Cardinals Business Report: Forbes values franchise at $591 million

Forbes.com released its annual The Business of Baseball feature a couple weeks ago. The St. Louis Cardinals were valued at $591 million which placed them #11 in the valuation rankings of all MLB teams.

The valuations are broken down into four categories; sport, market, stadium and brand. Sport is described the “portion of franchise’s value attributable to revenue shared among all teams.”  market is defined as the “portion of franchise’s value attributable to its city and market size.” Stadium is the “portion of franchise’s value attributable to its stadium.” Brand refers to the “portion of franchise’s value attributable to its brand.”

• Sport – $119 M
• Market – $240 M
• Stadium – $157 M
• Brand – $78 M

The Cardinals overall value increased by 14% from the 2011 valuation ($518 million). Owner Bill DeWitt Jr. purchased the team for $150 million in 1996. The New York Yankees are the highest valued team according to Forbes at $1.85 billion.

In 2011, the Cardinals had revenues of $223 million and returned a profit of $25 million (before interest, taxes, depreciation and amortization). The revenue figure ranked 6th among all MLB teams, with the Yankees leading the way at $439 million. The operating income total ranked 8th among all MLB teams. The Cleveland Indians generated the highest profit of any MLB team in 2011, $30.1 million.

Forbes rightly touches on the television rights deals that teams have secured in recent years as an important piece of the team valuations. The Cardinals are in the midst of a deal with Fox Sports Midwest which brings in only $14 million annually in revenues to the club. The Cardinals’ broadcasts ranked #2 in all of baseball last season with an 8.9 local Nielsen rating. In contrast, the television deal secured by the Los Angeles Angels (who signed former Cardinal Albert Pujols) receives $95 million annually from FOX.

It seems that FOX Sports Midwest is getting off incredibly cheap with the Cardinals. Bringing in an 8.9 local Nielsen rating on average for a baseball game is incredible. These numbers combined with the success of the team on the field could lead to a renegotiation of the television deal. Forbes suggests that the Cardinals could get three times the amount they are receiving now.

The Cardinals had home attendance in 2011 of 3,093,934. This figure was down about 2,500 per game from the 2010 season. The average price per ticket was $31 last season. The team is hoping to get a bump in attendance from the halo effect teams typically receive after winning the World Series. The Cardinals need it to turn around the downturn in ticket sales.

A downturn in ticket sales directly leads to lower revenues in other key categories; parking, concessions, merchandise sales, and premium services. If the Cardinals can get out of the gate quickly this season in combination with the carryover of the championship they could see attendance increase closer to levels seen when the team initially opened Busch Stadium III. We’ll continue to monitor the attendance levels this season and report them in this monthly feature.

As a whole, the figures also show that the team is very capable of adding payroll to the club if needed. Ownership and the front office claims to have gone hard after Pujols, but failed to sign him. They did however invest $14 million in Rafael Furcal for two seasons, $26 million in Carlos Beltran for two seasons and $75 million for Yadier Molina beginning next season through 2017 showing the willingness to spend. The revenues and profit levels reveal there are further resources available to invest in a player at the trade deadline if needed. This is a big benefit for the Cardinals and not all teams have the same luxury.

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