Forbes 2012 MLB valuations out

[Hairyducked Idiot]

Cubs No. 3 in valuation, No. 4 in reveune

 

http://www.forbes.com/mlb-valuations/list/

[Guest]

Cubs No. 3 in valuation, No. 4 in reveune

 

http://www.forbes.com/mlb-valuations/list/

 

Looks to me like they're #4 in valuation

 

 

#1 in operating income, which isn't surprising if they have the revenue figured that high.

[Guest]

Brett's take...

 

Of more interest to you, perhaps, is Forbes’ estimate that the Cubs took in $274 million in revenue in 2012, which earned them $32.1 million in income – the highest figure in baseball. What remains unclear is what the Cubs do with this “income.” According to team Chairman and Owner Tom Ricketts, every dollar that comes in the door goes back into the organization. The Cubs have invested in non-player expenses for the last couple of years (software, facilities, etc.), so it’s possible that the “income” ends up being used there somehow … but wouldn’t those simply be expenses? Then again, how does Forbes know exactly how much the Cubs are spending on, for example, proprietary software acquisitions? I’d think the Cubs wouldn’t want to share that information.

 

The other obvious ending point for “income,” if it’s being put “back into the organization,” would be using the income to pay down the Ricketts Family’s debt, which they took on to purchase the team. But Forbes indicates that the Cubs have a 58% debt/value ratio, which, at $1 billion in value, yields $580 million in debt. After the 2010 season, according to Forbes, the Cubs had … $580 million in debt.

 

It’s entirely possible that the Ricketts Family has paid down none of the debt in two years, but it feels a bit surprising. It also raises questions about the $30ish million in “income” that the Cubs have been purportedly netting the last couple of years. Where exactly is that money going if every dollar that comes in the door is staying in the organization? Rainy day fund? The front office has mentioned money potentially being rolled over from year to year as needed, so that’s a possibility. But $60 million over the last two years is a pretty healthy rollover.

 

Here’s where I get called a homer, but I tend to believe that Tom Ricketts isn’t flat-out lying about how organizational dollars are used. And, if I believe that, I have to regard the Forbes figures suspiciously.

 

That said, I’m sure Forbes has solid sources on their information, and I’d love to be able to reconcile the large amount of “income” the Cubs receive with the fact that the debt remains the same, and all revenue is supposed to be going back into the organization. I’m no finance guy, so maybe there’s some obvious answer I’m missing. You know, besides simply saying Forbes’ estimates are way off, which is entirely possible, too.

 

http://www.bleachernation.com/2013/03/27/the-chicago-cubs-are-worth-1-billion-and-took-in-274-million-in-revenue-last-year-per-forbes/

[Hairyducked Idiot]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

[UMFan83]

I'm not up to speed on everything but couldn't that $60m be going into the $500m Wrigley renovation?

[Guest]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

The numbers aren't even real, so it doesn't take any crazy mental gymnastics to disregard them.

[Hairyducked Idiot]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

The numbers aren't even real, so it doesn't take any crazy mental gymnastics to disregard them.

 

*shrug* They line up with everything we know outside of "Ricketts promised he wouldn't"

[SouthSideRyan]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

The numbers aren't even real, so it doesn't take any crazy mental gymnastics to disregard them.

 

Are the numbers not real only for the Cubs? What's the basis for completely ignoring the numbers again?

[Guest]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

The numbers aren't even real, so it doesn't take any crazy mental gymnastics to disregard them.

 

Are the numbers not real only for the Cubs? What's the basis for completely ignoring the numbers again?

 

None of them are and these Forbes valuations don't actually mean anything....

 

I didn't say anybody should completely ignore them. I said that it would be pretty easy for someone (Brett - in reference to Kyle's post) to disregard them based on the fact that they are basically educated guesses by a magazine if they don't feel inclined to believe them. It wouldn't take his head blowing up like Homer's helper robot for him to reconcile these numbers with the belief that ownership is actually putting all of the money back into the team.

[davell]

I've got no issue at all with Ricketts making money. Saying all the profits would go back into the team though, was a [expletive] stupid thing to say. Because it will be brought up time and time again. If profits are being used for the renovations? Fine, I guess. But it makes me think Ricketts bit off more than he could chew, in buying the team and the reason we don't have more money to spend, is because Ricketts isn't equipped to be a true large market owner.Unless extra revenues and the TV deal fall our way.

[Guest]

I'm having a hard time finding a picture of that robot... all I remember is it helped Homer at work and everything that Homer said was right, but then he said something that was clearly wrong and the robot blew up....

 

damn my shitty memory

 

am I thinking of the wrong show? is it family guy maybe?

[Guest]

I've got no issue at all with Ricketts making money. Saying all the profits would go back into the team though, was a [expletive] stupid thing to say. Because it will be brought up time and time again. If profits are being used for the renovations? Fine, I guess. But it makes me think Ricketts bit off more than he could chew, in buying the team and the reason we don't have more money to spend, is because Ricketts isn't equipped to be a true large market owner.Unless extra revenues and the TV deal fall our way.

