Last week, word came out that Jeffery Loria, the often criticized owner of the Miami Marlins had reached a handshake agreement to sell the team at some point in the next year or so to a group of buyers for $1.6 billion. That’s billion, with a ‘b.’
That is, quite simply, ridiculous. The Marlins are not worth that much. In fact, they aren’t worth nearly that much and if the team in Miami sold for that much, it could essentially upend the entire league and usher in an entirely new era in the MLB.
Reportedly, the group interested in buying the Marlins includes some family members of political advisor / global pariah Jared Kushner but, while their is ample evidence that the Kushner family has absolutely horrendous decision making skills, overpaying by as much as billion dollars for one of baseball’s least attractive teams is a real doozy.
Let’s think about why you want to own a baseball team at all. Well, first and foremost, it’s fun! You get to go to a lot of baseball games, hangout with baseball players, make baseball decisions, do sports radio interviews, and you probably get unlimited free gear with your team’s name and logo on it.
Second, it’s exclusive. Only 30 people in the whole world own a baseball team. You could be one of them, that’s pretty cool.
Third, it’s lucrative. While it’s true that player salaries have skyrocketed in recent years, salaries only go up as high as owners are capable of paying. Between $34 t-shirts, $16 steak sandwiches, $55 upper deck seats, revenue sharing, tv deals, and the rest, you can be sure that most owners consider their teams to be pretty good investments.
However, those three reasons apply to every baseball team, yet not all teams are equally valuable. There must be some criteria that differentiate the Rockies from the Yankees, for instance.
And lo, there are! For my money, these are the key factors to consider when trying to uncover a team’s worth: prestige, size of fan base, stadium situation, marketable players and, local tv deal / local tv market.
Certain teams, like the Dodgers, Yankees, Red Sox, and Cubs are very, very valuable because they have massive fanbases in major cities, with a long and storied history. While it’s certainly possible to fail to make money owning one of those teams, it’s awfully hard. Just about anything with an interlocking ‘NY’ or a red ‘B’ or ‘Kershaw’ written on the back of it will sell; it makes sense that those teams would be the most expensive to buy.
But what about the Marlins? They aren’t a prestigious team– they’ve only been around since the early 1990’s and, though they have won 2 World Series, they did a pretty good job of selling off their good players and alienating their fans almost immediately after each one.
While they have a brand new stadium, it doesn’t seem like they have the fan base to fill it (and it’s ugly). In fact, the scant attendance numbers at Marlins games have been a big story ever since they opened the new (very ugly) stadium. With only 1 truly marketable player and very few winning teams, there just isn’t a good reason for the fans the Marlins do have to go to games or tune in every night on tv.
In fact, it seems to me that there are very few teams in all of baseball that should be valued less than the Marlins. Miami has long been MLB’s sort of problem child. It’s as close to a stay away as you can get in a market where there’s no such thing.
So what might the Marlins actually be worth?
Earlier, I said that the Kushner group might be overpaying by as much as a billion dollars for the team, and I didn’t make that figure up. According to Forbes, as of mid-2016, the Marlins were worth about $675 million.
But there’s some more information we need to know. In August 2016, Nintendo sold a significant portion of its controlling interest in the Seattle Mariners in a deal that valued the team at about $1.4 billion. While Seattle’s stadium is now more than 15 years old, it’s important to know that Seattle is one of the most watched teams in baseball and that in 2013 it signed a tv deal worth about $2 billion.
So, that’s baseball team + big time tv deal for $1.4 billion. Notably, that’s not too far off from the Forbes valuation of $1.2 billion.
The Marlins don’t have a giant tv deal to sell along with the team, but even giving them the benefit of the doubt and adding about 15% to their $675 million valuation, that only gets us to about $775 million– still pretty close to $1 billion less than Loria’s rumored price tag.
Any way you slice it, the Miami Marlins are one of the least valuable teams in the MLB. In fact, Forbes has the Marlins above only the neighboring Tampa Bay Rays on their list. In other words, the 29th most valuable team in a league of 30.
Imagine the ramifications if the Marlins really do sell for $1.6 billion, about 2.4 times their Forbes valuation. All of a sudden the Dodgers’ ownership group could realistically ask for more than $5 billion for the Dodgers. The Steinbrenners could try to get $7 billion for the Yankees. Even the Baltimore Orioles would suddenly be worth more than we consider the Dodgers to be worth today.
Who would be able to buy teams if they cost that much? Private Equity firms? (Perhaps a forthcoming post on that apocalyptic scenario.) Even America’s richest billionaires would have to team up just to buy a middling franchise. At a certain point, the price gets so high that even the massive amounts of revenue a team produces wouldn’t be able to justify the purchase. Team values are supposed to keep going up, but a jump this big isn’t good for the sport.
In short, the Marlins aren’t worth $1.6 billion, or even really all that close to it. They’re an entry level baseball team in a bad situation with a bad history thanks to an awful owner. It’s going to take years to earn the good will in Miami to get that team back to respectability– and ‘respectability’ and ‘Kushner’ don’t exactly seem to be synonymous. A Marlins sale would be a good thing for baseball. A sale at this price to this group wouldn’t be.