Less than two weeks ago Sportico released their annual estimated values for all 30 teams in Major League Baseball. They estimated that the Cincinnati Reds were worth $1.39 billion, and that was including giving teams in the Bally Sports fiasco no credit for their television deals. The folks over at Forbes released their valuation estimates today for teams across the sport and they are a little less optimistic on the Reds value, stating that they believe the team is worth $1.19 billion.

Forbes shows the Reds having lost money for the second time in the last three years. After losing an estimated $47M in 2020, the team essentially broke even with a $400,000 positive number in 2021, and then lost $13M last year. The value of the organization, in the eyes of Forbes, has not changed from a year ago despite those losses.

Only the Miami Marlins and Oakland Athletics are valued lower. The Marlins come in at a cool $1 billion even. Oakland is just behind the Reds at $1.18 billion. Within the division only the Pittsburgh Pirates are also in the bottom third, coming in at 24th at $1.32 billion.

No team in baseball saw their value drop. Many teams saw their value rise, and some in significant ways. The Seattle Mariners, Milwaukee Brewers, Atlanta, Baltimore Orioles, and Los Angeles Angels all saw the estimated value of their franchise increase by at least 23%. The New York Yankees, Los Angeles Dodgers, Toronto Blue Jays, Chicago White Sox, and Boston Red Sox all saw their estimated values rise by at least 15%. The Marlins, Washington Nationals, Minnesota Twins, Arizona Diamondbacks, Pittsburgh Pirates, Cleveland Guardians, Oakland Athletics, and the Reds all saw a 0% or 1% change in their estimated values.

The business of baseball is still good despite all of the doom-and-gloom of everything that’s happened post 2019 with some years of limited attendance, the regional sport networks possibly collapsing, etc.

With Kroger now paying $5,000,000 a year for a jersey patch, and the Reds having the MGM Sportsbook within the stadium (and signage all over it), it will be interesting to see what happens to the franchise value and subsequent breakdowns of revenue a year from now. What happens with Bally Sports and in particular with the team could also play a big role in the short term, but we don’t really have an answer as to what will happen there yet.

31 Responses

  1. ryan

    Dress up all the players like NASCAR drivers and the money issues are solved

  2. mac624

    Great time for Phil to sell high! He’s all about saving money to make money anyway!

  3. LDS

    Assuming they actually did lose money last year, a big if, field a product worth watching and maybe they wouldn’t.

    • Melvin

      Yep. Fans will come if they (owners) just develop some trust.

  4. Michael Wilson

    I was living in San Diego in ‘74 when Ray Kroc (McDonalds) bought the Padres for 12 million. Now that was a deal. Reds for a billion, that’s some scary inflation.

  5. Christopher Hale

    And Castellini pockets as much of that as he can.

  6. BK

    Forbes showed the Reds having an “Operating Loss,” which is earnings (or losses) before interest, taxes, depreciation, and amortization–all of these reduce net income.

    Financial analysts often use “Operating Income (Loss)” to compare the performance of similar companies. In MLB, teams vary considerably in the amount of debt they carry (more debt means higher interest expense) and taxes. Net income (loss) remains the standard for whether a team earned or lost money in a given reporting period.

    Bottom line (pun intended): the Forbes report indicates the Reds have lost at least $60M over the last three years.

    • LDS

      And last I looked it up, baseball can amortize the value of player contracts as well. Sorry, I’m not feeling too much sympathy for the owners here.

      • BK

        @LDS, first, I didn’t call for sympathy for anyone. I simply offered an amplification of this article.

        Second, the tax laws are what they are. Rules for amortization and depreciation have solid rationales by limiting how much of a capital investment a corporation can expense in a year. Heck, I know a lot of fixed-income folks that take advantage of depreciation on property rentals–it’s not just a tool for the rich, as I’ve seen some on RLN like to posit. However, taxes and interest are actual cash outflows.

