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”.

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.

57 Responses

  1. Aaron

    I’d be curious to know what the radio rights are worth and how that impacts those numbers.

  2. B-town fan

    I’m sorry but the Cleveland Guardians, that is stupidest name, it sounds like the name of a newspaper.

    As for the Reds, add those numbers up and that looks like 277 million in revenue to me, and that could be low, roughly more than twice the payroll. Since the Castellini’s only own15% maybe the real problem is all the minority owners, maybe they just look at the Reds as a cash flow machine, to get their cut.

    • Melvin

      I know what you mean. When I first read it I thought he was talking about another team in another sport but then I realized, Oh yeah, the former Cleveland Indians. I guess there are worse names. just have to get used to it. Big Bob and the Reds owners just want the same amount of profit as the Yankees, Dodgers etc. while being in a small market. Those “poor” people. Feel soooo sorry for them. hahaha As I recall another famous quote from Big Bob was, “We will NEVER blow things up”. Really? It sounds to me like that’s exactly what they’re planning to do.

  3. JB

    I am a sports freak. It’s all I basically watch. Watching Baseball to me is heading down a slippery slope the way the NBA has. I love basketball but I gave up the NBA years ago. I’m to old to give up my precious time to watch a team be happy with 4th place every year. I could never understand Pirate fans and why they would waste their time with a franchise that doesn’t care. The Reds are not as bad as the Pirates but maybe they are heading in that direction. I guess we will find out soon enough. For me I’ll wait until spring and see what the front office has done. Spring use to bring hope for every fan but I’m not so sure it works that way anymore.

    • Alan Horn

      Same for me. I gave up the NBA years ago and the NFL only recently. MLB and college football are hanging on, but barely. The events of the last few years have turned me sour on professional sports. Sports should stay out of politics.

  4. SultanofSwaff

    I’m sure these valuations aren’t going unnoticed by the Player’s Association.

  5. RedsFan11

    Votto please ask for a trade to the Blue Jays

    • TJ

      Ya know. I hate to think about it, but would a Votto trade to the blue Jays look like. They have so much talent on their MLB roster. I have no idea what their minor league situation looks like. Anyone care to ponder?

      • Old Big Ed

        It would look like the Reds taking on about half of the contract, and the Blue Jays giving up their 44th best prospect to get him. Votto is owed $25 million per year, and he can reasonably be expected to produce, in a good year for his age, about $15 million/year in value. His contract is therefore about $10mm/year underwater.

        Plus, I am not sure what the Blue Jays would do with Votto. Vlad Jr. plays first, so Votto could only DH. The Blue Jays already have several DH options.

      • Bubba Woo

        Great work Doug! The current ownership group needs to sell. Reds fans should read up on the former Dodgers owner who sold to the current group. He mortgaged the Baseball team to offset losses in his other, less successful businesses. Same as the Castellinis. Sell the team Bob!

      • JayTheRed

        Toronto has a pretty good farm system from what I have been readying up on since I probably won’t follow the Reds anymore after this offseason so I’ve been doing my homework on my new team. They definitely don’t have any room for Votto unless we got back someone from their DH collection of players.

  6. LDS

    The ownership group isn’t interested in a viable product. And if Boras is to be believed, a lot of teams are tanking for profit. Personally, I think competitiveness, beyond draft picks, etc., should be part of the CBA. Either play to win or suffer some penalty. I don’t think payroll minimums/maximums actually gets to a solution.

    • Doc

      Responding to several of the above:

      Just how are you going to determine that a team is playing to win, or not? Making a generic statement without any suggestions adds little to the conversation.

      Maybe one option would be to establish the draft order by team records as of the All Star game, or on July 1 if a specific date is more preferable. Although not impossible, it is unlikely that teams would start tanking that soon.

      Scott Boras is not a credible neutral source. He is wholly biased in favor of players. Can anyone find a single statement ever made by Boras that was favorable to owners and unfavorable to players?

