Forbes values Brewers at $562 million

[BrewersSuperCollector]

Apparently the Brewers are worth 562 Million

 

http://espn.go.com/mlb/story/_/id/9104778/forbes-mlb-teams-see-historic-23-percent-surge-average-values

[PrinceEatMeat]

So Attanasio is already $362 million ahead then. Nice investment.

[JimH5]

They're worth $562M, but only made $9M last year?

 

Something doesn't seem right to me.

[dlk9s]

The value of a business is more than just how much profit it makes in a given year.

[JimH5]

No doubt, but long term, a business needs profit to be worth anything. And it would take 60 years like last year for someone to approach $562.

 

The Brewers have already penetrated this market better than most teams have penetrated theirs. I don't know how much more growth they can expect. The stadium is mostly full, the TV deal is what it is.

 

I'm sure there are valid accounting principles at work in coming up with that number. But if I had access to $562M, I don't think I would be buying the Brewers for that price.

[Funketown]

Jim - remember that owners have a history of crying poor. With so many assets to depreciate, etc., you have to expect much of that low figure is driven by creative accounting.

[endaround]

$9 million in profit on $201 million in revenue is a very nice sum of money. The franchise valuations Forbes uses change too much year to year to be anymore than a rough figure.

[Ennder]

$9M profit but he also put money into the park last year which ate into the total.

[Patrick425]

$9 million in profit on $201 million in revenue is a very nice sum of money.

 

Based on what?

 

I'll never understand the venom towards owners by some. They are supposed to make a profit, they are running a business. In my opinion, the owners should should get 60-65% of the revenue after expenses (not including payroll) and the players get the rest. The owners are the ones taking the financial risk. If the players don't like it they should start their own league and run their own teams.

[pogokat]

you also need to view owning a baseball teams as a premium perk that is like owning a limited edition sports car or the biggest house in the hamptons...

 

there are only 30 teams, so regardless of profit, there is tremendous scarcity.

 

Therefore, a huge determination of the value is just in the fact that it is a major league baseball team...I mean, you can be the richest guy on earth, but you can' just buy a team...which pushes their value up a ton

 

besides, if the team just wanted to rake in profit for a year or two, they could pull an astros or a marlins and make a ton of cash for a little bit, though it would hurt the overall value of the team

[fondybrewfan]

I wouldn't consider a 4.5% Profit Margin all that good. There are a multitude of industries that will double and triple that.

 

I am sure there is a boatload of depreciation, amortization, and interest deducted from that net profit; there operating margin is probably closer to 10-15% probably. Still not all that impressive. But I don't think MA is necessarily in this to turn a big profit; his other businesses are making him his money.

[James Zumstein]

I agree about Mark A. I don't think he necessarily bought the Brewers as an investment. I think it was a reward to himself for having the money to do it because of his other investments. Also, franchises historically never (or rarely) go down in value, so it really isn't much of a risk to become an owner if you already have made enough money to purchase a franchise. Its about as safe of an investment as you can make.

[adamb100]

Here is the full list on Forbes website: http://www.forbes.com/mlb-valuations/

[endaround]

$9 million in profit on $201 million in revenue is a very nice sum of money.

 

Based on what?

 

I'll never understand the venom towards owners by some. They are supposed to make a profit, they are running a business. In my opinion, the owners should should get 60-65% of the revenue after expenses (not including payroll) and the players get the rest. The owners are the ones taking the financial risk. If the players don't like it they should start their own league and run their own teams.

 

The owners are taking no risk. Their labor costs are artificially held low and they have their capital heavily subsidized by taxpayers.

[topper09er]

The owners are the ones taking the financial risk.

 

How often to sports franchises go down in value? Even if they do you can always sell to a group that wants to move to another city which they believe will cause the franchise to increase in value. An investment that has a very, very low chance of losing money is not much of a risk.

 

There was a time when it was much riskier, like 100 years ago when sports were not such a mainstay in society. I have no idea but the percentage of disposable income the public spends on sports much be 100s or 1000s of times higher than 100 years ago.

[Patrick425]

Well, if there is no risk then it should be easy for the players to own and run their own teams. Geez a no risk investment...you think a guy like Buffet or Gates would be all over that. If there wasn't a risk you'd have 100+ potential investors every time a team goes up for sale. There is risk in every investment.

[Funketown]

It's probably more accurate to say it's very low risk. I think I read that the average return on MLB teams is something like 12-14% per year since the 50's.

 

If I had the capital to invest in an MLB team I would absolutely do it. Unfortunately it's an investment that requires both a fairly large time commitment from the investor and a few hundred million dollars.

 

Of course, if brewerfan pooled together our little piggybanks and then put it all on a roulette wheel and won on 00 about five times in a row, we could be proud owners!

[jwill535]

As a business, especially one without stock holders, you never want to show a large profit. You pay bonuses and invest back into the team.

 

Also, I think the stadium is part of the value.

[endaround]

Well, if there is no risk then it should be easy for the players to own and run their own teams. Geez a no risk investment...you think a guy like Buffet or Gates would be all over that. If there wasn't a risk you'd have 100+ potential investors every time a team goes up for sale. There is risk in every investment.

 

You do realize that MLB is a legal monopoly right?

[sheetskout]

The Brewers only made 9 million in profit last season because of a record opening day payroll of 101 million or so and slightly decreased attendence. The Brewers profit was much higher in subsequent years. I don't think 2012 is a good measure of the profitability of the Brewers.

[James Zumstein]

Well, if there is no risk then it should be easy for the players to own and run their own teams. Geez a no risk investment...you think a guy like Buffet or Gates would be all over that. If there wasn't a risk you'd have 100+ potential investors every time a team goes up for sale. There is risk in every investment.

 

You do realize that MLB is a legal monopoly right?

 

Remember, 100 years ago the players did start their own league, and it folded after three years. It might seem like they could all make a fortune trying to compete against MLB, but in the end, the players make stupid amounts of money, the owners make stupid amounts of money, and we fans keep paying stupid amounts of money. Why would the players want to risk changing what is working for everyone?

 

P.S. Remember the XFL?

[owbc]

I think the franchise value is a better indicator of success than year to year profitability. The value has gone up by over $40 million annually. That is a very good return on their investment.

 

The payrolls are another good indicator of success and they continue to rise across MLB. With projected TV revenues, I expect all 30 teams to be above the $100 million mark by 2020. The owners would not be signing all these record contracts if they couldn't pay them.

[TURBO]

 

P.S. Remember the XFL?

 

I don't think the XFL was ever meant to be direct competition for the NFL, the USFL on the other hand, is a different story. They tried to steal the best players from the NFL via draft and free agency. (Hershall Walker, Reggie White, and Steve Young) I remember the WFL (World Football League) They didn't last either.

 

http://en.wikipedia.org/wiki/XFL

 

http://en.wikipedia.org/wiki/United_States_Football_League

 

http://en.wikipedia.org/wiki/World_Football_League

[Invader3K]

The XFL failed because it was incredibly overhyped and their expenses greatly exceeded revenues. Plus a lot of people were never going to buy into a football league tied to the WWF.