      • BK

        One more point … I agree that an MLB team’s ability to amortize player contracts is atypical. It allows them to accelerate expensing contracts and it’s typically advantageous to expense early as it defers (doesn’t prevent) taxes. However, every company can expense salaries. With many free agents failing to perform to the level of their contracts, there is at least some rationale for the practice (think about Moose’s and Akiyama’s contracts as recent examples).

    • David

      Depreciation of assets and amortization of debt can be instruments to alter the taxable income.
      That being said, if the Reds actually reported a loss with respect to the IRS, that doesn’t mean they are in poverty or poor.
      I would guess that a lot of better teams were likely to have broken even (at best) with higher payrolls, etc. over the same time period.
      I think other owners (with deeper pockets) are willing to shoulder “losses” in hopes of this thing called “winning” and realizing higher revenues from “winning”.
      I think in fairness to the present Reds’ Ownership Group, they do not have deep capital pockets, and are uncomfortable with shouldering continuing losses to achieve “winning”. They have to maintain an revolving credit line with a bank to pay for weekly/monthly operations, and when the end of the season rolls around, the difference has to come from somebody’s pockets.
      Also consider how signing bonuses to drafted players are now “slotted”, so that teams HAVE to pay higher picks more money, and also the operating costs of their Minor League teams, which likely (at best) break even, and likely LOSE money.
      But the “bottom line” is again, that fans will not watch on TV or come to the games to see a lousy product (62 – 100 last year). The loss of 1 million fans (in attendance) from 2014 to 2022 is not inconsequential to a team’s revenue. And I think low ratings are hurting their television revenue prospects.
      The mantra…..”Sell the team, Bob” is repeated. Perhaps the next owner will have a lot more money, and take the Reds out of Cincinnati. And that would be too bad.

      • Tom Reeves

        David +1000

        I think the “sell the team” mantra will continue. Cincinnati (or Ohio even) doesn’t have more than a couple billionaires. So a sale to a billionaire could mean a renaissance. It could also mean the team moves.

        I can also see the loss of the TV contract as a trigger for bankruptcy. That can mean voiding the stadium deal. The team removed from the stadium deal and free to move could become much more valuable to someone interesting in moving. It’s kinda ironic.

    • Tom Reeves

      And how long have I been saying all of this?

      If the losses continue, bankruptcy is a real option. Bankruptcy would likely void the stadium contract. That means the team can be sold to a new owner who can move to a faster growing market.

      Phil was dumb to say what he said. He was also right.

  7. MBS

    They had 1 million less people attend a game in 2022 than they did in 2014. I don’t know how much they make per fan attending a game but if it’s $50 per fan, that’s $50 million they lost by not fielding a team that fans wanted to watch.

    • BK

      The 2021 team was competitive, falling out of the playoffs in mid-to-late September, and attendance was just 1.5M. The 2020 team was competitive and made the playoffs, but COVID prevented the Reds from selling tickets leading to a significant loss.

      I’m not disputing the crux of your argument; the Reds have put far too few competitive teams on the field under Castellini’s watch, which has undoubtedly negatively affected attendance and revenue. However, the source of the recent losses started with COVID, not mismanagement. 2020 was the worst year during the Castellini’s tenure for a pandemic that resulted in zero attendance.

      • MBS

        Covid exasperated the situation both for the Reds loss of revenue, and the fan desire to attend games. The source of the problem is 2 rebuilds in such a short time period. Most fans are not willing to spend money on a team that’s not fun to watch.

      • David

        It is possible that the “Covid Year” (2020) broke the habit of some fans of coming to the games.
        My wife has worked in live entertainment for years, and the Covid Year took a LOT of people in that business ‘out of business’. A lot of things related to live entertainment died off (were bankrupted) as a consequence of 2020, and have not come back.

      • Ryan

        To the rebuilding point, i doubt you see many more teams take the tank approach, at least not for more than a season. In the Reds case it just killed fan interest. Its still tbd if the draft returns were enough to justify that loss in fan interest, and an eventual loss in revenue.

