Study Says Orioles Worth $200 Million

A two-month study by a business magazine ranks the Orioles as one of the most valuable teams in sports, with a suggested worth-price tag of $200 million.

Financial experts scoffed at the results, which were no doubt read with interest by Orioles owner Eli Jacobs, who says he is interested in selling his majority interest in the team. A $200 million price would represent a nearly three-fold appreciation in the value of a team for which investors, led by Jacobs, paid $70 million three years ago.

It would also be the highest price ever paid for a baseball team, and about twice what most experts estimate it is worth.

Five staff members of the New York-based Financial World calculated the value of 102 professional baseball, football, hockey and basketball teams. The study took into account estimates of ticket sales, player salaries, TV contracts and other financial data.

The New York Yankees, with an estimated annual operating profit of $24.5 million, were ranked as the most valuable franchise in sports, at $225 million. The Miami Dolphins came in No. 2, at $205 million.

The Orioles tied for third with the Los Angeles Dodgers and Lakers, the New York Mets and the Green Bay Packers.

“The new stadium is what really makes it,” said Michael Ozanian, one of the authors of the report.

Ozanian said the new Camden Yards stadium downtown that will open next year should boast ticket sales and interest in the team. And the 15-year lease is one of the best for any team in sports, enhancing future profits. Without the stadium, the team would be worth about $110-$115 million, he said.

“New stadiums are going to play a larger role in the future values of franchises because it’s going to be harder to raise television revenues,” he said.

Because most sports teams are privately held, and do not release detailed financial information, the magazine estimated much of its data. In some cases, published estimates by trade publications were used; in others, “industry averages” were used, he said.

The report used estimates of 1990 data, except stadium-related revenue for the Orioles and other teams expected to enter new stadiums soon.

Overall, the report estimates the Orioles’ annual revenues at $47.9 million, 15th highest in baseball. Operating expenses were put at $38.3 million, 17th highest, for an operating profit of $9.5 million, the ninth highest in baseball.

Several professional appraisers said the approach was too simplistic and greatly over-valued the Orioles.

“I really like the Orioles and I think they are a quality franchise and have quality management. But they are not worth $200 million,” said Stewart Rog, a principal and sports consultant with Deloitte & Touche.

He agreed that the new stadium should boost the team’s value, but even with it the Orioles are probably only in the top half, maybe the top third, of baseball teams, he said. That assumes that Washington never gets a major-league team, something that would cut deeply into the television and gate receipts of the Orioles, he said.

“This seems to me to be one of those kind of off-the-cuff analysis,” said Rog, who helped evaluate the team for a potential buyer in 1988.

Gene McHale, former president of the New York Yankees and current president of American Sports Associates, a sports consulting firm, said, “I can’t believe this is that accurate for all these franchises.

“I think this is a task that you need to do a lot of work on,” McHale said. When professionals appraise a team, they have access to revenue figures and other data that the magazine did not, he said.

“I would put, relatively speaking, a good value on the Orioles,” McHale said. “I don’t think they are worth $200 million.”

Orioles spokesman Rick Vaughn said, “I’m not familiar with where they got their figures. It seems pretty subjective to me.”

Other highlights of the report, which will be published in Financial World’s July 9 edition and be updated annually:

--The Orioles were estimated to have the eighth highest gate receipts among professional baseball teams, $19.1 million; the 13th highest revenues from television and radio contracts, $22.5 million; the 12th highest revenues from parking, concessions and other stadium sales, $5.1 million; the lowest player salary costs, $9.1 million.

--Five of the top 10 most valuable franchises were in baseball; three were in football; and two were in basketball. The National Hockey League, mainly because of low TV revenue, has 13 of the bottom 20 clubs.

--Five of the 26 major-league baseball teams lost money last year, led by a loss of $13.5 million by the Houston Astros. Commissioner Fay Vincent has said eight or nine teams lost money last year.

--The Washington Redskins were valued at $125 million (28th), with an estimated operating profit of $10.5 million last year. The Capitals were valued at $38 million (95th), with an operating profit of $1.7 million. The Bullets were valued at $37.5 million (96th), despite a loss of $2.4 million.