      What someone trying to sell shares is saying the club is worth and what the club is actually worth are not the same thing. If someone listed a house at $400k, you bought it at $300k and the taxing authorities valued it at $400k for property tax purposes, any of you, including me, would blow a gasket. Saying the Reds are worth more because the Cleveland owner says his team is worth more is not showing intellectual honesty. The IRS says the value of something is what a willing buyer pays a willing seller. Cleveland’s value is not established until you have a willing buyer, a willing seller, and an agreed price.

      Might also comment that it is frequently stated on this site that the Reds are worth a billion dollars and BC has plenty to spend. But BC’s piece is only worth 15% of that. That’s a big difference!

      • LDS

        I can think of a number of possibilities for determining tanking. From overt moves like dumping Miley on the waiver wire. The revenue sharing agreement could be modified to reduce the payouts based on winning pcts, quartiles, quintiles, etc. Lots of ways to do the calculation. As for BC and only owning 15% – by the same argument, it’s not up to him to foot the bill for all transactions, so the value of the franchise is still a better proxy. And the discussions on this site seldom touch on the accounting treatment of the player contracts nor on the advantages of the anti-trust protection. Greed on the part of the owners and the players will ultimately kill the game. The average fan will become increasingly unable to foot the bill for a game – especially in the current economic climate.

      • Kevin S Davis

        One way to try to lessen some of the tanking is to change MLB draft to be more like the NBA draft. Just because a team has the worst record would not mean the would get the number one pick.

        But I think the real issue is that MLB and NBA both tank if teams realize they don’t have a chance. The NBA trade deadline is absurd the way teams move and release players.

      • Bubba Woo

        Then Castellinis and his group should sell to one of the hundreds of billionaires who would gladly buy the Reds and put a competitive team on the field.

      • greenmtred

        Dumping Miley might be evidence of tanking, but it might be evidence that the Reds have confidence in Greene, Lodolo, etc. We’ll have a better idea about this when we see what they do during the rest of the off-season.

      • LDS

        Sorry @greenmtred but the argument of throwing away a valuable asset because you think you can replace it with a newer model isn’t rational. It’s like parking your 10 year old pickup truck on the side of the road with the keys still in it and the motor running. After all, if you win the lottery, you’ll buy a new Corvette. The guys in the minors chief asset at this point is they are cheaper. They aren’t proven MLB talent as of yet.

      • greenmtred

        I hoped that they’d keep Miley. But it’s worth remembering that he is 35 years old, has had injury issues (as almost all 35 year old pitchers will) and was too gassed to be effective late in the season. And the Reds have a good number of very promising young pitchers. Shedding salary seems like a logical motivation for the move, but this was a salary paid to player at a position where the Reds are strong.

      • Chris

        After thinking about this more and more, I’m fine with the dumping of Miley’s contract, assuming they use that money to improve in other areas. At 35, I would bet that he doesn’t pitch more than 2/3 of next season. And if he does, I’ll bet he’s not near as productive. His last month alone was not very impressive. I’m not by any means touting any sort of salary dump, but there are prudent moves, and then there are pure salary dumps. Not sure I think this is the latter…Chris

      • LDS

        Obviously, Miley had value in the trade market. The Reds weren’t able to swing it and we’re afraid of being stuck with his contract. Weak FO, lousy outcome.

      • BK

        @Chris, I read an analysis on another site that pointed out that Miley’s actual performance exceed nearly all of the predictive metrics. Coupled with his age, there were strong indicators that he will experience a drop in production in 2022.

        @LDS, he at least didn’t have trade value this Fall or the Reds would have found a taker. Clearly, if he pitched like he did in 2021 the Reds would have found a trade partner down the road. That said, it’s not unreasonable (based on his September health, pitching analytics and age) to believe they made a good move offloading his salary w/out having to pay the buyout.

        Moreover, one shouldn’t evaluate the move simply in terms of who may replace Miley in the rotation, but rather who the Reds might be able to add or retain for $9.6M plus the production of the pitcher playing for the Major League minimum. At this point we don’t know what that side of the equation will look like.

