wallet cashAnnually, the Forbes “Business of Baseball” reveal is one of the bigger pre-season events. How much is each franchise worth? How much revenue did they bring in last year? How much debt do they carry? Which teams shifted in which direction? Forbes has just released its iteration for this year, and it’s full of interesting – albeit estimated – data points.

The timing is particularly interesting, given last week’s large financial piece on the Cubs here at BN. For that reason, there aren’t really any huge surprises in Forbes’ piece – as far as the Cubs are concerned, anyway – but it’s still interesting to see the overlaps, if nothing else. There are also a number of interesting bits from around baseball.

  • The Cubs’ franchise value comes in at $1.2 billion, a healthy bump over last year’s $1 billion mark. Why the increase, despite reduced revenue, political headaches, and a deep rebuild? Well, the best guess here is that Forbes is pricing in the anticipated dramatic increases in revenue that are coming soon. The TV deal market, in particular, has burgeoned even further in the last year. Also, you just have general appreciation in the baseball market.
  • The Cubs’ revenues for 2013 are estimated at just $266 million, which is a decrease from its 2012 estimate of $274 million (and is dramatically lower than Bloomberg’s $320 million estimate for 2013). The Cubs’ “operating income”, therefore, shrunk to $27.3 million. Recall, “operating income” is not “profit” – it is earnings before interest, taxes, depreciation and amortization. For the Cubs, that figure has to be high enough to cover their debt service payments (currently $30 to $35 million) and to stay in the good graces of MLB’s Debt Service rule. All things consider, given the estimating involved, the Forbes figure lines up pretty closely with what you’d expect to see. Perhaps the Ricketts Family had to go out of pocket slightly to cover the Cubs’ debt service payments in 2013, or perhaps Forbes is a little light on the operating income figure.
  • In case you needed any further evidence that “operating income” is not the same thing as profit: the Yankees had an operating income of negative $9.1 million in 2013, according to Forbes. And, unless you labor under the obscene misapprehension that the Yankees are losing money, you know that these figures do not tell the whole financial story.
  • Interestingly, the Cardinals had 2013 revenue of $283 million and operating income of $65.2 million according to Forbes. And yet I don’t suspect we’ll see too many stories emanating out of St. Louis about its money-grubbing owners who merely want to pocket profits. (And, to be clear, I’m not saying that either: the Cardinals, like the Cubs, have fairly substantial debt to service, and could have a number of other one-time expenses into which they’re putting that operating income)
  • The more important point in that last bullet is the revenue: the Cardinals brought in more of it than the Cubs last year. Obviously the Cardinals deserved every dollar they brought in last year, but the point adds further color to idea that the Cubs – currently – aren’t raking it in as impressively as some would have you believe.
  • Indeed, many teams you might not expect were right there with the Cubs in revenue, or much higher: Yankees ($461M), Dodgers ($293M), Red Sox ($357M), Giants ($316M), Phillies ($265M), Rangers ($257M), Angels ($253M), and Braves ($253M). Together with the Cubs and Cardinals, that’s a full 1/3 of the league that was in the $250 million+ revenue range. Some day, the Cubs will be able to exercise a revenue advantage over most other teams, but that day absolutely not today.
  • After years of listing the Cubs’ debt at $580 million, Forbes now has the figure at $420 million (I reported it as $425 million, for purposes of MLB’s Debt Service Rule). My understanding is that the debt has not been paid down in a significant way since the original Tribune Company transaction in 2009 (although it has been refinanced), so I believe what we’re seeing is a recharacterization – from Forbes’ perspective – of some of the Cubs’ debt that is held by the Ricketts Family Trust. As I wrote last week, that debt, unlike bank debt, is favorable to the Cubs, and doesn’t really drive any of the financial issues in which folks are interested.
  • CubFan Paul

    “despite reduced revenue”

    Probably just tickets/recessions, but not overall.

    “many teams you might not expect were right there with the Cubs in revenue, or much higher”

    Crane Kenney would beg to differ.

    • http://www.bleachernation.com Brett

      You might want to actually check the numbers and the phrasing. This is consistent with what Kenney has said.

      • CubFan Paul

        Being 5th in revenue is not what you have above.

        • http://www.bleachernation.com Luke

          If I’m reading right, Brett only lists the Yankees, Dodgers, Red Sox, and Giants as having more than the Cubs listed $266 million in revenue.

          If four teams are ahead of the Cubs per this article (I haven’t checked the Forbes piece yet), how are the Cubs not fifth?

          • http://www.bleachernation.com Luke

            The Forbes article has the Cubs at 6th (I missed the Cardinals – my bad).


            • http://www.bleachernation.com Brett

              I’m not sure what Paul is debating here. That Forbes is off by *1* spot?

              Kenney has the actual numbers. Forbes has its best estimate/sources/etc. If Kenney said the Cubs were 5th, they were 5th. It’s actually not all that simple to come to a bottom line revenue number for all of these teams because they have associated entities that do or don’t count for MLB’s purposes on revenue. In other words, the “ranking” doesn’t really matter. What matters is the general tier in which you fall, and how much actual money you have to play with.

