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Forbes Baseball Team Values

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Offline  Forbes Baseball Team Values
#1

Posted: April 10, 2019, 1:08 PM Post
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Every team, yes even the Rays, are estimated to be worth at least $1 Billion

https://www.forbes.com/sites/mikeozanian/2019/04/10/baseball-team-values-2019-yankees-lead-league-at-46-billion/#7076ea9d69b2


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Offline  Re: Forbes Baseball Team Values
#2

Posted: April 10, 2019, 1:25 PM Post
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Cool to see the Brewers placing second in revenue per fan with only the Giants ahead of us.


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Offline  Re: Forbes Baseball Team Values
#3

Posted: April 10, 2019, 1:29 PM Post
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According to this article the Brewers were 8th in MLB with a 66M operating income last season.

Someone smarter than me please explain the differences between operating income and profit.


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Offline  Re: Forbes Baseball Team Values
#4

Posted: April 10, 2019, 1:30 PM Post
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A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.


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Offline  Re: Forbes Baseball Team Values
#5

Posted: April 10, 2019, 1:50 PM Post
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JimH5 said:
A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.


That's not really true. That's not realized profit. Mark A and the other owners do not realize any of that $700M (assuming Forbe's valuation is accurate) unless they decide to sell the team. If they want to leverage that increase in value by taking on debt to pay players, maybe. However, I doubt any team does that.


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Offline  Re: Forbes Baseball Team Values
#6

Posted: April 10, 2019, 1:52 PM Post
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JimH5 said:
A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.


That $700 million is imaginary though. It doesn't exist unless you sell the team.

What are profits and expenses? That is what matters.


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Offline  Re: Forbes Baseball Team Values
#7

Posted: April 10, 2019, 1:59 PM Post
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Vollbc74 said:
According to this article the Brewers were 8th in MLB with a 66M operating income last season.

Someone smarter than me please explain the differences between operating income and profit.


Even assuming "operating income = profit", doesn't really tell anyone much about that assumed 66 million.

Each team received a one time payment of 50 million dollars from the sale of MLBAM in 2018 & the Brewers also made a postseason run which will increase profits.

The 50 million is definitely not getting paid out again this year & making the postseason is yet to be determined.

Short of winning the WS, I would imagine the Brewers profits decrease this year compared to last year.


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Offline  Re: Forbes Baseball Team Values
#8

Posted: April 10, 2019, 2:05 PM Post
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They could borrow money against that increased value for any reason, including player contracts. It's probably true that other teams don't do that, but the Brewers are an asset, and that increase in value belongs to the ownership group to invest if they want to.


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Offline  Re: Forbes Baseball Team Values
#9

Posted: April 10, 2019, 2:18 PM Post
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JimH5 said:
They could borrow money against that increased value for any reason, including player contracts. It's probably true that other teams don't do that, but the Brewers are an asset, and that increase in value belongs to the ownership group to invest if they want to.


Ok, but the reason no team does that is because it would be bad business practice. Using interest burdened debt that is borrowed against an unknown and unrealized future value to pay millions of dollars in guaranteed contracts would be pretty foolish. I guarantee that revenue-wise the Brewers are not nearly in the same ball park (pardon the pun) as teams like the Dodgers, Yankees, or Giants. Those teams have TV contracts that are many times larger than the Brewers (and other small market teams). That is real money that can be spent now.


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Offline  Re: Forbes Baseball Team Values
#10

Posted: April 10, 2019, 2:32 PM Post
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I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?


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Offline  Re: Forbes Baseball Team Values
#11

Posted: April 10, 2019, 2:42 PM Post
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JimH5 said:
But they have >$700 million in gains.

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?


No, they have zero gains of $700mil. That is like any other investment...imaginary until you cash out. That $700mil means nothing to Attanasio. He will either die at the helm or hand it off to his kids. It isn't ever going to be sold by him.

Do you really think it is worth it to lose millions to have a better chance at the WS? I am not really convinced just blowing the payroll out of the water is worth it...MAYBE if we win the WS, but if not the "investment" of added payroll probably isn't really worth it. It would have been most financial business savy to not get Grandal or Moustakas....in all honesty. I would agree if adding all that payroll actually almost assured us a WS, but it is a giant crapshoot. Be a 100 game winning team and the odds are actually historically against you.


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Offline  Re: Forbes Baseball Team Values
#12

Posted: April 10, 2019, 2:54 PM Post
Posts: 772
JimH5 said:
I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?


Can’t wait to hear the rationalizations in trying to disput this absolutely fantastic take.

Attanasio said “all in”. He needs to put his $ where his mouth is.

144 million increase in the value of the team in ONE year.

Take 14% of that 144 mil and invest it in Kuechel.

49 years is long enough!!!!


