Forbes came out with their annual valuations of major league baseball teams and your Kansas City Royals rank 28 out of 30 in overall value.
Poor David Glass.
But, wait! There’s more! It turns out that while the Royals rank near the bottom of the valuation list the overall value of the franchise is $700 million. That is a whopping 43 percent gain over last year when the team was $501 million.
Read those numbers again. Because they are mind-blowing.
Apparently, owning a major league baseball team is quite the money-making venture. I’ve been tracking these numbers from Forbes for some time. While they should not be considered gospel since major league baseball refuses to open their books, by looking at the big picture you can certainly grasp trends. For example, here’s the estimated overall franchise value going back to 2006.
That’s pretty incredible. Value grew steadily for about seven years before skyrocketing in 2013. In 2012, the Royals were valued at $354 million. They have doubled in value in three years.
This increase isn’t unique to the Royals. All of major league baseball is rolling in the dough. The Royals 43 percent increase from last year was only ranked them 21st among the 30 teams. The Washington Nationals gained 83 percent from the previous year. The hated San Francisco Giants doubled in value from last year. I’m fairly certain these numbers and this trend put to bed the trope that “baseball is dying.” It’s not. Not even close.
While team’s values are ballooning across the game, it wouldn’t be farfetched to think part of the increase on the Royals part was fueled by their October run. That was certainly reflected in their revenues.
They have been on the uptick for years, but last October really put money in the coffers at The K. Tickets, merchandise, parking and concessions for eight extra home games certainly help. Especially at special October prices.
The increase in revenues led to near-record profits.
Quite the turnaround from the 2013 season when the Royals lost money according to Forbes. The profit has always been a little uncertain, again thanks to baseball owners refusing to open their books. The Royals maintain they do their best to break even each season. Forbes, the 2013 season aside, disagrees. Although it’s certainly not a stretch to assume their operating income wouldn’t have been so elevated without postseason baseball.
Going forward, we know the Royals will raise payroll to record levels. (Around $113 million, which will be the topic of another post around Opening Day.) They will also certainly experience a postseason hangover of sorts where merchandise and ticket sales will remain strong at least for the first half of the season, no matter how the season goes. The Royals are playing in one of the smallest market in the majors and that postseason financial bounce was certainly received with open arms.
The Royals will continue to talk budgets and financial constraints relative to market size. That’s to be expected and that’s wholly acceptable. The profits may find extremes from one year to the next, but they will likely set out to hover around the $5-10 million mark when those budgets are set. I remain skeptical their goal is to break even, as they so often say, but as long as they continue to inject money into a competitive payroll, I have no issue with their words.