The team that doesn’t have any more money to spend on free agents sure isn’t hurting when it comes to overall financial health. In its updated list of MLB team values, Forbes listed the Cubs fourth overall with a worth of $3.1 billion. Yes, with a “B.” That’s more than three times what the Ricketts family purchased the team for 10 years ago, which seems to represent some pretty solid appreciation.
Now, we don’t know exactly what figures comprise Forbes’ final total, but Wrigley Field itself — not to mention the various Ricketts-owned properties around the ballpark — appear to be excluded. There is, however, a great deal of value in shared MLB assets.
Methodology: Team values are enterprise values (equity plus net debt) that include the economics of the ballpark but exclude the value of real estate itself. We also do not include the equity value of team-owned regional sports networks. The league’s ownership in Major League Baseball Advanced Media (100%), BamTech (15%), the MLB Network (67%) and league’s investment portfolio are included in our values, equally divided among the 30 teams. These three assets constitute over $400 million in value per team.
Even if we remove the league’s contribution to the Cubs’ worth, we’re looking at $2.7 billion. Then you factor in the real estate values of the surrounding Wrigleyville properties Cubs ownership has either bought or developed since taking over. Granted, there’s probably very little liquidity in those entities, but the revenue being generated should only grow each year. Well, provided the team remains competitive and plays deeper into October.
What’s even more important than value is operating income, and the Cubs appear to be doing quite well on that front. Their $87 million haul last season was third in baseball behind the Dodgers ($95M) and Phillies ($94M), even though the Cubs ($452M) brought in nearly $100 million less in total revenue than the Dodgers ($449). And the Phillies were able to spend that stupid money because they retained more than a quarter of their $341 million.
There’s also the matter of the Cubs’ 14% debt-to-value ratio, which has gone down significantly as their investment has appreciated. Once well above MLB’s guidelines, the Cubs are now better off in that area than seven other teams. The Ricketts family also spent north of $100 million to buy the remaining 5% of the team from the Tribune Company this winter, thus finalizing the tax-dodging purchase mechanism demanded by Sam Zell.
Regardless of how you slice it or what the actual value is, it’s pretty clear that the Cubs are generating a good deal of revenue and operating income. Just how much of that is actually at the disposal of the on-field product, however, has been the cause of much consternation over the past few months.
“Look, I regret talking about money every single time it comes up, ’cause there’s no way I can win,” Tom Ricketts recently told 670 The Score. “Even if we have the second-highest budget in baseball, it’s not enough. The fact is that what we do is we’ve worked very, very hard to generate more revenue for the club and it almost all goes right back into the team on the field.
“Hopefully you put those dollars in the right places and the players that make those dollars perform, but the fact is that the correlation between how much you spend and how much you win is much lower than people imagine it to be.”
I’ve been told that owning a professional sports team is not a money-making venture, that’s it’s a break-even prospect at best. Maybe that’s true for the Cubs and every penny being hauled in really is being invested right back into the club because the Ricketts family cares more about winning than making money.
“I think that real fans, ones that come to the games and ones that follow the team closely, know that I’m at every game walking around,” Ricketts said. “They know that myself and the rest of my family really care and this is a passion for us and we’re committed to seeing championships here on the North Side.”
Or maybe there’s a little more to it than that, but I’ll leave that for you to decide.