Atlanta is the only team in Major League Baseball that we, the public, get some real insight into what kind of money they are actually making. They are owned by a publicly traded company, so much of their financials are out there. The other 29 teams, though, we are just kind of guessing. Each year Forbes does the best that they can to estimate the revenue, spending, and values for each organization. This past year they estimated that the Cincinnati Reds value was $1,085,000,000.
That’s a whole lot of money. And it’s nearly four times what the current ownership group bought in for, too, just 16 years ago. That still makes the Reds just the 27th most valuable team in Major League Baseball. The 2020 and 2021 seasons, one being shortened and without fans in the stands, and the other having limited fans for part of the season, has certainly harmed the cash flow. Forbes estimates that in 2020 the organization’s lost $47,000,000. Of course, they also estimate that since buying the franchise, the Reds current ownership group has come out ahead – including the 2020 season – at $195,300,000 without accounting for the growth in value of the franchise.
Owning a professional sports franchise is a great investment. They both make cash profits and they have grown in value that the stock market can only dream of – at least in the last two decades. But on Monday morning we learned that it may be better than we thought.
Paul Dolan, owner of the Cleveland Guardians* (lawsuit pending), is reportedly looking for a minority, but large investor in the team after the last one left the organization to buy the Kansas City Royals when they went up for sale in 2019. Zack Meisel and Daniel Kaplan of The Athletic are reporting that Dolan is looking at offering up 30-40% of the franchise for sale ($$). To put that in perspective, it’s been rumored that Bob Castellini owns just 15% of the Cincinnati Reds – he just owns the largest chunk of any individual and has the controlling share (which would mean even if someone else wound up with a larger share of ownership by buying out minority partners he would remain the CEO and decision maker).
Forbes has estimated that the Cleveland Guardians are worth $1,160,000,000 and the 25th most valuable franchise in Major League Baseball prior to the start of the 2021 season. The reporting from Meisel and Kaplan, though, says that their ownership has placed a $1,400,000,000 valuation on the franchise. That’s 21% more than what Forbes suggests.
Cleveland and Cincinnati are both in Ohio. That means that they both dealt with the same restrictions on fans in both the 2020 and 2021 seasons. Both teams reportedly lost money in 2020, though Cleveland’s number about just $20,000,000 according to Forbes. Still, in the long term – both franchises aren’t or at least shouldn’t be harmed by those losses.
The metro area for each franchise is nearly identical, with Cincinnati having a slight edge. There’s been a lot of talk about how the Reds are crying poor. Placing Wade Miley, their best pitcher in 2021, on waivers rather than pick up his $10,000,000 option, has truly sparked a fire under much of the fanbase who is simply tired of the non-attempts at winning. And whenever it’s brought up, it’s always about “money”.
@joe_sheehan's newsletter today lays out the Reds math:
$60M from national TV
$48M est. from local TV
$30-40M in revenue sharing
~$99M from hosting actual baseball games
And they tell you they "can't afford" to pay Wade Miley or Luis Castillo.
— Chris Garber (@cgarber8) November 12, 2021
As noted by Joe Sheehan, and conveyed above by Chris Garber – the Reds seem to have plenty of money. Sure, they don’t have New York Yankees money, but they aren’t nearly as poor as they claim to be. And I’ll also note that while we don’t know how much the Reds are getting from their television deal, I’ve heard it’s higher than the $48M estimated here.
So we’ve got Cleveland telling potential buyers that they are worth 21% more than Forbes is valuing them at. And their numbers are pretty much right in line with Cincinnati’s. Forbes is valuing the Reds at $1,085,000,000. But if they are worth 20% more than that, like Cleveland claims that they are, then we’re talking about the Reds being a $1,302,000,000 organization.
That’s over a billion dollars more than the current group bought the team for. It’s 4.8 times what the team was bought for in 2006. Keep that in mind when the team can’t “afford” things. Keep that in mind this winter when the owners try to take out the knees of the players, again, when it comes to salary compensation and potentially a work stoppage.