 

I don't understand why profits from the team being used for those infrastructural upgrades is a bad thing.

 

Other than the fact that people are mad that they aren't spending out of pocket either to upgrade that stuff or on payroll...but I don't really expect them to.

[woodchip2153]

I'm having a hard time finding a picture of that robot... all I remember is it helped Homer at work and everything that Homer said was right, but then he said something that was clearly wrong and the robot blew up....

 

damn my [expletive] memory

 

am I thinking of the wrong show? is it family guy maybe?

 

are you thinking of them, robot? http://en.wikipedia.org/wiki/Them,_Robot

[Guest]

Wait, was it Linguo that blew up?

 

I think I'm thinking of Linguo blowing up at something Homer said... and then I combined that with some helper robot Peter Griffin had, maybe...

[Guest]

I'm having a hard time finding a picture of that robot... all I remember is it helped Homer at work and everything that Homer said was right, but then he said something that was clearly wrong and the robot blew up....

 

damn my [expletive] memory

 

am I thinking of the wrong show? is it family guy maybe?

 

are you thinking of them, robot? http://en.wikipedia.org/wiki/Them,_Robot

 

nah, that's way too new of a Simpsons episode for me to have seen.

[Guest]

Wait, was it Linguo that blew up?

 

I think I'm thinking of Linguo blowing up at something Homer said... and then I combined that with some helper robot Peter Griffin had, maybe...

 

Confusing the old school Simpsons and Family Guy? I'm disappointed in you.

[Sammy Sofa]

Linguo was apparently from the [expletive] 12th season, when they crossed the line to having more bad episodes than good a season. Edited March 27, 2013 by Sammy Sofa

[Guest]

Regardless if the the numbers are accurate, they're probably in the ballpark (no pun intended). And the Ricketts are sitting on a gold mine.

 

They sort of inherited a mess so I think it's too early to tell what sort of owners they will be. If they're still trying to sell the same BS two years from now, we'll know.

[neely crenshaw]

The true value in sports franchises comes when you sell them. I could see this being especially true of the cubs, being that they will hold their value without much on-field success. 10 years from now it wouldn't be crazy to have the price double for the team.

[SouthSideRyan]

So if I'm understanding David correctly, he thinks that all of the numbers from Forbes are way off, and they're somehow overestimating what the Cubs make in revenues, rather than underestimating which might make some semblance of sense.

 

Also he confused Simpsons and Family Guy.

[davell]

I've got no issue at all with Ricketts making money. Saying all the profits would go back into the team though, was a [expletive] stupid thing to say. Because it will be brought up time and time again. If profits are being used for the renovations? Fine, I guess. But it makes me think Ricketts bit off more than he could chew, in buying the team and the reason we don't have more money to spend, is because Ricketts isn't equipped to be a true large market owner.Unless extra revenues and the TV deal fall our way.

 

I don't understand why profits from the team being used for those infrastructural upgrades is a bad thing.

 

Other than the fact that people are mad that they aren't spending out of pocket either to upgrade that stuff or on payroll...but I don't really expect them to.

My reason for not being totally on board with it is they knew going in what they had. They knew what they paid for the team and knew what it'd basically cost to upgrade the park. For now, if this is why the teams' payroll has taken a dive, its at the expense of the park. I know not everyone can have a Guggenheim Group as owners, but I wish like hell that we had gotten a group that was able to spend on both simultaneously. Obviously, I'm fine with the rebuild, but it didn't necessarily HAVE to be this way, depending on our owners financial positioning.

[Hairyducked Idiot]

The Ricketts have already made $100m in increased valuation just since buying the team, right?

[Ryne Ween]

Does this include the 25% of CSN Chicago? That is pouring into the bottom line for Ricketts. They got a lot more there than I bet they expected.

 

Also, "stadium improvements" is capex and has nothing to do with operating income. Its not a P&L item.

[Guest]

Does this include the 25% of CSN Chicago? That is pouring into the bottom line for Ricketts. They got a lot more there than I bet they expected.

 

Also, "stadium improvements" is capex and has nothing to do with operating income. Its not a P&L item.

capex has something to do with OI. The impact is just spread across multiple years.

[Ryne Ween]

Does this include the 25% of CSN Chicago? That is pouring into the bottom line for Ricketts. They got a lot more there than I bet they expected.

 

Also, "stadium improvements" is capex and has nothing to do with operating income. Its not a P&L item.

capex has something to do with OI. The impact is just spread across multiple years.

 

Ok but you would likely see a combination of incremental revenue, cost saving and tax shield from the improvement that is close to, equal two or greater than what would be expensed in a year.

 

The point is whatever conclusions you draw from the Forbes numbers (and who knows the accuracy there) shouldnt be impacted by costs of improving the stadium.

 

And the main point that is missed in the other thread about moving to rosemont is that ricketts bought three seperate assets. Zell talked about finding seperate buyers for wrigley and the team. He ultimately didnt because the value of the two assets together is more valuable than seperated.