Forbes Baseball Team Values

[Fear The Chorizo]

I don't have factual knowledge. But I'm not just talking about home equity, either.

 

When an Art Museum purchases a piece of art, I doubt it is always a cash deal. I believe there is financing based on the sale of other pieces in their collection.

 

When a business finances the construction of a new building, it is based on their ability to pay it back, either from future earnings, or the value of the business itself. Isn't it?

 

What else is financing other than money borrowed with the obligation to pay it back at terms that are acceptable to both sides?

 

You’re applying theory of fairly liquid assets to ownership in an entity that a select few can purchase. A house has a readily available market. So does that artwork, or even that building. How many people can truly afford to buy a 46 billion dollar franchise like the Yankees? Bill Gates and Warren Buffett?

 

You may well be right, but I think it’s dangerous to universally apply a theory like this without actually knowing it’s true. Far too much talking in absolutes in this thread without actually knowing real numbers and mechanisms for my liking.

 

 

I don't want to be a blowhard know-it-all, but I would think collateral is collateral. And I can't believe that he couldn't find a lender willing to lend money for other projects. Why would money earmarked for new concession stands and videoboards be any different than money earmarked for a staff ace?

 

I'd be interested knowing whether MLB has any rules concerning how an organization can/cannot be used as an asset when incurring debt. When it comes to the lending collateral comparisons between objects (concessions/videoboards) and players, there may be something to providing an asset like Miller Park (whose value would be improved by those objects) that would be easy for a lender to accept, whereas just saying "hey our franchise quadrupled in value over the past 15 years, give us money to sign a veteran starter" might not pass legal muster for lending $. What technically would be the collateral for a loan to provide a player contract, if in theory the organization wouldn't honor the terms of the loan for whatever reason? An infintessimal ownership stake based on a snapshot valuation that isn't liquid? Rights to whatever player signs that contract to become a bank teller?

[RollieTime]

I'm just wondering if there is anybody on this board that bought a 200k house in 1999. Now that house is worth 350k. So because that house is now worth 150k more than it was than it was when they first bought it, they have decided to go out and buy themselves a brand new 2019 Aston Martin Vantage?

 

I’m glad you mentioned this. Just because the valuation went up $150K doesn’t mean you have that extra $150K sitting in your bank account to use on other things. The valuation of the Brewers increasing over the years does not mean there are hundreds of millions of dollars sitting in a bank account ready to be spent on the drop of a hat.

[trwi7]

I'm just wondering if there is anybody on this board that bought a 200k house in 1999. Now that house is worth 350k. So because that house is now worth 150k more than it was than it was when they first bought it, they have decided to go out and buy themselves a brand new 2019 Aston Martin Vantage?

 

I bought a Porsche 911 Carrera because I'm a douche bag.

[Outlander]

Most of this stuff from Forbes is educated guesses and that is why they always have an operating profit number and never a net income number because they don't even have a good guess what the other numbers are. A team could have operating income every year but a net loss every year. Highly likely they did have net income last year but just showing the best guess estimated operating income for 20 years doesn't say a whole lot.

 

Do believe a team like the Brewers are worth a billion dollars though and a business owner could possibly justify operating at a loss if they continue to see large valuation increases.

[MrTPlush]

Value is not the same as operating capital. It's not even close. As others have said, value is just an imaginary number that you can throw out there, if you decided to sell.

 

If you have a thing, it's only worth what someone wants to give you for it, if you're even in the market to sell it, which Attanasio is not. It doesn't matter what someone says it's worth. That value doesn't give you operating dollars.

 

I'm sure if you had something of extreme value, you could borrow off of that value without having to sell. Isn't that what collateral is? Lenders would offer financing on that value, and they wouldn't use an imaginary number. They would conduct an audit and lend based on real worth.

 

Okay...while I agree that can be done...lets think about that actually happening for a second. Mark Attanasio taking out a loan to add payroll. An owner taking out a loan against the value of their franchise because they are that tight on payroll. It is absolutely just ridiculous and never going to happen. That is the only possible way they could make the value of the franchise a liquid asset of some sort, but that is just beyond any fantasy even imaginable. Pigs will fly before something like that happens.

