Detroit Tigers MLB 2015 News: What is the Team's True Value?
How can it be that a company with a $20 million operating loss last year and an operating loss in five of the last seven years be worth 65 percent more than it was a year ago? That is the fuzzy math Forbes is trying to sell with its annual list of baseball team evaluations that was published today. Forbes has tracked the value of sports franchises sine 1998 but just like everyone else they do not have access to the books, so Forbes is estimating team values.
In the case of the Detroit Tigers, it seems like they are off. The value of the Tigers, according to Forbes' estimates, is $1.125 billion. Yet, all the above rings true of this team that has won four straight division crowns.
Looking at the fuzzy math we see that the Tigers had $84 million in gate receipts on revenue of some $254 million. That means their share of the national TV deal, their local TV contract, Stadium Naming right deal, souvenir sales and concessions totaled $170 million. We know that the team had a payroll of $187 million but have no idea what the other operating expenses are.
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However, given the numbers we can estimate that the team spent $87 million on them. What does a Major League Baseball team spend $87 million on that isn't payroll?
Mike Illitch bought the team in 1992 for $82 million. The team is certainly worth more than that given its extremely high local TV ratings and solid numbers at the gate, along with the revenue a new ballpark generates. Forbes says $1.125 billion, but the team is really only worth what someone will pay for it. That means the true value lays somewhere between $82 million and whatever the team is sold for the next time it is on the market.
