New York Yankees Surpass $8 Billion Threshold: The Age of Digital Streaming

A yearly analysis of projected franchise values within the Major League Baseball scene provides a clear outlook on the imminent revolution in broadcasting. This transition hints at the League’s strategy to take advantage of local television rights within the increasingly digital era of streaming. For the 28th year running, Forbes’ annual study positions the New York Yankees at the helm, making them the initial baseball team to surpass the $8 billion threshold. With a net worth of $8.2 billion, they successfully maintain an impressive lead over the second-highest valued franchise, the Los Angeles Dodgers, valued at $6.8 billion.

The Dodgers witnessed a remarkable 25% surge in value within one year, thanks to their achievement of defeating the Yankees in the World Series. Additionally, they successfully capitalized on the inaugural season of international two-way sensation Shohei Ohtani, which accelerated their revenue growth. The top seven clubs, namely the Yankees, Dodgers, Boston Red Sox (valued at $4.8 billion), Chicago Cubs ($4.6 billion), San Francisco Giants ($4 billion), the New York Mets ($3.2 billion), and the Philadelphia Phillies ($3.1 billion) have a noteworthy common trait. They have either established their own regional sports networks or, like the Dodgers (Time Warner), Giants, and Phillies (NBC Sports), have cemented contracts worth billions.

Clubs of lesser value are facing ambiguity regarding their television prospects, a crisis that became inevitable after Diamond Sports Group, who held the rights to 14 MLB teams, filed for bankruptcy in March of 2023. The decisions that ensue will heavily affect the tone of labour discussions post the expiration of the current agreement in December 2026. These circumstances will also influence MLB Commissioner Rob Manfred’s strategies to market local TV rights as a collective package.

Diamond underwent reorganisation as Main Street Sports Group’s FanDuel Sports Network after filing bankruptcy. This, coupled with significant revenue loss due to moving other networks to pricier cable tiers, sent ripples of widened disparities between the most affluent and the remaining franchises. A case in point would be the Dodgers, who concluded an $8.35 billion agreement with Time Warner valid till 2038. Similarly, Yankees, Red Sox, Cubs, and Mets either have ownership, control, or equity stakes in their respective networks.

Such instances contribute positively to the industry’s total revenue but could become obstacles in Manfred’s plans of bundling local rights for marketing. Simultaneously, the most prosperous entities would resist lumping in with the two dozen less fortunate franchises. This reluctance is primarily due to the existing revenue-sharing structure that benefits the lower half.

Those lagging are targeting the local TV issue in various ways. This year, MLB will handle local broadcasts for six franchises: the Cleveland Guardians, Milwaukee Brewers, Minnesota Twins, San Diego Padres, Arizona Diamondbacks, and Colorado Rockies. Following a similar path, the Texas Rangers, who also parted ways with Diamond Sports, opted to build the Rangers Sports Network. This decision ensures that all Rangers telecasts will commence under their banner.

One positive outcome amid the broadcast turmoil is the speed-up of direct-to-consumer options. A majority of the teams, 26 out of 30 to be precise, will furnish streaming subscriptions, many of which will be separate from a cable subscription. Forbes valuations, however, do not take into account the value of team-owned networks nor the stakes held by teams in them. Neither do they consider the value of other sports assets or mixed-use real estate.

In spite of this, teams who have ventured into the real estate sector seem to have surpassed their tax zones. The Atlanta Braves, being the highest-valued club still governed by the reformed Diamond Sports Group, boasts a $3 billion valuation, placing them eighth. The Giants, who recently began the construction of a 28-acre Mission Rock development adjacent to Oracle Park, secure fifth place, ahead of larger-market clubs like the Mets and Phillies.

On the other hand, the Baltimore Orioles and Pittsburgh Pirates, both lower-revenue clubs, were projected to yield a significant profit. Baltimore managed to draw 2.28 million attendees to Camden Yards, the highest since 2015, and simultaneously entered the playoffs for the second consecutive season with a young, cost-effective team. While the Pirates may not have made it to the playoffs since 2015, they experienced an increase in attendance to 1.7 million, the largest figure since 2017.

This attendance rise enabled the owner of Pirates, Bob Nutting, to enjoy a hefty profit according to Forbes. However, injecting investments into the roster doesn’t hurt either. Take the San Diego Padres for instance, who managed to generate $32 million in operating income last season. This came about whilst they still held valuable investments acquired by the late owner Peter Seidler.

With a franchise value standing at $1.05 billion, the Marlins are placed last. After losing 100 games and drawing a meager crowd of just 1.08 million fans, they are still projected to achieve $38 million in operating income. New Orioles owner, David Rubenstein, who paid $1.725 billion for the Baltimore franchise, seemed to strike the right balance. The transaction, which was finalized precisely a year ago, values the club at $1.9 billion which ensures that Rubenstein’s new asset isn’t underwater.

Regardless, this is not a privilege that Marlins owner Bruce Sherman, who purchased the club in 2017 for $1.2 billion, can enjoy. The team is now estimated to be worth a reduced $1.05 billion. The Minnesota Twins, whose value is pegged at $1.5 billion by Forbes, are reportedly looking for $1.7 billion in their sale.