I’m pretty sure there’s enough magical accounting going on inside a mega-corporate oligopoly like Rogers to make us all not take too seriously the figures provided in the MLB franchise valuation pieces we see annually by Forbes.

That said, their just-released 2012 edition provides some interesting food for thought– as one might expect.

The basics? Let’s start with the fact that, while still just the 25th-most valuable franchise in the majors, the Jays value has jumped by $76-million since their 2011 report– up to $413-million from $331-million last year. That’s a 23% rate of growth, which was the fifth-best in the Majors.

Their operating income– aka the difference between operating revenues and operating expenses– was at $24.9-million. That’s the second highest figure the team has pulled in over the last decade– and $14.9-million more than the operating income of the Yankees and ninth overall.

You’ll never guess why they believe that is.

“The television rights fee paid to the Toronto Blue Jays by Rogers Sportsnet doubled in 2011,” they write. “TSN, which had been televising a handful of games, no longer shows the team’s games. Both the Blue Jays and Sportsnet are subsidiaries of Rogers Communications. This jump in television revenue helped boost the team’s operating income to $25 million from $4 million the previous season. The bottom line was also goosed by the team’s low payroll. The Blue Jays have been in the lower third of the league’s payroll the past two seasons.”

Weird.

Forbes also provides a breakdown of the franchise’s valuation, which interestingly reports that only $44-million of the club’s value (10.6%) is attributable to its brand. Forbes doesn’t say what goes into this number, but the number for the Yankees is $363-million (19.8%), while the Red Sox– who were passed as the second most valuable franchise by the Dodgers– are at $192-million (19.2%). Clearly the Jays aren’t misguided in their attempts to re-brand and to strengthen their brand across the country– nebulous as the terminology Forbes is using may be.

So… ya. Bottom line is, as far as I can tell, the Jays made some money last year. And while it would be easy to get offended at how they failed to re-invest it over the off-season, let’s not forget that the operating income Forbes reported for them in 2011 was just $3.6-million. If they’re able to sustain such levels and still won’t budge, then we’re probably safe to lose our shit.

For now… I don’t know… maybe it bodes well for the future. I mean the stuff about the increase in TV revenues certainly sounds like it does, as long as it doesn’t somehow end up back in Rogers’ pocket. And, y’know, assuming that we should even take what Forbes says seriously. Which, frankly, we probably shouldn’t.

Ugh.

Comments (32)

  1. It only doubled? Those cheap fucks…

  2. It’s a pity they are generally still off by so much in reality. Witness the previous valuations for the Astros and what they sold for. The value on the Mariners and the valuation put forth by the independent auditor who actually got a look at the Mariners books. Then there’s the Dodgers.

    • Very good point. Rogers can manipulate the financial information provided to forbes to show whatever number they want.

      It is amusing to see that Rogers paid the Jays an extra 20 million in broadcast fees when they didn’t have to.

      There has been substantial discussion on this board about the true FMV of the rights, which should be significantly higher based on what competing teams are getting paid.

      Its hard to make the argument that Parkes made last year that Rogers should not subsidize the Jays & yet allow Rogers to get a discount on broadcast fees from the Jays.

      If Rogers wants the Jays to be independent, then it makes sense that the Jays should be given the FMV broadcast fees to use in their budget.

      • Except why would Rogers pay more money for TV then they are mandated by the MLB, the more money they pay the more tax is applied and if they pay enough they would stop receiving a share from other team’s TV deals because they would be above the threshold for receiving those payments. It is all the same company and and they have a board of execs and shareholders to answer to at the end of the day so my guess is the money will be there when it needs to be. The whole valuation of the Jays is a cluster fuck because of the ownership monopoly Rogers has.

        • Rogers kept payments to the Jays at minimum levels in order to benefit from revenue sharing. They may have been forced to raise the amounts paid for broadcast fees a certain amount, but still well below true FMV based on the Angels & Rangers contracts.

          The new CBA will virtually eliminate any revenue sharing payments to the Jays because they operate in a big market.

          They can’t pretend to be a small market team anymore.

  3. Blair often makes a big deal of the fact that the Jays are on of the only MLB teams that operates without debt. Looks like only the Braves and Mariners are also in that boat (with Yankees basically there).

