings/deals factor in. Brand Management could be based in part on merchandise sales. The Yanks' figures are $530 mil - Market, $190 mil - Brand.

Bleacher Dave said...

Without some understanding of how they were derived, I'd say those numbers are suitable for the bird cages and fish wrap.

drummer510 said...
This comment has been removed by a blog administrator.
Marine Layer said...

MLB's almost immediate statement dismissing the numbers leads me to believe Forbes is more on target than not. The last thing MLB wants is for the union to have ammo going into the next CBA negotiations. A financially thriving MLB is a bad starting point for them. You're not siding with MLB on this, BD, are you?

Jeff said...

Wait a second ML....are you saying that because MLB's collective mouth is moving....they must be lying? Conspiring against the union you say? Less than honest behavior on the part of the owners? Ulterior motives?

All this and yet I'm the "conspiracy theorist"? lol

I know, I know....just good business practice!

Anonymous said...

Where are the A's in terms of wealthiest ownership group? I read the current group was the third wealthiest when they bought the team. Since then Lindner the 2nd wealthiest sold the Reds.