SOUTH HILLS COMMAND CENTER – Baseball’s death has been greatly exaggerated. Don’t believe me? Go ask your neighborhood MLB franchise owner.
In case you missed it, earlier this week Bloomberg came out with a new report on the value of MLB franchises accompanied with a really great interactive graphic.
The average value of a major league franchise has increased 35 percent in nine months!!! according to Bloomberg, in large part because of the $2 billion sale of the Dodgers, but also because of skyrocketing media revenue streams. The average value of a major league franchise is now $1 billion. Ten franchises are valued at at least $1 billion. Russian oil tycoons might even be priced out of this game.
So while the Pirates are 22nd in baseball with a “team value” of $500 million and 23rd with a “total value” of $610 million – that includes their stake in MLB Advanced Media – the value of the team has increased 43 percent in one year according to Forbes.
Somewhere Bob Nutting is smiling.
Of course there are relative competition concerns in the report for the Pirates.
While the Pirates have increased in value, the club ranks 20th or lower in team revenue ($185 million – 27th), gate receipts ($39 million – 25th), concessions ($14 million – 20th) and media rights ($56 million – 28th), according to Bloomberg.
Gate receipts should increase in 2014.
The Pirates finished 19th in attendance in 2013 and president Frank Coonelly is expecting attendance to increase in 2014. The club hopes it approaches 2.5 million, which combined with an increase in ticket prices, could lift the Pirates into the teens in gate receipts.
The biggest gap is in media rights.
The Pirates’ local cable deal with ROOT is signed through 2019, and according to multiple reports, its value is tied for a low among such deals in baseball. The Pirates claim they are receiving more than $18 million per year in the deal but have not made public the terms of the contract.
While the Pirates have missed the initial proliferation and explosion of lucrative regional TV agreements — 13 MLB clubs received revenue from a regional sports networks in 2013 (the Mets received a whopping $1.1 billion in regional cable money in 2013, the Yankees $932 million) – it’s not too late to get in the game later this decade.
It would make a ton of sense for the Penguins and Pirates to form a joint regional sports network, which could provide year-round live content. We’ve seen the Penguins’ impressive local NHL cable ratings – best in the sport – and we’ve seen how the Pirates’ ratings broke records this season.
While the Pirates are never going to be a major market type revenue producer, they do have untapped revenue potential in local media dollars. The bad news is they’re going to have to wait.
MLB ADVANCED MEDIA LEVELING THE PLAYING FIELD?
The other encouraging trend for small-market clubs is the dollars – shared equally by all 30 MLB teams – from the MLB Advanced Media, the internet and interactive branch of the league.
MLB Advanced media was founded in 2000. Last year, it reportedly produced $620 million in revenue and its value is worth $110 million to each MLB team.
As mobile devices grow as the primary vehicle with which people consume media and advertising, MLB Advanced Media has huge potential. And since its shared equally could it become something like the leveler the national TV deals in the NFL have become? Could it top the value of local TV deals? Maybe not until 2050 or something but it’s something to keep an eye on.
HEY, MIKE, WE’LL GIVE YOU OUR TEAM … YOU PAY US!
As good as business has been for owners, it hasn’t been bad for players, either.
Some are estimating 1 win above replacement is worth $7 million on the open, free agent market. But even if you go with the accepted $5 million per WAR, that would make Mike Trout‘s value worth $50 million per season if he were a free agent this offseason.
— Jonah Keri (@jonahkeri) October 22, 2013
If Trout kept up this level of performance, or if say Bryce Harper becomes a 10-win player, we are going to be looking at 10-year, $500 million deal contracts before the end of the decade? (Keep in mind WAR/$$$ will inflate along with revenues). Trout will be a free agent entering his Age 27 season.
Barry Bonds earned a 7-year, $49 million deal after 1992 in his first free agent deal.
Alex Rodriguez earned a 10-year, $225 million deal after the 2000 season
Trout will earn a XX-year, $XXX deal after the 2017 season. It’s going to be a record breaker
It means a player has the potential to be more valuable than a MLB team. That’s crazy. Has that ever happened? Maybe Babe Ruth in the 1920s?
WHO SHOULD WIN GOLD GLOVES? (NERDS HAVE A SAY THIS YEAR)
Pirates outfielders Andrew McCutchen and Starling Marte and catcher Russell Martin were nominated for Gold Gloves on Friday. Defense was a big part of the Pirates’ season and all three players are above average defenders.
According to Fangraphs’ defensive runs above average, here is your NL Gold Glove team:
C Russell Martin
1B Anthony Rizzo
2B Darwin Barney
SS Andrelton Simmons
3B Juan Uribe
OF Carlos Gomez
OF Gerardo Parra
OF AJ Pollock
Martin is great, we know that. He led the league in throwing out potential base stealers. He’s an above average pitch framer and is praised for his pitch sequencing. The metrics like him more than Yadier Molina. The metrics are not as kind to McCutchen and Marte.
Yes, defensive stats are imperfect but so is the eye test and for the first time nerds will have a say in who wins the Gold Glove award as 25 to 30 percent of the voting will be done by a sabermetric panel determined by SABR. It should be interesting to see if there are any surprises and perhaps the SABR panel will give Martin a chance against the Molina name brand.