              • JB88

                I actually think that when you consider your piece Brett in conjunction with Forbes’ piece, there is a lot to be optimistic about.

                That the Cubs’ attendance could be so bad in 2013 and its revenue still in the top 6 of baseball is definitely encouraging. When you factor in the likely increased revenue that is coming from the park, from TV revenue, and from the decrease in park maintenance and, eventually, the debt service piece, you can see potentially how the Cubs could be in the top 3 of revenue with a whole lot less debt. Maybe they don’t have the flexibility of the Yankees, Red Sox, and Dodgers, but it is pretty easy to see a time where the Cubs can justify carrying a Top 4 payroll, consistently.

          • CubFan Paul

            You’re right, i misread.

  • Ivy Walls

    After this year’s draft/trading and IFA acquisitions I see the Cubs making a strategic move. The Wrigley Field Renovation should be in place except for the shouting. First stage media deal should also have its framework(s) and the pipeline should emerge as to what to expect.

    Cubs need a TOR starter and they need to make a long term decision at SS. Those are the key points, the other things will probably take care of themselves. The pipeline will have depth so the will be able to trade prospects for MLB talent.

    It is all about resources and then it will be about gate revenues where the club should return to over 3M paying customers.

    • Brocktoon

      “The shouting” is a pretty big obstacle to the renovations

  • Austin


    This has probably been posted but in case it hasn’t this was a good read on Josh Donaldson. Glad he got a change of scenery and righted his career. Just wish it was with the Cubs still.

  • J

    How do the Cardinals compare with the Cubs for +/- on revenue sharing?

    • http://www.bleachernation.com Brett

      Last year, Bloomberg says the Cubs gave up $39 million while the Cardinals gave up just $6 million.

      The worst part is that the calculation for revenue-sharing is so complex that, just because the Cardinals brought in more than the Cubs last year in revenue doesn’t necessarily mean that the Cubs won’t have to pay out more in revenue-sharing than the Cards.

      • Sandberg

        I just have to keep telling myself that it won’t matter soon, but this (along with the extra draft picks) is really infuriating.

  • CubChymyst

    Does this means the Cardinals can get kicked out of the bonus pick pool?

    • http://www.bleachernation.com Brett

      Nope. As long as they continue to play in one of the smallest 10 markets, they’ll always be eligible. You can pretty much book it that the four other teams in the Central will *always* get those picks, and the Cubs will *never* get one, at least until/unless there are major CBA changes.

      • http://www.friendly-confines.com hansman

        All four might not always get the picks, but I think we can bank on the Cardinals ALWAYS getting a pick.

    • C. Steadman

      I’m guessing no. The pool is made up of the 10 clubs with the lower revenue and 10 clubs from the smallest markets. I’m guessing the Cardinals get entered due to being in a small market because they’ve always had good revenue streams it seems.

      • CubChymyst

        The smallest market thing is BS.

        • C. Steadman

          Yeah, technically St. Louis must be a small market, because they usually have high revenue streams.

      • cubfanincardinalland

        What is unfair is how they define the cardinals market. While the st. Louis metro area is a small market, I have read that 35% of ticket buyers live over 100 miles from the ballpark.

        • C. Steadman

          Exactly…I hate competitive balance picks based on market size. I can see based on winning pct or revenue streams.

          • Brocktoon

            The extra picks are silly as is, it’s be sillier to double down on rewarding losing by giving extra picks in addition to picking higher in the normal rounds. It’d also be silly to punish smaller market teams who’ve managed to build revenue streaks in spite of the handicap of having a smaller population to draw from.

            • C. Steadman

              I agree that they should do away with them, but I can see why they’re giving them out based on quantitative data(Winning PCT and Revenue) but market size is hard to quantify based on so many different factors.

              • Edwin

                I don’t think determining market size is too hard. Most of the time when they’re talking about market, they’re talking about TV market, so that makes things simpler.

                • C. Steadman

                  Fair enough, but I just hate the competitive balance picks anyways.

        • CubChymyst

          Also with the way media is streamed online now, teams games are not localized. You can develop fans who will by merchandise anywhere.

          • Edwin

            But the revenue teams generate from online streaming and merchandise sales pales in comparison to revenue from broadcast contracts. And a big part of broadcast contracts is driven by the TV market a team is in.

            • CubChymyst

              Fair point. But i’m still going to dislike it weather it is irrational or not.

              • Edwin

                I know. It’s tough to see a team that doesn’t seem to need much help get a bonus pick.

                But at the end of the day, the Cubs are better off than the Cardinals. I’d glady take the Cubs market and no comp pick than have the Cards market and have that comp pick.

  • cubfanincardinalland

    What is ridiculous is the cardinals still get extra draft picks for being a small market team.
    $35 million in debt service on a $425 million loan. Wouldn’t part of this be paying down the principle? What type of terms would they have on debt like this?

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