 

And someone mentioning past profits in 2015-2016 etc....forget about them. They mean absolutely nothing to the current day to day payroll. They may help use that money to build a new ST complex or A+ team...but those are real investments that add value to the organization long term. Moustakas/Grnadal...in all reality that is basically just flushing money down a drain. Barring a WS win there is no way all that added payroll for them is even near worth what we paid. If payroll is maxed and one is arguing for them to throw saved money or take on debt to put $20mil into someone you are essentially asking for them to throw money into the payroll to watch it burn.

 

Attanasio would probably throw $100mil at the payroll tomorrow if it meant assuring a WS win...but payroll does not mean that and being the best team almost assures the opposite historically.

[MrTPlush]

Do believe a team like the Brewers are worth a billion dollars though and a business owner could possibly justify operating at a loss if they continue to see large valuation increases.

 

No because:

 

#1 You assume Attanasio has any interest selling the team and realizing those gains. All signs point to the opposite.

 

#2 You are inferring/assuming that large valuation increases are due to them spending more and more money...but it is not. The Marlins are cheapos and the worst run franchise in sports....yet they are worth $1 billion. That article actually has a few valuation graphs. One of which shows you the breakdown of where they get their value. The only one that the team really even controls is their "brand". Brewers do an amazing job and the Marlins are terrible building a brand...yet all that hard work gives us a brand value of $100mil while the Marlins sit at $50mil. This would probably be one of those situations where spending a dollar gets you a dime in the long run. Spending money on the payroll is not a long term investment...and as the Marlins showed in years past you can be big cheapos (garnering huge short term profits) and see no hit to the value of the franchise when you decide to sell it.

[jjgott]

Spending money on the payroll is not a long term investment...and as the Marlins showed in years past you can be big cheapos (garnering huge short term profits) and see no hit to the value of the franchise when you decide to sell it.

 

Exactly. I think the team can spend more money than it does but I AM appreciative of the fact that Mark A. seems to want to win vs. prioritizing profits. Mark A could run the team with all pre-arby guys and make even more money if he wanted to. Even if attendance went down as a result, there's enough national TV and revenue sharing money to go around to make it all profitable.

 

The Marlins have ZERO fan support and yet they got an ownership group to pay $1.2 billion for them. Either its just an elaborate ruse to write off loses for tax purposes or they are making plenty of $$$ with an average attendance of 9,000 per game.

[Outlander]

Do believe a team like the Brewers are worth a billion dollars though and a business owner could possibly justify operating at a loss if they continue to see large valuation increases.

 

No because:

 

#1 You assume Attanasio has any interest selling the team and realizing those gains. All signs point to the opposite.

 

#2 You are inferring/assuming that large valuation increases are due to them spending more and more money...but it is not. The Marlins are cheapos and the worst run franchise in sports....yet they are worth $1 billion. That article actually has a few valuation graphs. One of which shows you the breakdown of where they get their value. The only one that the team really even controls is their "brand". Brewers do an amazing job and the Marlins are terrible building a brand...yet all that hard work gives us a brand value of $100mil while the Marlins sit at $50mil. This would probably be one of those situations where spending a dollar gets you a dime in the long run. Spending money on the payroll is not a long term investment...and as the Marlins showed in years past you can be big cheapos (garnering huge short term profits) and see no hit to the value of the franchise when you decide to sell it.

Regarding #2, no I am not, silly to assume that. They could make the business decision that spending more potentially gets them a World Series which could lead to higher current/future income and a higher valuation. There is also risk with that because they could have a high payroll and be out of the playoff picture by July and need to have a huge sell off. There are always various reason why a business owner will/will not spend money.

[Brew crew 92]

FWIW

All mlb teams gaining 7 mil/yr starting next year with new Fox deal.

 

Brewers getting increase starting next year with their local tv deal that’s to my knowledge yet to be worked out.

 

Brewers ticket sales up 20%for the year

Record number of corporate sponsors

 

Profit is a guess yes, but if we take the 66 operating income and subtract 20 mil for tax & int we get 46

 

46+ 110 payroll = 156 million max payroll to break even.

