Forbes Magazine has released it’s annual report on the baseball business.

The Reds’ operating income for 2008 was $17 million dollars, which was 15th in baseball for last season.

The Florida Marlins led baseball with profits of $43 million and the Washington Nationals were second with $42.6 million. The Detroit Tigers lost $26.3 million and the Yankees lost $3.7 million. They were the only two teams to lose money for 2008.

As for the value of the teams, the Yankees are still first, with a value of $1.5 billion, followed by the Mets at $912 million and the Red Sox. The Reds’ franchise was valued at 25th in baseball, at $342 million. The most profitable team in baseball last year, the Marlins, had the lowest team value at $277 million.

The Reds’ team increased in value by 2% in 2008; MLB overall increased by 1%. As for debt to value ratio, the Reds have a debt/value ratio of 12%, which is 6th lowest in baseball. The Yankees debt/value ratio is 95%, including their new stadium debt. The three teams whose value increased the most last year were the Yankees, the Mets, and the Rays. They all had double digit growth.

The Reds team can be found here. Robert Castellini purchased the team for $270 million in 2006 and the team is now worth $342 million. The highest Reds operating income for a season was $23 million in 2005 and they made $22 million in 2007. They’ve dropped the last two seasons as player expenses have risen. Player expenses were $93 million for 2008 (the Forbes charts have different years listed than the story).

Forbes does say the Reds risk their team value declining in 2009 due to a big push by the team to increase their premium seating revenue during the recession. The story says the Reds made a big push for big ticket sales, which can’t be supported by their sponsorship and television revenue if the tickets aren’t purchased.

5 Responses

  1. Jack

    I agree on the ticket prices. My buddy and I have been going to GABP since 2003. We started sitting in the 300 seats (Club 4192) in 06. Tickets were $46 then. In 07 they went to 48. In 08 they went to 49. This year they jumped to $85. I know it includes the buffet, but that’s just too much for us. I guess it’s back to the 130’s seats behind the reds dugout for us.

  2. Kurt Frost

    A profit? This can’t be true…Mr. Redlegs stated the Reds are in dire financial straits.

  3. Mr. Redlegs

    Are you looking at the numbers? No one said they were broke and the numbers are based off 2008. But as the story clearly indicates, the sponsorships, TV/radio revenues and recession along with some higher costs have shrunk their margins. There’s also conjecture on how much of the operating costs includes the minors opps.

    When you look at the Reds’ profit margin and then realize that has to carry the following season, especially for draft bonuses and other ops costs, it’s not that much margin.

  4. Steve Price

    The value of the Reds’ franchise has increased more than 25% since Castellini took over the team. The team made $17 million last year, and that included $93 million in player expenses.

    The Reds have tons of money. Baseball history shows that fans come to see teams that win games, not raise tickets to cover the buffet at the game.

    Draft bonuses and ops costs are already included in the formulas…the exclusions listed are taxes, interest, and amortization. Taxes are a given, the Reds’ stadium is publicly owned, and amortization is an accountant’s playground.

    I think serious questions can be given to the direction and focus of team management. Player resources are improperly allocated, and the Reds seeminly disdained the ordinary fan during recessionary times to tie up more money at the ballpark.

    So, instead of putting a better product on the field, we went the marketing and amenties route. You have to do marketing, no doubt, but I have to question the wisdom of paying big money to 16 year olds (high risk, high reward?), to overaging skill players, and to relievers, both middle relievers and closers, while making it less affordable for fans to come to the games.

  5. GregD

    Owners who cry foul (and I’m not saying that current Reds ownership is doing this) always neglect to mention unrealized gains in the value of the franchise.