Baseball, as a whole, keeps growing, and a historic season for the Nationals helped boost the franchise’s valuation even further. Forbes magazine released its annual valuation of Major League Baseball teams on Wednesday and the Nationals were estimated to be worth $631 million, 14th highest among the league’s 30 teams.
After a thrilling season in which the Nationals posted the most wins in the majors, the franchise’s valuation was 31 percent higher than the previous season, the tenth-highest jump, despite the ongoing dispute with MASN over the value of their television rights. Last year, Forbes valued the Nationals at $480 million, 16th most valuable, with a revenue of $200 million and operating income of $25.9 million. After the 2012 season, the team’s revenue rose to $225 million, as did the operating income to $28.4 million, the third-highest total in baseball.
According to Forbes, the average MLB team is worth $744 million, a 23 percent increase over last year, and the largest jump since the magazine started tracking league finances since 1998. The Nationals have posted steady increases in team value over the years, exploding after last season. While this comparison doesn’t account for inflation, it’s worth noting the Lerner family bought the Nationals from MLB in 2006 for $450 million. From 2006 to 2011, except for 2008, the franchise’s value, according to Forbes, was under-performing the amount Lerners paid for the team.
“What we’re seeing more now is more market, and with a good team they’re generating more revenue through seats and sponsorships,” said Michael J. Cramer, a former president of the Texas Rangers and NHL’s Dallas Stars who is director of the Texas Program in Sports and Media at the University of Texas. “At some point this TV deal will come together and they will do better.”
Fueled by a 98-win team that featured marketable stars like Stephen Strasburg and Bryce Harper and other big-name players like Jayson Werth and Ryan Zimmerman, the Nationals enjoyed unprecedented popularity in the Washington region. The Lerner family spent more than ever on talent (more than $92 million), ratings were up and attendance was more than 2.3 million (the second-highest total in Washington history and a 22 percent increase from 2011).
Team valuations have also seen large increases thanks to growing national and regional television deals. After the New York Yankees, the Los Angeles Dodgers are the second most valuable franchise ($1.615 billion), an increase furnished by their record $7 billion television deal with Time Warner Cable. The Houston Astros ($626 million, 16th) and San Diego Padres ($600 million, 18th) both had losing seasons but their valuations were propped up by recent TV deals with regional sports networks. Even the Cleveland Indians, with low ratings and a losing team, enjoyed one of the largest valuation increases (36 percent to $559 million) thanks to a new TV deal.
The Nationals have sought to enjoy the same skyrocketing size increases in television rights as other teams, particularly those also in the top 10 markets. The Nationals and MASN, which is controlled by Baltimore Orioles Peter Angelos, have been in a disagreement over the size of the Nationals’ TV rights fee since the end of the 2011 season. A league committee of baseball executives has been reviewing the issue. MLB even sought a creative solution to find a new owner for the Nationals’ rights. (The Orioles, whose TV rights are also controlled by MASN, receive the same rights fee as the Nationals.)
There’s no news to report regarding the ongoing dispute over the Nationals’ television rights. MLB is notoriously slow on major decisions.
The Nationals’ stake in MASN increases to 14 percent next season. Based on MASN’s proposal, the rights fee amount would increase to just under $37 million in 2013 with an equity stake payment of $8 million. But if the Nationals receive closer to the amount they requested, it would boost their bottom line, increase their value and potentially spending.
The Nationals had asked for between $100 million and $120 million per year, far more than the $29 million they received in the 2011 season.
“It’s a fair valuation,” Cramer said of the Nationals’ estimated current value. “Who knows what it would go for if they traded hands right now. I would think that, at best, a half-and-half [TV] deal could be struck [between the teams]. They’re never going to be worth like Yankees, Dodgers, and in addition there’s the population difference.”