 

What are we at now? I’ve read from 121-130 depending on call ups and such.

 

Let’s go with 130

 

That leaves 26 mil room to break even.

Not that he should

But that he Could

[PeaveyFury]

FWIW

All mlb teams gaining 7 mil/yr starting next year with new Fox deal.

 

Brewers getting increase starting next year with their local tv deal that’s to my knowledge yet to be worked out.

 

Brewers ticket sales up 20%for the year

Record number of corporate sponsors

 

Profit is a guess yes, but if we take the 66 operating income and subtract 20 mil for tax & int we get 46

 

46+ 110 payroll = 156 million max payroll to break even.

 

What are we at now? I’ve read from 121-130 depending on call ups and such.

 

Let’s go with 130

 

That leaves 26 mil room to break even.

Not that he should

But that he Could

 

Again, you're just making up numbers. Where is your 20 million number for tax and interest coming from? I can do similar math: 66 operating income, subtract 60 million for tax and interest, = $6million, likely what they have available to add at the deadline.

 

Which of us is wrong?

[Ron Robinsons Beard]

FWIW

All mlb teams gaining 7 mil/yr starting next year with new Fox deal.

 

Brewers getting increase starting next year with their local tv deal that’s to my knowledge yet to be worked out.

 

Brewers ticket sales up 20%for the year

Record number of corporate sponsors

 

Profit is a guess yes, but if we take the 66 operating income and subtract 20 mil for tax & int we get 46

 

46+ 110 payroll = 156 million max payroll to break even.

 

What are we at now? I’ve read from 121-130 depending on call ups and such.

 

Let’s go with 130

 

That leaves 26 mil room to break even.

Not that he should

But that he Could

 

Again, you're just making up numbers. Where is your 20 million number for tax and interest coming from? I can do similar math: 66 operating income, subtract 60 million for tax and interest, = $6million, likely what they have available to add at the deadline.

 

Which of us is wrong?

 

He's making up numbers in an attempt to justify his stance that the Brewers should be paying for Kimbrel and Keuchel. Because the fact that the team hasn't signed them is apparently a personal insult?

[Brew crew 92]

FWIW

All mlb teams gaining 7 mil/yr starting next year with new Fox deal.

 

Brewers getting increase starting next year with their local tv deal that’s to my knowledge yet to be worked out.

 

Brewers ticket sales up 20%for the year

Record number of corporate sponsors

 

Profit is a guess yes, but if we take the 66 operating income and subtract 20 mil for tax & int we get 46

 

46+ 110 payroll = 156 million max payroll to break even.

 

What are we at now? I’ve read from 121-130 depending on call ups and such.

 

Let’s go with 130

 

That leaves 26 mil room to break even.

Not that he should

But that he Could

 

Again, you're just making up numbers. Where is your 20 million number for tax and interest coming from? I can do similar math: 66 operating income, subtract 60 million for tax and interest, = $6million, likely what they have available to add at the deadline.

 

Which of us is wrong?

 

I Guess you could be closer to the actual profit figure than I am. I already stated it’s all a guess anyhow.

 

But we’re never gonna know for sure unless the books are shown, which will probably never happen nor should it happen.

 

Lots of people choose to believe what’s being told to them by the powers that be, I choose skepticism based on life’s experiences with extreme money focused individuals, like when someone says “all in” and then poop hits the fan.

[pacopete4]

Well, there is a reason some tend to believe an owner over some poster on the internet making up numbers to justify their agenda. One has credibility. The other, well, yeah.

[tomwopat]

FWIW

All mlb teams gaining 7 mil/yr starting next year with new Fox deal.

 

Brewers getting increase starting next year with their local tv deal that’s to my knowledge yet to be worked out.

 

Brewers ticket sales up 20%for the year

Record number of corporate sponsors

 

Profit is a guess yes, but if we take the 66 operating income and subtract 20 mil for tax & int we get 46

 

46+ 110 payroll = 156 million max payroll to break even.

