Interactively Graphing Forbes’ Team Values
Yesterday, Forbes released its franchise values for all 30 Major League Baseball teams. Briefly, the team values are estimates of the price that the franchise is likely to sell if the team’s management group began fielding offers. There are always debates about the accuracy of revenue and valuation figures, and I would recommend reading one of the many FanGraphs articles that already has examined the methods and discrepancies in both Forbes and Bloomberg’s valuation metrics.
In this post, I want to provide some graphical context for Forbes’ data and allow you to explore the data in a different way than on a table.
Being a financial news outlet, the team value is the heart of the Forbes’ data. The graphic below shows that data as a simple bar graph. From this, there are four different tiers of teams. There’s a small-market plateau that constitutes the lower half of MLB teams. These teams are valued under $1 billion and come from smaller cities (except Toronto and Houston). The next tier has larger metropolitan areas or teams that are the secondary team in the largest markets (White Sox, Angels, Mets). The third tier is composed of ‘big market’ teams that come from the largest US cities. Finally, the Yankees are in a tier by themselves.
Using the revenue data, I created an interactive graphic to explore the relationship between the relationship between payroll and revenue. This the payroll to revenue ratio is the basis of fan angst demanding that ownership spend more. Payroll estimates constantly change as the Opening Day rosters are established, so I’ve used a blend of estimates from FanGraph’s data set and Cot’s Contracts for the payroll data; I took the maximum of the two numbers to try to account for players added to the 25-man roster.
The scatter plot at the bottom of the data visualization demonstrates the relationships between payroll and the Forbes data in a more traditional view. Aside from the obvious outliers of the Dodgers and Yankees, the Cubs stood out comparing the two plots. The Cubs have a much higher valuation than their revenue would suggest; they break away from a cluster of teams when you compare the revenue plot to the team value plot.
This data visualization is INTERACTIVE; you are able to sort the teams by payroll, revenue, and a ratio of payroll to revenue with a drop down menu. All the data points have extra data mapped to their tooltips, which appear when you hoover your mouse over the different data elements (or tap them on mobile).
I build things here.
St. Louis is not a larger metropolitan area, not even remotely. Literally every other valuation can be accounted for through the rough schema presented here, with the other two exceptions noted, Toronto and Houston, easily explained. There must be a good explanation for St. Louis, and I don’t know what it is. Is it that sustained success has kept the attention on baseball, when that attention has flagged in other places of the same size? Is it that the lack of competing basketball and hockey, combined with the lack of a college sports power in the area, means less competition for baseball dollars? Is it something about the management treatment of fans that has kept them loyal? Why are the Cardinals so unusually successful as a franchise?
St Louis has an absolutely HUGE regional draw. I live in Springfield Il, so mroe or less 100 miles away, and this city is about evenly split Cardinals/Cubs. It is the same in Bloomington and Champaign (the other larger regional areas in Central Illinois). Additionally, travel to St.Louis, and to the Stadium itself) is mostly painless outside of rush hour. It is the same In Missouri. The Stadium is directly off where multiple major Interstates converge. Basically, while the city is comparatively small, the region has a large population, transportation from outlying regions is not that big a hassle, and they have a rabid fan base.
Additionally, Unlike in nearly every other major city, Football is the also ran within the city itself.
The same can be said about nearly any MLB franchise – only Phoenix and Denver are genuinely isolated among MLB cities, and arguably Baltimore is hemmed in by its proximity to Philadelphia and Washington DC, but after that: Milwaukee has Madison to its west and an entire state to draw from; Minneapolis draws from population density in Minnesota and Iowa; Indianapolis feeds to both the White Sox and the Reds, who also get half of Columbus, Louisville, Lexington and most of Kentucky. Seattle gets all of western Washington and Oregon, including Portland. Boston gets all of New England. Atlanta is as regional a team as they come, as I know from when I lived in Knoxville, three hours away. There is nothing special about St. Louis.
In fact, the most important and conspicuous case of people not counting outlying areas when speaking of potential fan bases is Northern California, where Sacramento – an area with a population larger than five MLB cities – is (depending on where exactly you live) within an hour of the Oakland Coliseum and barely an hour to AT&T Park. This (not to mention Santa Cruz/Monterey, Modesto, Stockton and Fresno) is why the claim that Northern California can’t support two teams is absurd, and why explanations for the A’s failure to draw requires something deeper than population numbers.
The point is that St. Louis is an outlier. Of course St. Louis draws from it’s periphery – so do most teams. Why does St. Louis draw better, from its center and from its periphery?
Point on Northern California very well taken here from Sacramento’s 2.5m metropolis, but as a technical note (this is fangraphs after all), I have no idea how fast you would have to drive (over other cars, no less) to get to a game at AT&T Park (or the Coliseum) in “barely an hour” from Sacramento. It’s at least an hour-twenty even at 4am, 2+ hours by train, and regularly 3+ hours in normal SF Bay Area day traffic.
Jperb: Sorry for the exaggeration on Sacramento, but it is all about where you start counting: I personally have driven from Davis to the west side of the Bay Bridge in 60 minutes on a Saturday morning (a time I could have been driving to a baseball game) in the last month. I know, Davis is 12 miles west of downtown Sacramento, and from the west side of the Bay Bridge into an AT&T parking lot is the slowest one mile any of us will ever drive (not that this is terribly different from any other downtown stadium, of course). So that makes 90 minutes downtown Sacto to AT&T door to door if you’re not fighting rush hour traffic; two hours if you are.
Of course, I’m an A’s fan, and direct Amtrak alone is the reason you Sacto folks should be preferring Oakland.
