Guest Author - Joe Mancini
You’ve probably heard by now that MLB Commissioner Allan H. “Bud” Selig has taken the extraordinary step of assuming day-to-day operations of the Los Angeles Dodgers. While MLB has stepped in recently to take over financially struggling franchises in Montreal (which moved to Washington, DC and was subsequently sold to the Lerner family), and Texas (where Chuck Greenberg and Nolan Ryan have bought the bankrupt Rangers), this is something different in kind and in scope.
Welcome to Divorce Court (or McCourt as the case may be) meets Major League. This is bad for the fans in Los Angeles, bad for the other owners, maybe bad for the players, and good only for the tabloids that have been breathlessly covering the train wreck of Frank and Jamie McCourt’s marriage.
Unlike the foundering Expos or Rangers, the Dodgers are one of the premier franchises in sports, a storied team that plays in a major market, the media capital of the country, a glamour destination full of celebrity and outsize personalities. Trouble there and across the country in New York City where the Mets and their ownership the Wilpon family are in serious trouble spells dark days, potentially at least, for a sport that is otherwise sailing on tranquil seas.
Forbes magazine annually reviews team valuations in all the major sports, and recaps the finances, issues and news affecting the pro leagues. Kurt Badenhausen is one of the top reporters on the business of sports, and he doesn’t pull any punches; he gives a clear-eyed assessment of where baseball is strong, where it is weak, and where problems could be arising.
Chico Escuela, the fictional baseball player portrayed by Garrett Morris on “Saturday Night Live”, would say “Baseball been berry, berry good to me.” Well, to the 30 ownerships of MLB teams, baseball has indeed been “berry, berry good”. Average team valuations rose 7% in 2010 to $523 million. The Yankees’ $1.7 billion valuation does slightly skew this number, as the median in more like $449 million but still only three teams, the above-mentioned Mets (-13%), the Cleveland Indians (-10%) and the San Diego Padres (0) showed negative or no growth, and only three teams, the Mets again (-$6 million), the Tigers (-$29 million) and the Red Sox (-$1 million) had operating losses in 2010. Overall, MLB had revenues of $6.1 billion (+4%) and operating income of $494 million (-5% as stadium costs and payrolls, etc grew).
Thanks to $404 million in revenue sharing (this is NOT the so-called “Luxury Tax”), baseball’s small-market and low-payroll teams did well for themselves in 2010, especially teams that did well on the field and enjoyed increased attendance like the San Diego Padres who pocketed $37.2 million in operating income on a payroll of only $38 million. Their near-miss was certainly a “sweet spot” as their attendance jumped 200,000 and their TV ratings improved.