 

What are we at now? I’ve read from 121-130 depending on call ups and such.

 

Let’s go with 130

 

That leaves 26 mil room to break even.

Not that he should

But that he Could

 

Again, you're just making up numbers. Where is your 20 million number for tax and interest coming from? I can do similar math: 66 operating income, subtract 60 million for tax and interest, = $6million, likely what they have available to add at the deadline.

 

Which of us is wrong?

 

I Guess you could be closer to the actual profit figure than I am. I already stated it’s all a guess anyhow.

 

But we’re never gonna know for sure unless the books are shown, which will probably never happen nor should it happen.

 

Lots of people choose to believe what’s being told to them by the powers that be, I choose skepticism based on life’s experiences with extreme money focused individuals, like when someone says “all in” and then poop hits the fan.

 

Yes, we are operating with limited information; the only "hard" data we have is when there's a change in ownership or other release relating to a transaction, but I rarely feel we get 100% of the story there.

 

I'm curious though, how you interpreted the "all in" comment and what your expectations are based on that?

[JosephC]

I'm just wondering if there is anybody on this board that bought a 200k house in 1999. Now that house is worth 350k. So because that house is now worth 150k more than it was than it was when they first bought it, they have decided to go out and buy themselves a brand new 2019 Aston Martin Vantage?

 

No, but they could.

 

I think we're using Midwest values to determine what is prudent and what is excessive. Just because we wouldn't buy such an expensive, flashy car doesn't mean we couldn't. And it doesn't mean he shouldn't. And you're talking about a 75 percent increase over 20 years, while the Brewers have had a 400 percent increase over 14 years.

 

Baseball teams go through cycles where they are competitive and then they're not. The Brewers are at the peak of that cycle. So if they find themselves lacking at a position and have a trade partner with an expensive player coming back, that contract shouldn't be a factor.

 

It depends on the liquid assets held by that individual. If said individual has a net worth of 500k...350k house, 125k retirement accounts, 25k in the bank...then the said individual only has 25k in liquid assets(*) and cannot buy a 150k car.

 

(*) - assumes that the individual would suffer a loss in value when cashing out the retirement account, thereby making it a non-liquid asset

 

Or the individual could just go ahead and cash out the 125k retirement account, and after the value of that 125k is decreased, could add the "lesser" 125k to the 25k the bank, finance the rest to get himself up to 150k and then buy himself the car. Foolish and irresponsible as could be, but that individual could buy the car.

 

We really have no idea what Attanasio/Brewers liquidity situation is.

[Brew crew 92]

Well, there is a reason some tend to believe an owner over some poster on the internet making up numbers to justify their agenda. One has credibility. The other, well, yeah.

 

Why, because it’s in his best interest to tell the truth the whole truth and nothing but the truth?

[MrTPlush]

Regarding #2, no I am not, silly to assume that. They could make the business decision that spending more potentially gets them a World Series which could lead to higher current/future income and a higher valuation. There is also risk with that because they could have a high payroll and be out of the playoff picture by July and need to have a huge sell off. There are always various reason why a business owner will/will not spend money.

 

I am not sure what the gain in a World Series really gets us. There is value there in the short term...but once again it is not going to make the franchise any more valuable than it was before. Even if you want to argue it does it would be pretty darn marginal. Success on the field just doesn't equal anything to the valuation of the franchise....nothing meaningful that is.

 

The Royals, the only small market to win the World Series in the last friggin decade plus, are proof it doesn't really add anything long term. Their attendance quickly dropped back down to pre-WS levels in three years. Yes, they now suck, but it shows the WS victory wears off fast. They sucked before the WS and now they have comparative or worse attendance numbers.

 

Also lets not forget our WS odds are pathetic to begin with...it is for any team. Fangraphs has us at 1.6%. What is Keuchel or Kimbrel going to make that? 3%? I bet they wouldn't even be that high. $20mil+ to increase our chances a percent or so? So if making that signing worth it you need to win the World Series then there is a 97% chance you pretty much wasted all of that.