To add to Philo:
STL’s blackout region includes OK, AR, MO (except KC metro), IL (except Chicago metro), Memphis metro, SW IN, and W KY. Back of the envelope that’s just about 16M. That’s more than the Red Sox blackout region, which is at 14.5M. That doesn’t nearly tell the whole story — STL metro is 2.9M to Great Boston’s 4.6, and it’s 7+ hours from OKC to STL and 3.5 from Bangor to Boston — but it adds some color.
By way of comparison, CLE, a quintessential small market team, has an area that includes 9M in their home state, the 1.25M between Erie and Buffalo metro areas, and ~.5M in E KY/W WV.
Greater* Boston. Though it is a pleasant town.
There is a hockey team in St. Louis, they are the Blues an are in 1st right now.
I find it really hard to believe that the Braves are still a top 10 team for revenue (9th to be exact). Their TV deal is horrible & ticket revenue can’t be great.
Look at all those owners that are “just breaking even”…
Please send the full set of financials that you are looking at to be able to make that statement… I’d be interested in seeing them.
In case the quotes around “just breaking even” didn’t make the sarcasm obvious, it was a jab at owners that say they can’t raise payroll or spend their own money on stadium improvements without operating at a loss.
If you think that Forbes’ estimates, which suggest huge profits, are wrong please send the full set of financials that you are looking at to us so that we can share in your wisdom.
How is Miami considerd a small city? Its metro area population according to the 2010 census is only slightly smaller than Houston philly and DC, but larger than Boston Atlanta and San Fran. All of which you consider large cities.
Because the person writing this is not a demographer or geography nerd, and random people are idiots on subjects they don’t have knowledge of (as this very site is dedicated to pointing out). It is always funny when non experts start spouting of on the size of cities because they uniformly have no idea what they are talking about.
The author is saying “small city” when he really means “small market”. The two are not synonymous. The Cardinals are a big market team despite St. Louis proper being a smaller city because their fanbase and effective media market spans huge swaths of the Plains & Midwest that aren’t part of the St. Louis metro area
Miami is a small market despite an MSA population comparable to many others mainly because it is less prosperous. The census bureau estimates (http://factfinder.census.gov/faces/nav/jsf/pages/community_facts.xhtml) median household income for Miami-Dade county at $43,100 vs $75,600 for San Francisco County, $65,830 for DC, $53,600 for Boston, $53,100 for Harris County (Houston). The counties don’t exactly align with the Metro areas (much of the affluence/wealth in the Miami MSA is outside of Miami-Dade county, e.g.), but the general point remains- comparative to MSAs of similar population, Miami has much less economic heft. Related to this, the number of corporate HQs has a disproportionate effect on sports franchise economics, as these are the typical customers for luxury boxes, high-priced season tickets, sponsorships, etc. Of the Fortune 1000 companies (http://www.geolounge.com/list-fortune-1000-companies-urban-area/), San Fran (24) plus San Jose (31) has 55 HQs, Houston has 46, DC has 30, Atlanta has 27, Philly 26, and Boston 23, whereas Miami only has 13.
I’m actually quite familiar with cities, their sizes, and their geographies to an extent, but I did gloss over details while making generalizations of what I saw in the data. This wasn’t intended to be a thorough analysis of city/market size’s relationship to Forbes’ valuation; it was just a pattern I saw.
I called out Houston and Toronto, because Houston is the fourth largest US city (not metro area) and Toronto is up there with Chicago for population within the city limits (not metro area). But yes, overall, an entire post could be written about the details of city/market size and the relationship to revenue, payroll, and valuation. Craig looked at the relationship to extent here already: http://www.fangraphs.com/blogs/importance-of-market-size-attendance-and-tv-revenue-on-payroll/
I wasn’t trying to knock you at all, but rather clarify- as you say, actually digging into city-level details for each city would turn this into a monograph length publication, not a post. I was mainly trying to answer M Marino’s question, which does require digging into city details.
It’s in many ways fair to ‘call out’ Houston (full disclosure: I live there and am a total Astros homer), but there are several unique quirks about their situation- 1) Despite market size, The Astros went 1.5 seasons (mid-2013 and 2014) without any local TV revenue because of the bankrupcty of the RSN. The situation was only resolved in January, which put limits on what they could to in the FA market this offseason. 2) While the city/metro area is quite large, it has gotten there by growing rapidly recently. The MSA population in 2005 (when the Astros went to the WS and the last time they were in the playoffs) was 5.3m. It is now estimated at 6.3m. Assuming some churn, at least 1/4 and perhaps 1/3 of the Houston population hasn’t lived there to witness a playoff-quality Astros team. The Astros management has to build a fanbase in a way almost analogous to an expansion team.
No worries, I’ve just traveled a bit around the US (road trips are a lost art form), so I enjoy discussing this topic a lot. Cities depending on the region all have different characteristics. Eastern cities are crowded and generally have good public transportation. Western cities sprawl and have wide roads.
I think one of the most interesting things regarding urban characteristics and baseball, is that the Braves are moving into the suburbs when everyone else is trying to get their city’s skyline into the ballpark.
RE: Astros
I remember the cable provider for a period of time didn’t carry the RSN that the Astros games were on. That seems like that was a disaster.
And the Yankees didn’t sign Moncada because…………..
Because Robbie Refsnyder projects better at the major league level and is a whole lot cheaper.
The Red Sox have Betts or Pedroia, it didn’t stop them.
He’s a good young player, and the more good young players you have, the better. Cost should not have been prohibitive for the Yankees.
Here’s my conspiracy theory. George Steinbrenner put winning first. His spoiled sons put making money first.