The Business of Baseball: Fewer Fans, More Money

BizJournals is sharing an ugly truth about the O's franchise, ranking it below even the Royals and the Nationals in the publication's evaluation of success on the field and in the ledger. The Birds beat out one only other major league team, the Pittsburgh Pirates, and ranked 115 out of 122 total sports franchises. But don't believe any of these owners if they tell you how bad they have it.

The value of the Nationals, the Orioles, and the Pirates still increased (the Nats by 3 percent, the O's by 1 percent, the Pirates by 7 percent) despite each team's dismal on-field performance and low ranking among the money-makers in sports. Those franchise values are based on estimates published by Forbes magazine, which show that between 2006 and 2008 the O's worth went from $359 million to $398 million. Just imagine how much money Peter Angelos could make on a winner.

Say what you want about competitive imbalance, steroids, and all the other ills of baseball; the owners are still making money. Take John Henry of the Red Sox. Sure, he's calling for a salary cap, but his team ranked fifth in the Bizjournals poll and gained 13 percent in value compared to the Yankees' ranking of 23 and 9 percent increase in value. Granted, the Yankees' overall value is greater than that of the Red Sox, which makes it harder for New York to move the needle. And there is certainly a valid argument to be made for competitive imbalance in the sport. However, the idea that payroll disparity - or any of these other issues for that matter - is hurting baseball where it counts most, in the pocket, just doesn't add up.

There's a lot of interesting discussion to be had based on these rankings. Here are some of the details of how Bizjournals carried out its evaluation:

"Bizjournals analyzed the performances of all 122 franchises in the NBA, NFL, Major League Baseball and the National Hockey League in the 2008 calendar year. The top scores went to those teams that were strongest at the twin missions of professional sports -- winning games and making money.

...

Half of a team’s score was determined by its level of success on the field, court or ice. Bizjournals’ formula considered each franchise’s win-loss record, average margin of victory (or defeat), and playoff results.

The other half was determined by a team’s relative success in business. The formula analyzed average home attendance, the percentage of available seats sold for home games, and the increase (or decline) in a franchise’s value from 2007 to 2008. The latter was based on annual estimates published by Forbes magazine."

Given the focus on attendance in the rankings, it's surprising that the Nationals, having just completed Year 1 in their new stadium, didn't rank considerably better than the O's. However, the Nats only managed an average gate of 29,005 at Nationals Park compared to the 25,000 average gate at Camden Yards. I examined the issue of the "new ballpark bump" and the Nationals' stadium in an April 2008 Roar from 34 posting.