Baseball Team Values 2019: Yankees Lead League At $4.6 Billion
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aseball is more lucrative than it has ever been because of the continued escalation in the value of the sport’s media rights and higher profits.
In November, Fox signed a new seven-year media rights deal with MLB beginning with the 2022 season that is worth almost 50% more than its current eight-year deal with baseball on an annual average rights fee basis. That bodes well for subsequent deals with baseball’s other national media partners, WarnerMedia’s TBS and Walt Disney’s ESPN. Those two agreements also expire after the 2021 season.
Although the new media deals with the three networks will not double in value over their previous deals like the existing agreements did, the increase from $1.55 billion in media revenue per year to, say, $2.2 billion would be huge. MLB has also been adding streaming deals. For example, beginning this season, DAZN will deliver a live MLB show each weeknight to subscribers of DAZN’s digital sports streaming platform that will feature live look-ins to the best MLB action as it’s happening. The three-year deal—worth $100 million per season—will also provide on-demand MLB content and live weekend wrap shows to DAZN subscribers.
As for baseball’s P&L statement, by our count, the 30 MLB teams generated record average operating income (in the sense of earnings before interest, taxes, depreciation and amortization) of $40 million during the 2018 season, 38% more than the previous year. Last season revenue increased 4.8%, to an average of $330 million per team, while player costs (including signing bonuses and benefits) remained flat at $157 million.
The revamped competitive balance tax and international signing rules in the new collective bargaining agreement, which runs from 2017 through 2021, are partly to blame for the slight drag on player spending. So, too, is the greater emphasis on analytics by teams. Indeed, teams are showing they can win a lot without exceeding the tax threshold.
True, the Boston Red Sox won the World Series last year with baseball’s highest payroll and paid a $12 million penalty for exceeding the competitive balance tax threshold. But the Los Angeles Dodgers, previously serial breakers of the tax threshold, made it to the World Series last season while cutting payroll under the tax threshold. The New York Yankees won 100 games, the third most in baseball (Red Sox, 108; Houston Astros, 103), while staying under the tax for the first time since 2002.
The Dodgers had operating income of $95 million last season, the most in baseball. Such richness is a plus when, as in the case of the Dodgers, the owners are in the process of selling small stakes in the team to limited partners. The new investors will pay more if they believe a dividend is more likely than a capital call.
Bottom line: The average baseball team is now worth $1.78 billion, 8% more than a year ago. This is our 22nd rendition of MLB valuations, and over that span the average team value has increased at an 11% compound annual rate of growth. Over the same span NBA and NFL team values have increased 13% and 12%, respectively.
MLB’s central revenue (mainly national television money that is shared equally) was $2.76 billion in 2018, while local revenue (ballpark and local television money) was $7.29 billion. Thus baseball’s pecking order is driven by ticket, sponsorship and local cable television deals.
The New York Yankees are the most valuable team ($4.6 billion) and had local revenue of $712 million last year, the most in MLB and more than the bottom six teams (Miami Marlins, Tampa Bay Rays, Oakland Athletics, Kansas City Royals, Cincinnati Reds and Baltimore Orioles) had combined. The Dodgers ($3.3 billion), Boston Red Sox ($3.2 billion), Chicago Cubs ($3.1 billion) and San Francisco Giants ($3 billion) round out the list of teams worth at least $3 billion.
Methodology: Team values are enterprise values (equity plus net debt) that include the economics of the ballpark but exclude the value of real estate itself. We also do not include the equity value of team-owned regional sports networks. The league’s ownership in Major League Baseball Advanced Media (100%), BamTech (15%), the MLB Network (67%) and league’s investment portfolio are included in our values, equally divided among the 30 teams. These three assets constitute over $400 million in value per team.
Click here for full list of MLB valuations and financial information.
Revenue and operating income (earnings before interest, taxes, depreciation and amortization) measure cash in versus cash out (not accrual accounting) for the 2018 season. Our figures include the postseason and are net of revenue sharing and stadium debt payments for which the team is responsible. Revenues include the prorated upfront bonuses networks pay teams as well as proceeds from non-MLB events at the ballpark. The nonrecurring $50 million each team received in 2018 from the sale of a stake in BamTech to Walt Disney was excluded, as were profits or losses from team-owned RSNs.
Additional reporting by Christina Settimi. Cover Photographs: Getty Images. Collage: Anton Klusener.