      • LDS

        I’ll agree to be the odd man out in this discussion. In my world, bad management is bad management. As for age, Scherzer, Verlander, et. al. You would take them at $10M/yr?

      • Chris

        @LDS your question is completely unrealistic. It’s one thing to disagree with the Reds front office on the Miley release, it’s another to try and bolster your argument by comparing Miley at $10 mil to Scherzer or Verlander at $10 mil.

      • LDS

        Comparing age not talent. The assumption that Miley is done at 35 isn’t established.

  7. RedsGettingBetter

    Aligning payroll to “personal resources”…What can we do?

  8. Brad

    I was at a Reds caravan a few years ago and little Phil was there. I told him that I was at a Reds-Cubs game the previous year and had seen a Cubs player with a bucket of autographed balls that he was tossing into the stands. I asked the player why they were doing it and he said it was just something they would do every Wednesday for the fans. I asked little Phil if the Reds would consider doing something like this. His response was and I quote “do you know how much a bucket of balls cost”. That told me right that no matter what was said to the press, they would never spend money on this team. And that the current owners made Marge look like she spent money like a drunken sailor.

    • TR

      I like the appellation ‘Little Phil.’

    • LDS

      Worse, little Phil probably inherits dear old dad’s ownership at some point. And I’ve read elsewhere that he’s even tighter with a buck.

      • Jim walker

        Getting all the ducks lined up so they can afford (or avoid) estate taxes could well be a driver of the current austerity. It is not all that unusual for teams to change hands over such situations. Many times it comes down to whether the family wants to hold onto the team or is more interested in cashing out.

        Of course in the Reds situation, as best as can be estimated, the Castellini family holds only around 15% of the team but that is or includes the managing/ general partner “supershare”.

        When the so called “Castellini group” took control of the franchise from Carl Lindner, the Williams brothers (Dick’s dad and an uncle if I have it right) were identified along with Castellini as principal owners. They bought all the team not directly controlled by Lindner who supposedly had held direct control of around 35% (including the supershare). That 35% was reported to be a large enough % to block any attempts to unseat the supershare (2/3 required to do so). How Linder was persuaded to relinquish control of the supershare to Castellini group has to my knowledge never been publicly disclosed.

        However once they had control, the Castellini group then proceeded to sell out most of the shares not owned by principal owners to various minority owners. Some of the sources which put the Castellini share at ~15% also report the Williams’ combined share to be in the 20-25% range.

        So, I think it is also a fair question to wonder where the Williams are in all this since Castellini could be a lame duck managing partner needing to cobble together a coalition if he no longer has the Williams percentage to count on in case of a showdown. And in fact is the Williams money still in or is it out? And if it is out could some of the austerity involve an inside purchase of that share. Just thinking aloud late at night here but some things to wonder about as this situation unfolds.

      • LDS

        Thanks Jim. Good info. Maybe we’ll get lucky and the ownership turns over completely. But alas that’s probably wishful thinking.

  9. DaveCT

    Off topic, but Detroit wants to extend Tucker to help with their young pitching staff (MLTR). They obviously know what they’ve got. Go Tuck!

    • TR

      I hope Tuck has a big year with the Tigers.

  10. Oldtimer

    The late Bill DeWitt, Sr paid about $4.5 million for the Reds in 1961 and sold them for about $7 million in 1967.

  11. Brian Rutherford

    Wow. I mean just wow. What an answer, at a fan caravan of all places.

  12. BK

    A few of points:

    Of course Cleveland’s ownership is going to set an “asking” price above the level they intend to take. Negotiating strategy 101. Additionally, I’m not sure what parts of the franchise may be for sale that are not part of Forbes evaluation. That said, Forbes has a track record of getting pretty close to actual sales prices with their valuations.

    Putting out revenue numbers without the corresponding expense numbers is meaningless. It takes both sides of the ledger to do any valid analysis. Revenue does not equal profit.

