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Tampa Bay Rays: Franchise Value Increases According to Forbes

By Althea Pashman |
Apr 2, 2017; St. Petersburg, FL, USA; A general view of Tropicana Field as fans enter for Opening Day between the New York Yankees and Tampa Bay Rays . Mandatory Credit: Kim Klement-USA TODAY Sports
Apr 2, 2017; St. Petersburg, FL, USA; A general view of Tropicana Field as fans enter for Opening Day between the New York Yankees and Tampa Bay Rays . Mandatory Credit: Kim Klement-USA TODAY Sports

Forbes magazine released their 2017 franchise values with the Tampa Bay Rays having a $27 million increase from last year.

Without a new stadium, without decent revenue coming from their television agreement and having the lowest attendance in the majors, the Tampa Bay Rays franchise value according to Forbes magazine had a 27 percent increase from last year.

It is hard to believe and understand that the Tampa Bay Rays franchise, with all of their financial problems, small market-large market disparity, were able to stay afloat operating in 2016 on an income of $32.1 million with revenues at $205 million according to Forbes.  Yet, to see their franchise value increase to $825 million without any other assistance is amazing.

Despite the increase in their value, they remain dead last in the majors – the Oakland A’s also in need of a new stadium saw their value increase by 21 percent and are now worth $880 million. The remaining teams are all valued in the billions, with the New York Yankees leading the way at $3.7 billion.

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However, the Rays and the six other teams above them have franchise values in the millions ($978 million average), the remaining teams are all valued in the billions, with the New York Yankees leading the way at $3.7 billion.

According to Forbes, the average MLB value increased by 19 percent and that the average team is worth $1.54 billion.

While there are a number of nuances that helped lead to this figure, some of which are local television deals, overall profitability, the Rays however see little in that. On the other hand, one of the largest revenue makers is Major League Baseball Advanced Media, which is the technology and internet section of MLB. However, MLBAM provides much more than just this to the majors.

Disparity does not come in payroll alone or small market-big market but in television revenues as well. For instance, in 2015 the St. Louis Cardinals signed an unbelievable deal with Fox Sports Midwest that runs through 2032 – this will net the Cards a cool $1 billion over the life of the contract.

The current Rays television pact brings little revenue and it could be another year or two until a new deal is reached. However, in 2016 FanGraphs updated a report (original report 2013) which gives the estimated television revenue for all 30 major league baseball teams. In the report, the Rays and Sun Sports signed a deal in 2009 that runs through 2018 with an estimated $20 million in revenue. Forbes also reports the Rays showed a 29 percent loss in television viewership in 2016, which I would speculate is attributed to their 68-win season.

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Attendance has always been a major de-facto for the Rays, whether winning or not, and not necessarily because of the stadium itself but because of the location. In 2016, the Rays attendance averaged 15,878 and it marked the fifth consecutive year that they ranked last. As a point of reference, in two of those seasons (2012-2013) the Rays won at least 90 or more games.

Fans just have a hard time making the trek over the bridge to St. Petersburg. As for the stadium itself, while under the ownership of Stuart Sternberg and his group, many upgrades and renovations have been made from adding additional restrooms, concessions,  a walk-around from the lower bowl  through to the outfield (video below – 2014), plus the improvements to playing field with new advanced turfs.

Many of the upgrades were paid by the ownership group, while other monies came from a special stadium capital projects escrow account the city controls.

Some Financial Notes and Explanations – according by Forbes

Revenue and operating income are for 2016 season and net of revenue sharing and stadium debt service.

Ownership: Stuart Sternberg purchased a 48% plurality-share of the Rays (known then as the Devil Rays) in May 2004 for $200 million from Vince Naimoli, and took over as managing general partner in October 2005. At the time of his purchase in 2004, the Rays value was $152 million, one year later it increased to $209 million.

Value of team based on current stadium deal (unless new stadium is pending) without deduction for debt (other than annual stadium debt).

  • Revenue: $205 M – Net of stadium revenues used for debt payments.
  • Operating Income: $32.1 M – Earnings before interest, taxes, depreciation and amortization.
  • Debt/Value: 17% – Includes stadium debts.
  • Player Expenses: $80 M – Includes benefits and bonuses.
  • Gate Receipts: $28 M – Includes club seats.
  • Revenue per Fan: $28 – Local revenues divided by metro population with populations in two-team markets divided in half.
  • Market:  $173 M – Portion of franchise’s value attributable to its city and market size.
  • Stadium:  $110 M – Portion of franchise’s value attributable to its stadium.
  • Brand:  $51 M – Portion of franchise’s value attributable to its brand.

The best scenario for the Rays to increase their total revenue will come from a new stadium that is constructed to meet the needs not only for baseball, but also for other sports and offseason projects. Additionally a new television pact, where the Rays could possible own a percentage of the network would also add additional revenues.

Next: Mallex Smith Making an Impact with the Rays

Until these two critical issues are dealt with, the Rays value is likely to increase based on the revenues from their current sources, but not enough to increase payroll.

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