Forbes: O’s had $83 mm in operating income in 2021, but team value is down 4%

[Frobby]

I’m not sure if Forbes has done its big piece on MLB economics that it does every spring, but their team valuation charts are updated as of March 2022.   Here’s what it shows for the O’s:

Revenue $251 mm

Gate receipts $20 mm

Player expenses $66 mm (includes benefits)

Operating income $83 mm

Non-major league payroll expenses $102 mm*

Team value: $1.375 bb (down 4%)

====
* This is a derived number not reported by Forbes.   It’s simply revenue minus player expenses and operating income = non-payroll expenses.

Revenue was flat to 2018, despite gate receipts dropping from $42 mm to $20 mm in that time frame.   That’s the result of more TV money and perhaps more revenue sharing from other sources.

One thing I find interesting is that non-payroll expenses are up only $5.5 mm from 2018.   That’s despite all the investment in technology, whatever has been spent so far on the Dominican conplex, increase in personnel devoted to analytics, etc.   So, when we hear that reductions in major league payroll are being used to fund infrastructure etc., well maybe, but the  vast majority of the savings is going to the bottom line.   That isn’t a surprise, but it does surprise me that the non-payroll expenditures have not really increased that much, especially when you consider that our spending on foreign amateurs has increased significantly since 2018.

No reason is given why the team valuation is down, but I suspect it’s due to declining attendance and brand deterioration derived from all the losing.

Team page here: https://www.forbes.com/teams/baltimore-orioles/?sh=2a0534db76db

MLB overview page here:  https://www.forbes.com/mlb-valuations/list/

 

 

 

 

[eddie83]

Pretty incredible gate is only 8% of revenue. I know the world has changed for all teams but that is crazy. 

[Can_of_corn]

1 minute ago, eddie83 said:

Pretty incredible gate is only 8% of revenue. I know the world has changed for all teams but that is crazy. 

That's why they can continue to throw a sub-standard product out there.  They don't need folks in the stands like the teams of the past did.  Attendance drops 20% and it is a drop in the bucket compared to the saving on payroll.

[Frobby]

Just now, eddie83 said:

Pretty incredible gate is only 8% of revenue. I know the world has changed for all teams but that is crazy. 

It’s a commentary both on the changes in revenue streams for all teams, and the particular decline in attendance for the O’s.

[eddie83]

3 minutes ago, Frobby said:

It’s a commentary both on the changes in revenue streams for all teams, and the particular decline in attendance for the O’s.

Of course but that is still an amazing number to me. 

[Frobby]

I should add that the O’s were the only team in MLB that had a decline in valuation (in Forbes’ view).    That can’t make the Angelos family happy.   

[eddie83]

5 minutes ago, Can_of_corn said:

That's why they can continue to throw a sub-standard product out there.  They don't need folks in the stands like the teams of the past did.  Attendance drops 20% and it is a drop in the bucket compared to the saving on payroll.

I know.  In simple terms drop payroll by $30M and lose $20M in gate you are still ahead $10M. 
 

Obviously there were still restrictions last year and other factors beyond the product that impacted attendance. That said this is a time I would be doing anything to get people to the park. Will be curious to see where attendance winds up this year. It will be higher than last year but by how much? 
 

They are really pushing Opening Day tickets. I would be surprised at this point if it is a sellout. 

[Can_of_corn]

4 minutes ago, Frobby said:

I should add that the O’s were the only team in MLB that had a decline in valuation (in Forbes’ view).    That can’t make the Angelos family happy.   

True, but they are probably pulling enough cash out of the team to make up for it.

[Frobby]

6 minutes ago, Can_of_corn said:

True, but they are probably pulling enough cash out of the team to make up for it.

That probably works in the short term, but may not work in the long term.  

[LookinUp]

$20 million in gate receipts is a shockingly low number, to me at least. 

[geschinger]

7 minutes ago, LookinUp said:

$20 million in gate receipts is a shockingly low number, to me at least. 

I'm not too surprised.  I think their attendance was around 800k.  $20m would be roughly $25 per attendee which sounds about right.

[Frobby]

9 minutes ago, LookinUp said:

$20 million in gate receipts is a shockingly low number, to me at least. 

Well, overall attendance was under 800,000, despite promotions like Kids Cheer Free.   That’s only about 30% of what they drew in 2014.   

There’s a chance that attendance rises modestly in 2022, if Covid numbers stay relatively and more people are comfortable going to games.   That certainly was a factor last year, especially in the early season when there were attendance restrictions and most people hadn’t been vaccinated yet.  Even later, I’m sure there were people who weren’t comfortable being in crowds, even outdoors.   

But mainly, attendance will stay low until the team improves.   

 

[Porky]

43 minutes ago, Frobby said:

I should add that the O’s were the only team in MLB that had a decline in valuation (in Forbes’ view).    That can’t make the Angelos family happy.   

Eight winning seasons in the last thirty years certainly doesn't help a brand. The Ravens and Orioles could not be more opposites.

[DrungoHazewood]

2 hours ago, Frobby said:

One thing I find interesting is that non-payroll expenses are up only $5.5 mm from 2018.   That’s despite all the investment in technology, whatever has been spent so far on the Dominican conplex, increase in personnel devoted to analytics, etc.   So, when we hear that reductions in major league payroll are being used to fund infrastructure etc., well maybe, but the  vast majority of the savings is going to the bottom line.   That isn’t a surprise, but it does surprise me that the non-payroll expenditures have not really increased that much, especially when you consider that our spending on foreign amateurs has increased significantly since 2018.

My guess is because most of those expenses are not expenses.  As I said in the other thread, I think that fans wouldn't recognize most of that as operating expenses.   Things like depreciation of tangible assets as well as players.   Other things that they probably have some discretion as to how they're categorized and taken credit for.  With the information we have access to we have no idea how that $102M is broken down and what it's comprised of.  It's possible infrastructure and analytics investment went up $20M and other things offset that.

[DrungoHazewood]

2 hours ago, Frobby said:

But mainly, attendance will stay low until the team improves.   

They could always try free tickets/beer/food for lingerie models. Not only would it bring more lingerie models to the park, but also other interested parties.