    That said, the numbers provided above total $237M-$247M which is well below Forbes revenue estimate following the 2019 season (last season not affected by the pandemic) which was $272M.

    The whole idea of the value of the franchise factoring into payroll is myth perpetuated among sports riders (not taking a shot at Doug, he has a lot of company). The gains are unrealized (i.e., not monetized or not real until the team is sold). Yes, you can borrow against the value of the team to a point, but only to a point. You won’t see that approach recommended in the Harvard Business review or by any credible economists or financial analysts.

    • Joe D.

      Thank you for your comment. I too don’t see how a higher valuation of the franchise increases cash flow. Just because my house is worth more than it was 5 years ago does not mean it’s money in my pocket. And with the Covid restrictions the past two seasons I bet their cars inflow from concessions and ticket sales took a nose dive.

    • Old Big Ed

      BK, to comment on this blog, you are not allowed to understand business valuation concepts or the fundamentals of finance.

      If you actually dig into the Forbes numbers, and following at least two sets of footnotes, about 30% of the value of the Reds franchise is ownership’s share in the separate investment fund of MLB. (The primary sources of that fund are (1) the proceeds of the sale of the Expos/Nats to the Lerner family; and (2) selling some or all of MLB’s various tech/video streaming enterprises). This is a classic non-operating asset, to which the Reds have no real access. That value has soared, because MLB has been very, very good at investing it and at timing when to sell the tech assets.

      The value of the Reds’ actual baseball operations has increased since the ownership group purchased it in 2007, but at a rate little different (and maybe even worse) than a typical business of that size would have in the same period.

      Always take guesses at the financial position of a business with a grain of salt. Without audited numbers, it is almost impossible to know what is actually going on. Take the Sheehan numbers from Chris Garber’s tweet, for example. It posits that the Reds received $99 million from “hosting actual baseball games.” The attendance was 1.5 million, so that assumes “revenue” to the Reds of $66 per fan. I doubt that number, because the average working family just can’t pay that, and would expect it to be maybe 2/3 of that figure. I don’t spend that much when I go, and I typically get a good ticket. Perhaps it is a gross figure, including 2 beers per person, but as you note, “revenue” is only half the equation, with costs (including labor costs, COGS, sales taxes, depreciation, etc.) being equally important.

    • Jim Walker

      I would add that if in fact the Castellini share is 15%, that seems thin for a managing partner even in a closed company. The MLB debt rules could limit them from “loaning” the LLC (how the Reds company is registered the last I saw) money even of they had the funds and wanted to loan them; and, the bylaws of the company no doubt have provisions to protect the other owners’ capital share % as well as provisions for how the managing partner could be removed for not operating in the best interest of all.

  13. Max BRAGG

    Listen a REDS fan from birth the ownership in REDSLAND is the WORSE,and let’s not be deceived by Bob. Reds are worth alot more than he paid,but like anything else it is about PROFIT MARGIN LOL!

    • Chris

      Your house is too, but is it giving you the ability to buy more goods and services? I bet not, unless you are mortgaging it away.

  14. Mark Moore

    Paper worth is nearly worthless unless there is an active seller seeking a buyer. My house is worth plenty right now, but since it’s not on the market, that point is moot.

    • MBS

      They value teams based on the revenues they generate. The 2020 Forbes list has the St Louis Cardinals listed as the 7th most valuable MLB franchise doubling the Cincinnati Reds valuation. The reason they have such a valuable team isn’t because the city is very large, it’s because they’ve built a winning product that people want to support. They spend money, the Reds don’t.

    • Bubba Woo

      If your home is valued at 250k and you bought it for 62k, you also would be given a line of credit by the bank of 200k, the same as buying a baseball team for 250 mil that is now worth more than 1 Billion. Jeff Bezia doesn’t have 200 billion in cash, he has an asset worth 200 billion that he borrows against whenever he wants to buy something.

      • BK

        The bank will want to know what you plan to use the proceeds of the loan for. Unless you are borrowing to improve the value of your house, they will either turn you down or charge you a much higher interest rate based on their risk assessment. Banks will do the same to the Reds.

