Baseball's economy is booming
, and guess which franchise you can thank:
Baseball owners continue to slam the ball out of the park. Team values increased an average of 15 percent for the second consecutive year, to $376 million, in our 2006 survey of Major League Baseball's 30 franchises. Overall operating income increased to $360 million ($12.1 million per team) from $132 million ($4.4 million per team) the previous year, as revenue increased faster than player salaries.
But the biggest story is the effect revenue sharing is having on the league's economic landscape. Most of the money comes courtesy of the New York Yankees, which paid a record $77 million toward baseball's revenue sharing system.
But the league's reliance on Steinbrenner's Yankees goes far beyond revenue sharing. For example, a visit by the Yankees can increase a home team's ticket sales by as much as 25 percent. And the Yankees account for 27 percent of all league merchandise sales, the profits of which get shared equally throughout the league to the tune of more than $3 million per franchise. In effect, much of the league operates as subsidiaries of the Bronx Bombers.
But don't feel bad for the Yankees or the Red Sox. They sit atop our [Forbes'] rankings, worth $1 billion and $671 million, respectively, thanks to the revenue generated by their ownership stakes in regional sports networks. Steinbrenner's $62 million in cable money from the YES channel was by far the most in the league. Moreover, the Yankees will have a new cash-rich ballpark by 2009 -- perhaps adding another 20 percent to the team's valuation.