The Cubs are worth $3.8 billion and other MLB financial info from Forbes

Major League Baseball teams have been increasing in value exponentially over the last few years, and per Forbes Magazine’s annual accounting of those values, that continues in 2022.

The Cubs are listed as the fourth most valuable MLB team, with an estimated value of $3.8 billion. That’s nearly $3 billion more than the $845 million the Ricketts family paid for the team in October 2009. Forbes says that’s a 13 percent increase over last year and that the Cubs had operating income of $68 million in 2021.

The three MLB teams ranked as more valuable: Yankees ($6 billion, MLB’s first $6 billion team), Dodgers ($4.075 billion) and Red Sox ($3.9 billion). Of those, Forbes says the Yankees and Dodgers reported operating losses last year.

The Forbes article by Mike Ozanian and Justin Teitelbaum reports some other interesting financial numbers for the sport.

First, about the jersey patches on which I reported yesterday, Forbes says:

The new jersey patch deals are likely to be local, meaning teams will negotiate their own deals and keep all the revenue, whereas the helmet decal deals will probably be national, with MLB being in charge of the initiative and splitting the money evenly among its 30 teams. Over the last four years of the new five-year CBA, these sponsorships could generate more than $400 million combined annually, even better than the $225 million the NBA reportedly earns from its single stream of jersey patch deals.

So that’s even more money coming in to MLB teams, including teams who are not currently spending a lot on payroll. (Hint, hint, Guardians and A’s.)

Also interesting regarding the decals on helmets:

Some of the helmet money will be used to fund the CBA’s new $50 million-a-year bonus pool that was established for players not yet eligible for salary arbitration.

Per Eric Fisher’s SportBusiness article which I linked yesterday, ad patches will not appear on jerseys until 2023, but there could be helmet decals during this year’s postseason.

The Forbes article concludes:

All of the boosts to revenue will help teams recover from the past two seasons: an abbreviated 2020 without fans at ballparks and a full 2021 when most teams did not allow full capacity until July.

In 2019, the last season before the start of the Covid-19 pandemic, teams’ operating income (earnings before interest, taxes, depreciation and amortization) averaged $50 million. In 2020 and 2021, those figures were -$60 million and $22 million, respectively. In other words, after pocketing operating income of $1.5 billion in 2019, MLB has lost $1.14 billion during the past two seasons combined. To help keep their balance sheets afloat, owners over the past two years have added more than $2 billion of debt (excluding holding company borrowings) and injected about $1.5 billion of equity, according to sports bankers.

The 2020 figure cited above is likely what Tom Ricketts was referring to when he mentioned “biblical losses.” As you can see, MLB recovered from a loss recorded as operating income in 2020 to a positive figure in 2021, but still had significant overall losses over the last two seasons, largely due to the COVID-19 pandemic. This is one reason why a lockout that lost any games this year would have been near-suicidal for the sport. This will be the first 162-game season with full capacity in ballparks in three years, and owners will be counting on you, the fan, to fill those ballparks to similar numbers that were recorded in 2019. Even then, though, total attendance was at its lowest figure since 2003.

The Cubs’ home opener April 7 is not sold out — not close, looking at this ticketing page — and the last time a Cubs home opener did not draw at least 40,000 was in 2014, when 38,283 paid to see the April 4 opener against the Phillies (and that was largely because the weather was awful). This year’s might draw less than that.

As always, we await developments.