Forbes, Bloomberg Battle It Out on MLB Team Valuations

Right around Opening Day, Forbes publishes its annual report on MLB team valuations. There is information on team revenues, debt, net income, and overall franchise value. The 2013 valuations, published in March, relied on 2012 numbers, plus a bit of forecasting about teams likely to land new, lucrative local TV contracts soon.

Now Bloomberg Business is getting into the act. A few weeks ago, Bloomberg published its own MLB team valuations, along with a terrific infographic comparing each team to the 29 others. Bloomberg also dug a bit deeper, and broke down each team’s revenue into gate receipts, concessions, sponsorships, and media rights. Bloomberg also used 2012 numbers, but reflected higher revenue and valuation figures than Forbes’ report from earlier this year.

We’ll get to the numbers in a second, but first a few words about the reliability of these valuations. The Forbes author doesn’t specify his sources. We don’t know if any teams or the league cooperated or provided information. We don’t know what secondary sources he may have relied on if teams didn’t cooperate. Bloomberg, on the other hand, is clear on where it obtained the information in its report:

Data for franchise valuations were provided by sports bankers, media consultants, municipalities, financial statements and people familiar with team operations. Calculations were compiled for the 2012 season and made available to each team and MLB for review and comment. Four teams didn’t return calls or e-mails. Sixteen declined to comment.

That means ten teams did provide at least some comment. Indeed, representatives from the A’s and the Giants told Bloomberg their team valuations were too low.

The fact that Bloomberg reported its sources and Forbes didn’t doesn’t make Bloomberg’s numbers inherently more reliable. Without access to the financial reports each team sends to MLB or to MLB’s own financial records, Forbes and Bloomberg are estimating. There’s some hard data and a lot of educated guesswork. Read the numbers with those caveats in mind.

One more thing. Forbes’ team valuations do not include any equity the team owns in a local sports programming channel. So, for example, the Yankees’ stake in the YES Network is excluded from the team’s valuation. In Forbes’ view, if the TV equity can be valued and sold separately, then it shouldn’t be included in the franchise valuation. Bloomberg takes the opposite view. Those teams that own a slice of their TV broadcaster see substantially higher valuations in the Bloomberg report, as compared to Forbes.

Let’s start with the valuation numbers, following Bloomberg’s rankings.

	Team	Bloomberg Franchise Value	Bloomberg TV Equity	Forbes Franchise Value
1	Yankees	$3,280,000,000	$932,000,000	$2,300,000,000
2	Dodgers	$2,100,000,000	$0	$1,615,000,000
3	Red Sox	$2,060,000,000	$675,000,000	$1,312,000,000
4	Mets	$2,050,000,000	$1,165,000,000	$811,000,000
5	Cubs	$1,230,000,000	$181,000,000	$1,000,000,000
6	Giants	$1,230,000,000	$230,000,000	$786,000,000
7	Orioles	$1,120,000,000	$432,000,000	$618,000,000
8	Angels	$1,090,000,000	$160,000,000	$718,000,000
9	Phillies	$1,040,000,000	$0	$893,000,000
10	Rangers	$1,010,000,000	$120,000,000	$764,000,000
11	White Sox	$960,000,000	$226,000,000	$692,000,000
12	Blue Jays	$950,000,000	$236,000,000	$568,000,000
13	Nationals	$850,000,000	$108,000,000	$631,000,000
14	Tigers	$830,000,000	$0	$643,000,000
15	Cardinals	$805,000,000	$0	$716,000,000
16	Astros	$800,000,000	$139,000,000	$626,000,000
17	Braves	$760,000,000	$0	$629,000,000
18	Mariners	$720,000,000	$0	$644,000,000
19	Twins	$700,000,000	$0	$578,000,000
20	Padres	$685,000,000	$43,000,000	$600,000,000
21	Reds	$680,000,000	$0	$546,000,000
22	Brewers	$615,000,000	$0	$562,000,000
23	Pirates	$610,000,000	$0	$479,000,000
24	D’Backs	$600,000,000	$0	$584,000,000
25	Marlins	$595,000,000	$0	$520,000,000
26	A’s	$590,000,000	$0	$468,000,000
27	Rockies	$580,000,000	$0	$537,000,000
28	Indians	$545,000,000	$0	$559,000,000
29	Royals	$540,000,000	$0	$457,000,000
30	Rays	$530,000,000	$0	$451,000,000

For many top tier teams, the Forbes valuation number added to the TV Equity number gets close to the Bloomberg valuation number. Given how Forbes excluded the TV equity piece, that makes sense. Bloomberg has some teams at a significantly higher valuation without a TV equity piece — the Dodgers, Phillies, and Tigers, as prime examples. The Dodgers’ valuation is likely influenced by the expected TV deal with Time Warner to launch SportsNet LA. That deal — announced early this year as $7 billion to $8 billion over 25 years — may very well push the Dodgers ahead of the Yankees in 2014.

The lower tier teams see an even bigger value differential from Bloomberg, as compared to Forbes, and it’s not clear why. Both Forbes and Bloomberg look at the enterprise value — the price at which a team would sell in an arms’ length transaction. Team-generated revenue is the key factor, followed by shared MLB revenue, market-size, ballpark value, and brand value.

On the revenue side, the Forbes and Bloomberg are relatively close for the bottom half of teams. The larger differential is at the top. Much larger, in some cases.

	Team	Bloomberg Revenue	Forbes Revenue
1	Yankees	$570,000,000	$471,000,000
2	Red Sox	$405,000,000	$336,000,000
3	Dodgers	$325,000,000	$245,000,000
4	Cubs	$320,000,000	$274,000,000
5	Phillies	$315,000,000	$279,000,000
6	Giants	$300,000,000	$262,000,000
7	Angels	$275,000,000	$239,000,000
8	Mets	$265,000,000	$232,000,000
9	Rangers	$260,000,000	$239,000,000
10	Cardinals	$250,000,000	$239,000,000
11	Tigers	$245,000,000	$238,000,000
12	Nationals	$230,000,000	$225,000,000
13	White Sox	$225,000,000	$216,000,000
14	Mariners	$225,000,000	$215,000,000
15	Braves	$225,000,000	$225,000,000
16	Twins	$215,000,000	$214,000,000
17	Orioles	$210,000,000	$206,000,000
18	Blue Jays	$210,000,000	$203,000,000
19	Astros	$205,000,000	$196,000,000
20	Brewers	$205,000,000	$201,000,000
21	Reds	$205,000,000	$202,000,000
22	Marlins	$200,000,000	$195,000,000
23	Padres	$195,000,000	$189,000,000
24	D’Backs	$195,000,000	$195,000,000
25	Rockies	$195,000,000	$199,000,000
26	Indians	$190,000,000	$186,000,000
27	Pirates	$185,000,000	$178,000,000
28	Royals	$180,000,000	$169,000,000
29	A’s	$175,000,000	$173,000,000
30	Rays	$175,000,000	$167,000,000

That’s a nearly $100 million differential in the Yankees’ revenue, $80 million for the Dodgers, $60 million for the Red Sox, $45 million for the Cubs, and $35 for the Phillies and Giants. Without more details from Forbes and Bloomberg, we’re left to wonder how they could have reached such wildly different revenue estimates for these teams.

Dig into the details. See how your team stacks up. By Opening Day 2014, we’ll have entirely new numbers from Forbes to play with.