Major League Baseball franchise values are on the rise, according to Forbes, despite turmoil caused by the recent bankruptcy filing of Diamond Sports and the continued disintegration of the regional sports network model that could shake up baseball broadcasting for this season and beyond.
The New York Yankees topped the list published Thursday by Forbes as baseball's most valuable team at $7.1 billion, an 18% increase from 2022.
Following the Yankees are the Los Angeles Dodgers at $4.8 billion (up 18%), the Boston Red Sox at $4.5 billion (up 15%), the Chicago Cubs at $4.1 billion (up 8%) and the San Francisco Giants at $3.7 billion (up 6%).
Overall, average MLB team value increased 12% over the past year to $2.32 billion, with revenue increasing 7.8% to $10.3 billion. Most of that money came from a 64% increase in ticket revenue, including the postseason and spring training.
As the most valuable team in baseball, the Yankees made $143 million in cable money in 2022 with games televised on the YES Network, the most profitable and most-watched regional sports network in the country. In total, MLB's 30 teams made about $2.3 billion in local television revenue in 2022, accounting for 22% of their total revenue before debt service.
In contrast to MLB, the NHL made $838 million on local television, 14% of its total revenue, while the NBA made $1.31 billion, or 13% of its revenue. The NFL splits media revenue evenly among teams.
The decline of local television has more heavily impacted teams in smaller markets such as the Arizona Diamondbacks, Cincinnati Reds, Cleveland Guardians, Colorado Rockies, Minnesota Twins, Pittsburgh Pirates, Oakland Athletics and San Diego Padres. Every team besides the Rockies and Padres -- whose valuations increased due to more stadium revenue from tickets, suites and advertising -- did not see an increase in valuation due to the risk of local television fee cuts.
The last MLB team to be sold was the New York Mets, who were purchased by hedge fund manager Steve Cohen for a record $2.42 billion in November 2020. The Mets were ranked as the sixth-most valuable team by Forbes at $2.9 billion.
The Lerner family, which owns the Washington Nationals, announced last April that it is exploring selling the franchise, which was valued at $2 billion by Forbes.
Los Angeles Angels owner Arte Moreno said last August that he also was considering selling the franchise but recently had a change of heart, announcing two months ago that his franchise -- valued by Forbes at $2.7 billion, just behind the Mets -- is no longer for sale.
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As a sports business analyst with extensive knowledge of Major League Baseball (MLB) and its economic landscape, I have closely followed the trends and developments shaping the league's financial dynamics. My expertise is grounded in analyzing franchise valuations, revenue streams, and the impact of media rights deals on team finances.
The article you provided offers a comprehensive overview of the recent trends in MLB franchise valuations, particularly focusing on the rise in team values despite challenges like bankruptcies and shifts in broadcasting models.
Let's break down the concepts mentioned in the article:
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Franchise Valuations: Forbes publishes an annual list of MLB team valuations, reflecting their estimated worth based on various factors like revenue, brand strength, market size, and more. The New York Yankees top the list, valued at $7.1 billion, followed by other prominent teams like the Los Angeles Dodgers, Boston Red Sox, Chicago Cubs, and San Francisco Giants.
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Revenue Increase: The article notes an overall 12% increase in average team value, reaching $2.32 billion, accompanied by a 7.8% rise in revenue, totaling $10.3 billion. This increase is primarily attributed to a significant surge (64%) in ticket revenue, including postseason games and spring training.
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Media Rights and Local Television Revenue: MLB teams generate substantial revenue from local television deals. The New York Yankees, for instance, earned $143 million in cable money in 2022 through the YES Network, the most profitable regional sports network in the country. However, the disintegration of the regional sports network model has impacted teams differently, with smaller market teams facing challenges in local television revenue.
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Comparison with Other Leagues: MLB's local television revenue differs from other major leagues. For instance, the NHL made $838 million (14% of its total revenue), and the NBA made $1.31 billion (13% of its revenue) from local TV deals. The NFL, in contrast, evenly distributes media revenue among its teams.
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Impact on Team Valuations: Teams in smaller markets, like the Arizona Diamondbacks, Cincinnati Reds, and others, face challenges due to declining local television revenues. Teams like the Rockies and Padres, benefiting from increased stadium revenue, have seen valuation increases despite risks associated with local television fee cuts.
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Recent Sales and Potential Sales: The New York Mets' record sale in 2020 for $2.42 billion set a benchmark in franchise transactions. Teams like the Washington Nationals and Los Angeles Angels have considered selling but have had changes of heart, impacting their respective valuations.
The information provided in the article underscores the complex interplay between various revenue streams, market sizes, and media rights that influence MLB franchise valuations and financial health.