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Offline  Re: Forbes Baseball Team Values
#13

Posted: April 10, 2019, 2:57 PM Post
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JimH5 said:
I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?


This link in the article is more relevant in my opinion:

https://www.forbes.com/mlb-valuations/list/#tab:overall

The Brewers operating income is $66M with revenue of $288M. The Astros are also at $66M but have an overall revenue of $368M. That extra revenue ($80M) lets the Astros spend more on players, player development, front office, etc in order to achieve the same operating revenue. There is no way you can say that teams in smaller markets and/or with smaller TV contracts don't have limitations and that they are on the same footing as teams in larger markets with bigger TV contracts. In many cases it's not even close (look at the revenues for the Yankees and Dodgers, it's more than double the Brewers (not to mention their value is is 3-4 times that of the Brewers). Debt has to be paid back with interest, revenues can be used and spent without that burden. You really expect the ownership group to leverage their equity to pay players? That's not realistic at all.


Having said all that, it does appear in that link that most teams do have some debt, but it's probably not directly payroll related. I know you are thinking what's the difference? Notice the Yankees have no debt while the two bottom value and revenue teams (Rays and Marlins) have some of the highest debt/value ratios. Where is that getting them? It's not translating to higher payrolls. Again, no way they are on the same footing and have the same ability to pay high contracts as the teams at the top.


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Offline  Re: Forbes Baseball Team Values
#14

Posted: April 10, 2019, 3:00 PM Post
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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

Their asset is worth over $1 Billion. And there shouldn't be any shortage of lenders willing to loan them money on that asset.

The other thing to remember is that the Brewers are a business, but the value of the franchise isn't only determined by the success of the business. It is determined by how much someone is willing to pay for it.

The fact that sports franchises are rare, popular, and exclusive makes ownership attractive. The super wealthy want to be in the club. That's why fine art will sometimes (not always) command huge prices. Not because the asset is a profitable business, but because it is rare and other rich people want to buy it.


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Offline  Re: Forbes Baseball Team Values
#15

Posted: April 10, 2019, 3:05 PM Post
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JimH5 said:
I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.


It's self imposed because they are not stupid!


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Offline  Re: Forbes Baseball Team Values
#16

Posted: April 10, 2019, 3:13 PM Post
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Patrick425 said:
JimH5 said:
I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.


It's self imposed because they are not stupid!


Steve Ballmer paid $2 Billion for the Clippers. Was it a good deal? Probably not, but it was his one chance to buy an NBA team in Los Angeles.

Sometimes the super wealthy will spend their money in was that are pleasing to them, without regard to whether or not they turn an annual profit.


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Offline  Re: Forbes Baseball Team Values
#17

Posted: April 10, 2019, 3:17 PM Post
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Patrick425 said:
JimH5 said:
I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.


It's self imposed because they are not stupid!


It’s only stupid if the only thing that matters is profit


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Offline  Re: Forbes Baseball Team Values
#18

Posted: April 10, 2019, 3:21 PM Post
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Our payroll is already higher (or will end up higher) than any other person who could own the Brewers would spend. I don't think people realize that sometimes. We should be thankful for having Attanasio...not just demand him to be greater than he already is.


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Offline  Re: Forbes Baseball Team Values
#19

Posted: April 10, 2019, 3:21 PM Post
Posts: 3100
MrTPlush said:
JimH5 said:
A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.


That $700 million is imaginary though. It doesn't exist unless you sell the team.

What are profits and expenses? That is what matters.



It's not imaginary. If they sold the team now, they'd make several times what they purchased it for. That's not just created in someone's imagination.

And when you talk about billionaires, about 90 pct of the time their value is "imaginary" in the way you're using it. Hell, Trump includes his names value in how much he's worth. How much he values the number put on his name. That's imaginary. The value of Trump towers vs the actual cash he has is not imaginary.


PS-Just using the famous rich President as an example. NOT trying to argue about him in any way at all.


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Offline  Re: Forbes Baseball Team Values
#20

Posted: April 10, 2019, 3:24 PM Post
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JimH5 said:
Patrick425 said:
JimH5 said:
I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.


It's self imposed because they are not stupid!


Steve Ballmer paid $2 Billion for the Clippers. Was it a good deal? Probably not, but it was his one chance to buy an NBA team in Los Angeles.

Sometimes the super wealthy will spend their money in was that are pleasing to them, without regard to whether or not they turn an annual profit.


Sometimes...but should we really expect that from every small market owner? You stated this: Being a small market team should not limit their roster construction. Perhaps if you want to take on debt that is true. However, I hope you would agree that a small market team has to take on more debt and more risk than a large market teams and/or a team with a larger TV contract in order to compete for the same high contract players when constructing their roster.


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