        The baseball team this year has flaws to be sure, but they should be a fun team to watch throughout the year. They are back to where they were in ’19, and didnt go and blow prospect capital by acquiring Vets on 1 year deals. They have a deep well of propects and an emerging core of controllable major leaguers. Its probably going to take a few seasons of it, but winning cures all.

      • BK

        I agree tanking is a menace to MLB, and fans should hate it. However, tanking is far more prevalent in MLB than in other sports. This is a result of the resource disparity between franchises.

        We can’t answer whether the Reds would have gone into a total teardown without COVID. I don’t think they would have, as they had consistently invested in the team to the break-even point going into 2020. However, only the ownership group can answer that question.

      • Tom Reeves

        Reds fans simply don’t show up to support any team that isn’t winning like the BRM.

        This is a doom loop and if the city wants the team to stay, fans will have to show up. Complaining about the owners does zero good. They’re bleeding cash. The only way out is a sale and/or bankruptcy (unless somehow this group of young players turns out to be amazing).

  8. Ryan

    The Reds have unique opportunity to capitalize their loss of Bally. Streaming the games for free for the start of the season, THIS season, could go a long way into recapturing (positive) interest. What’s so special about this season? It just so happens the MLB has revamped the rules in way that hasnt been done in my lifetime, possibly ever.

    The pitching clock will be a game changer, and outside of maybe the staunchest of purist, one for the better. The thing i hear most from non-baseball people is that the game is boring, and that can certainly be the case. The games should be action packed. I can really see these changes bringing in more fans alone.

    Cutting the chord is a very costly step for the Reds. As a person that refuses(and have for awhile), to carry a cable package just to watch the Reds, this is most welcomed. Exposure to casual fans is key and hopefully their able to get those eyeballs someway, even if the upfront money is lower than it was, hopefully pays of in higher attendance numbers.

  9. Redsvol

    Hey Doug/ I’ll put up $1000 to put a RLN patch on Chad pinder’s behind if you make all the calls.

    • Doug Gray

      This will be a fun thing to test out if he doesn’t make the roster and hits free agency. Just thinking about a guy getting $1000 to wear a Redleg Nation patch (I HAVE ONE!) on his jeans as he walks through the grocery store.

  10. Ahimsa

    1.19 billion, not too bad for a non-profit organization.

  11. Votto4life

    I find my self caring less and less about how much this team is worth. It doesn’t really matter how much the team is worth or not worth. The Castellinis are not going to spend money regardless.

    I find myself caring less and less about what the front office says and does. I only casually follow Spring Training these days. On a scale from 1 to 10, my interest in the 2023 baseball season is about a 2. By mid-season, that number will probably be cut in half.

    • JayTheRed

      I have to say I have more interest in this team today than a year ago. Castellini asked where you gonna go, Well I followed the Blue Jays mostly last year watching Mosty their game and catching a few Reds games here and there just to see how things were going. I enjoyed my 2022 baseball season, and basically didn’t care much about what the Reds were doing.

      This year I like that they are putting a focus on some of the young players. With the new rules I really think we will see an improved hitting team this year. I’m kind of excited to see what our three young starting pitchers do this year. Who knows maybe Williamson joins that group of good pitching. Overall, I just know there is at least some interest in my mind in this team this year whereas last year I really could care less about how they did because I knew they were terrible.

      • Votto4life

        Jay, I hope you enjoy this season. My guess though is anyone who is expecting an improvement over last year is going to be disappointed. The Red’s best young players are just not major league ready. Perhaps a couple will emerge the second half of next season, but the team is headed for another rough year in 2023.

  12. Bill Newell

    If baseball goes to streaming that will be the end. A three hour game will use about nine gigs of data. At $3 per gig that’s $27 just for the data. Nobody can pay that, so nobody will be watching and when the advertisers figure that out they will be gone and take their money with them. Baseball has to stay on satellite or over the air TV.

    • Colorado Red

      streaming can be over cable, not just a cell phone.
      No different then MLB.tv