        I’m not sure why you think a wealthy business owner is borrowing money to fund living expenses. Their investments have absolutely generated positive cash flow if their product is mature which $200B ventures certainly are.

      • Old Big Ed

        The Major League Agreement has restrictions on the level of borrowing that any team can do. Violations can result in being forced to sell the franchise.

        Bezos is a unicorn. About 8 people in the U.S. are in his position, and the tomato salesman who owns the Reds is not one of them.

        The Reds stepped up two years ago and spent $90 million on Moustakas and Akiyama. Both were dumb deals — ones that the Rays would never have made. That these two deals have hamstrung the Reds so much ought to be proof positive that the Reds do have actual financial restraints. Profligacy works for the Dodger and Yankees, but it is not a viable option for the Reds

  15. Alex

    Only left to ponder what the Rays would turn Gray, Castillo and Mahle into on the trade market. A savvy team could really make some nice moves to make the overall team better, save money to put in other places and lean on their farm system to fill any other gaps.
    But I can’t help but think that ” save money” is the only real intent.
    I guess that’s my frustration. Cheap or not. This is not a well run franchise. What’s the long term plan? They do not seem to have a structural vision for how to consistently win under their constraints, or they don’t have the know how to make it work. I don’t want to hear about covid revenue problems. The cards and rays consistently produce a winning product, in smaller markets, while also picking late in the draft, by having a consistent organizational vision.
    The reds path to competing, no matter who the owners are, is going to be paved in drafting, developing and finding value where other teams don’t. Not spending money they apparently can’t live without, and than trading away valuable players or just letting ppl go for nothing just to stay afloat. An ownership group that can establish this vision remains elusive.

    • BK

      Lots of good points. If they have a vision, it has not been publicly articulated.

    • Old Big Ed

      The Tampa Bay Rays’ strategy is not really all that complicated. If the Yankees employed a higher-end variation of it, the Yankees would go to the World Series half the time.

      The Rays, as you say, “draft, develop and find value where other teams don’t.” They brought up a 20-year-old Wander Franco this year, and two years ago traded almost zero to the Cardinals for Randy Arozarena. They are not afraid to trade good players early — they traded Chris Archer for Austin Meadows, Tyler Glasnow and Shane Baz. Meadows even with a step back in 2021 has been a solid starter who is first-year arbitration eligible in 2022. Glasnow was all-star caliber until his Tommy John surgery, and Shane Baz is their #1 prospect who already has playoff experience. And now they have Archer back at a cut-rate price.

      The one thing the Rays don’t do is give long-term contracts to players in their 30s. They understand the fundamental truth of the 3-true-outcomes era: young players are better than old players. (But they aren’t above using old guys like Nelson Cruz or Rich Hill in support roles.) The Rays would not have signed Moustakas or Akiyama. They would not sweat Castellanos’s leaving. They would certainly listen to offers for Castillo and Gray, if they got value in return.

      The Reds have room to be much smarter with their money than they have been. I can certainly understand anybody who doubts that Nick Krall is the guy to lead the revolution, but the answer is (1) draft and develop; (2) find hidden value; and (3) avoid old players except in support roles.

  16. Tom Reeves

    A businesses valuation is not the same as it’s balance sheet, income statement, or cash flow statement.

    None of the Reds owners have the cash to sustain losses like 2020 without selling their shares of the club.

    I wish the Red would open their books for the public to see.

    One way I think MLB could fix this is to pool all TV money together and equally distribute that money to each team. But, teams also need a variable to put competitive teams on the field, so leave attendance revenue as that floating variable. That would encourage teams to do the things in their market that boost attendance.

    The only other option for the Reds is for a far wealthier ownership group to come to town and buy the team.

    I simply don’t think the current ownership group can take a risk of another year like 2020.

  17. Jim Walker

    I am reminded of the line from a Don Henley (The Eagles) solo album, “A man with a briefcase will steal more money than a man with a gun”.