 

 

I am not saying they won't shrink profits to zero or even take a small loss...but they aren't going "all-in" in the sense of tens of millions of dollars in the hole. It is crazy people think Attanasio should throw money around like it isn't an object to take our odds from 1.6% to 3%.

[Brew crew 92]

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?

 

Mr wopat, Jim answers your question better than I could.

[pacopete4]

Well, there is a reason some tend to believe an owner over some poster on the internet making up numbers to justify their agenda. One has credibility. The other, well, yeah.

 

Why, because it’s in his best interest to tell the truth the whole truth and nothing but the truth?

 

No, because you know jack squat and are tossing around numbers that aren't at all factual. Just stuff you've made up in your own mind to justify your opinions on ownership. When you get something factual, bring it to the table and I am sure we'd all be glad to hear it and discuss what ownership should be doing.

[FVBrewerFan]

Keep in mind, Miller Park will need major repairs/ renovations in the relatively near future. Do you think they'll have any luck having the taxpayers pay for that? Me either. For example, I don't know how much it costs to replace the roof or make significant repairs but let's just say it isn't cheap.

 

So they make a profit, but they need to put money aside for huge expenses like this coming down the road. Not to mention, we don't know how they're financing the big upgrades in Maryvale, if they plan to buy any other minor league affiliates, etc.

 

There's so much that is unknown to say they can easily bump player payroll up to "x."

[Brew crew 92]

Regarding #2, no I am not, silly to assume that. They could make the business decision that spending more potentially gets them a World Series which could lead to higher current/future income and a higher valuation. There is also risk with that because they could have a high payroll and be out of the playoff picture by July and need to have a huge sell off. There are always various reason why a business owner will/will not spend money.

 

I am not sure what the gain in a World Series really gets us. There is value there in the short term...but once again it is not going to make the franchise any more valuable than it was before. Even if you want to argue it does it would be pretty darn marginal. Success on the field just doesn't equal anything to the valuation of the franchise....nothing meaningful that is.

 

 

The Royals, the only small market to win the World Series in the last friggin decade plus, are proof it doesn't really add anything long term. Their attendance quickly dropped back down to pre-WS levels in three years. Yes, they now suck, but it shows the WS victory wears off fast. They sucked before the WS and now they have comparative or worse attendance numbers.

 

Also lets not forget our WS odds are pathetic to begin with...it is for any team. Fangraphs has us at 1.6%. What is Keuchel or Kimbrel going to make that? 3%? I bet they wouldn't even be that high. $20mil+ to increase our chances a percent or so? So if making that signing worth it you need to win the World Series then there is a 97% chance you pretty much wasted all of that.

 

 

I am not saying they won't shrink profits to zero or even take a small loss...but they aren't going "all-in" in the sense of tens of millions of dollars in the hole. It is crazy people think Attanasio should throw money around like it isn't an object to take our odds from 1.6% to 3%.

 

The Royals had a payroll of 142 million the year after they won the World Series, with just inflation that would equal 150 million today. I would argue their revenues aren’t as high as ours with everything being equal. Whether they won the series or didn’t win the series just the fact they spent the money should tell us something.

 

Sorry, but in regards to fan graphs I don’t place any stock in their series odds, their resent history predicting or projecting anything Brewers is abysmal.

 

And as far as the crew going tens of millions in the hole for payroll, I think that’s quite the exaggeration there.

 

In fact I would argue a 155 mil payroll this year be zero borrowing.

[Ron Robinsons Beard]

 

In fact I would argue a 155 mil payroll this year be zero borrowing.

 

There is nothing "fact" about that. That is 100% pure speculation.

[Brew crew 92]

Just curious what guesstimates you guys have on brewers break even payroll for this year?

[pacopete4]

Fact- Mark Antanasio $15 billion in his bank. He should be able to afford to give Kimbrell $500 million.

 

 

See I can throw out numbers to. But just like a certain poster, they are meaningless and almost a certain to be wrong.

[Brew crew 92]

 

In fact I would argue a 155 mil payroll this year be zero borrowing.

 

There is nothing "fact" about that. That is 100% pure speculation.

 

You really had to say that?

 

Speculation or guesstimate yes it is!