The St. Louis Cardinals are the 11th-most valuable Major League Baseball team, according to Forbes Magazine’s annual assessment. After two years of basically flat value, the Cardinals are estimated to be worth $518 million, up 6.1 percent from 2010.
St. Louis Cardinals value (source: Forbes)
| Year | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 |
| $ million | $271 | $308 | $314 | $370 | $429 | $460 | $484 | $486 | $488 | $518 |
| YTY increase | 13.7% | 1.9% | 17.8% | 15.9% | 7.2% | 5.2% | 0.4% | 0.4% | 6.1% |
Interestingly, the new Busch Stadium is only valued at $136 million despite its $357 million cost, with its $20 million per year debt service noted. (Note reader comments below that this is an equity statement, not a valuation.) Forbes estimates that the Cardinals took in $207 million in revenue, with operating income of $19.8 million, up from $13 million the prior year. Gate receipts were assumed to be $95 million.
Player expenses were pegged at $110 million by Forbes, basically flat year to year. Team season-opening player payrolls have yet to be determined, but the Cardinals are expected to be in that same 10-12 ranking range for the 2011 season.
Interestingly, despite being ranked in the top half, the Cardinals are worth slightly less than the average team. Overall, Forbes estimates the average MLB franchise is worth $523 million. That is an all-time high and up seven percent from last year.
The New York Yankees remain the most valuable team at $1.7 billion. At the other end of the totem pole at number 30 is the Pittsburgh Pirates at $304 million.
While some disagree with these valuations, with MLB’s books closed to the public, the yearly Forbes process provides the most exhaustive analysis generally available.
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I wish more people understood basic accounting. If our operating income (and I can only assume Forbes is using the real definition, not some made up definition) was truly $19.8MM, then we likely barely cash-flowed…if that.
Depreciation is the big unknown variable but, if true, this does not mean we pocketed $19.8MM…not even close. One entry level accounting class, even in high school, would tell you that.
What I would give to be able to run a UCA Cash Flow of the team’s audited financials…
Are you suggesting the Forbes folks lack basic accounting knowledge?
“Operating Income”, the phrase, is always misused. It is not net income. It is income from operations prior to interest and taxes, essentially.
How much do you think we pay in interest expense annually with several hundred million (at least) in debt?
But, no, I wasn’t suggesting that. They are simply guessing anyways…but I would be interested in seeing how Forbes defines operating income within the confines of their estimations.
It is indicated in footnote #5 in the link Brian provided.
Whoa. So I guess I should say they don’t know basic accounting. Either that or they are willfully misrepresenting a common accounting concept.
EBITDA is not operating income.
EBIT is…says GAAP.
If their estimation doesn’t include depreciation either then we almost surely didn’t cash flow.
I would say their terminology is misleading.
For example, they imply that the value of the stadium is $136 million but this is not true. If you read the footnotes (and use some logic) one can clearly see that what they mean to say is that the team’s equity in the stadium is $136 million. Those are two entirely different things. Why a respected financial publication such as Forbes can’t make that clear is beyond me.
Yep. They should define the parameters of their estimations if they want them to be credible. They are, after all, basically the only thing anyone has to go on when discussing MLB financials (other than the leaked ones)…so they should be more clear as to what they are actually estimating.
I need to apologize. They did define them. I didn’t even look. Shame on me.
But their use of EBITDA as operating income is just wrong. If you are estimating EBITDA, that is fine, just call it that. Anyone who knows enough about accounting to understand what the numbers mean would know the difference.
I project/analyze several bottom line factors in my line of work (and I do highly detailed financial analyses every single day). EBITDA, Operating Income, Net Income, Cash After Debt Amortization, etc. All have value but they are different things.
I, for one, are of the school that believes one needs to remove financing decisions from the equations when determining how well a business is doing. When I look at how well the team is doing I could care less if they financed the stadium via debt or by selling more equity. If they had chosen equity financing they would most likely be cash flowing well more than $20 million per year.
That said, $20 million in cash flow for an investment close to $500 million and with a resale value North of $700 million is not an overly generous amount.
But there isn’t $20MM in cash flow. Operating income would not include interest, taxes, or debt service payments. All are cash outflows.
Even using EBITDA as the bottom line, cash flow may very well be zero.
Ok, I see what you are saying now. We are in agreement, for the most part. That is the reason why interest expense is not considered an operating expense, of course.
Does the revenue number indicate the revenue from the farm system too? I wonder if the farm teams and facilities are self-sustaining? I want to head over to Springfield this summer and add my contribution$ by watching a game or two.
Unclear what is included regarding minor leagues. Of the Cards top five clubs, they own just two – Springfield and Palm Beach. Memphis loses money annually due to their heavy debt load. Springfield has good fan support. Attendance at Palm Beach is embarrassingly low. Batavia also loses money every year. Given the organization bears the player and coaching costs, I imagine the minors are a money loser overall, but very necessary.
I hope you support your area clubs. Hammons Field is a great place to see baseball.
Nothing like a good conversation on how much the Cardinal owners are making in order to get some life back into this board!
So, is this or is this not about baseball?
Boras taking criticism from player in ESPN article…