show me the moneyThe annual – and oft-debated – Business of Baseball rankings are out, thanks to Forbes, which annually does its best to determine not only the value of, but the revenue and income of, each MLB franchise. How it does this without actual access to the individual teams’ books (as private entities), remains a laudable mystery.

According to Forbes, the Chicago Cubs are the fourth most valuable franchise in baseball at $1 billion in value, behind only the Yankees ($2.3 billion), Dodgers ($1.615 billion), and Red Sox ($1.312 billion). These are dramatic shifts upwards from last year, which was to be expected after the Dodgers were sold for north of $2 billion, and the industry was flooded with valuable TV dollars.

Of more interest to you, perhaps, is Forbes’ estimate that the Cubs took in $274 million in revenue in 2012, which earned them $32.1 million in income – the highest figure in baseball. What remains unclear is what the Cubs do with this “income.” According to team Chairman and Owner Tom Ricketts, every dollar that comes in the door goes back into the organization. The Cubs have invested in non-player expenses for the last couple of years (software, facilities, etc.), so it’s possible that the “income” ends up being used there somehow … but wouldn’t those simply be expenses? Then again, how does Forbes know exactly how much the Cubs are spending on, for example, proprietary software acquisitions? I’d think the Cubs wouldn’t want to share that information.



The other obvious ending point for “income,” if it’s being put “back into the organization,” would be using the income to pay down the Ricketts Family’s debt, which they took on to purchase the team. But Forbes indicates that the Cubs have a 58% debt/value ratio, which, at $1 billion in value, yields $580 million in debt. After the 2010 season, according to Forbes, the Cubs had … $580 million in debt.

It’s entirely possible that the Ricketts Family has paid down none of the debt in two years, but it feels a bit surprising. It also raises questions about the $30ish million in “income” that the Cubs have been purportedly netting the last couple of years. Where exactly is that money going if every dollar that comes in the door is staying in the organization? Rainy day fund? The front office has mentioned money potentially being rolled over from year to year as needed, so that’s a possibility. But $60 million over the last two years is a pretty healthy rollover.

Here’s where I get called a homer, but I tend to believe that Tom Ricketts isn’t flat-out lying about how organizational dollars are used. And, if I believe that, I have to regard the Forbes figures suspiciously.



That said, I’m sure Forbes has solid sources on their information, and I’d love to be able to reconcile the large amount of “income” the Cubs receive with the fact that the debt remains the same, and all revenue is supposed to be going back into the organization. I’m no finance guy, so maybe there’s some obvious answer I’m missing. You know, besides simply saying Forbes’ estimates are way off, which is entirely possible, too.


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