    • Blair also made the point not too long ago that when Rogers purchased the Jays, they paid CASH. No loans, no financing. Cash.

      Put that in your pipe and smoke it.

      • You’re on the right track here. Rogers, like Shaw in the western part of the country, has a shitload of money and is making piles more. The Jays are a sideshow that they picked up largely to get more content on their cable channels.

        • The Jays are a pillar of the Sportsnet franchise – Hell, they pretty much singlehandedly supported the launch of Sportsnet One.

          Of course Rogers can pay cash for a baseball team. Rogers is a bigger company than Toronto Blue Jays in large part because telecoms is a WAY bigger business than baseball will ever be.

    • What Blair need to realize is that leverage (use of debt) generally increases the owner’s return on investment since interest is tax deductible (admittedly, it does magnify losses as well). Saying 0 debt is good is a naive understanding of the function and purpose of leverage. Most companies employ debt, not because they can’t raise money via equity (stock), but because it is more profitable to use debt to raise capital.

      Also the Jays’s parent corp, Rogers Commincations Inc. has debt. Debt is issued at this level because Rogers can get lower interest rates due to the better financial position/collateral of RCI.

      Sports writers make bad financial analysts.

      • Very good to point out that Rogers itself is not debt free, and that it is entirely by choice. The Jays are roughly 2% of Rogers revenues, 2% of Rogers debt would be $200m. That is a manageable but by no means negligible debt load.

        That said, Rogers is so large compared to the Jays that they are in some ways a rounding error. During 2011, Rogers communications generated enough cash from activities to buy the Jays (at Forbes current, $413m valuation) every 5 to 6 weeks…

      • Very true. 10 years ago Rogers was one of the most heavily indebted companies in Canada because of the costs to develop cell infrasctructyre & bandwith etc…

        Now the cash flow from these opeations is paying off.

  4. Does that mean if they signed Fielder, they woulda been broke?
    Makes sense now.

    • So if the valuation of the team goes up because revenues from Sportsnet doubled, then lets raise their rate by 10x and then we can sign free agents like Darvish. Is this a great country or what.

      • As there are likely not many posts on this topic (not to many interested on the money side of the game) allow me to share my concerns on the 2012 Jays. Strength down the middle, yikes, JPA sit still behind the plate – you make Morrow nervous. Kelly Johnson, just when I thought it couldn’t get worse for Arron….we are in trouble here. Colby, its time to wake up now, lets hit the ball.

        • I think you take your Spring Training a bit too seriously!

        • what?

        • Actually, Zaun covered JPA’s movements early on last season. If he’s too still behind the plate, he’s stiff and that’s when there are a lot of passed balls. He’s been trained to keep moving in order to stay loose and it improves his reaction time considerably. He won’t be sitting still behind the dish any time soon.

  5. i attribute everything top the v dub dump

  6. Speaking of operating income, check out the article in CA Magazine on Paul Beeston and the Jays. It’s actually pretty good for a bean counter magazine.

    Cheers!
    Aj

  7. They are still just a “rounding” error on the consolidated financial statement

    • http://www.rogers.com/web/Rogers.portal?_nfpb=true&_pageLabel=IR_LANDING

      Jays are 10% of revenue of Rogers Media, which is itself a small piece of the larger Rogers Communications goliath. Since Sportsnet is also part of the Media division, so how they divide the pie between the two pieces of a small division is (almost) round off error for investors.

      If the Jays are close mid-summer (and the starters have held up!), I suspect we see a new first baseman in a trade for Lind + draft picks/prospects. With the chance to put an extra 10,000 fans in the seats for a pennant race over the last 40 home games, AA would, IMO, go for offence instead of pitching as it has a much higher short-term bang for the buck, without getting a back of the rotation veteran clogging up the path for the prospects.

  8. Anyone who has done any serious financial analysis knows these types of estimates are at BEST an educated guess. Even when firms open up their books 100% for scrutiny and additional due diligence (which goes well beyond the information included in audited and unaudited financial statements and involves teams of dozens of professionals), several different valuation are employed and the ultimate estimates still vary substantially (much of this has to do with the underlying assumptions, which can have a very large impact).

    Without having done any research whatsoever (note caveat) I would imagine Forbes is undervaluing the Jays somewhat — this is primarily because Rogers (who owns the stadium and the broadcaster, which both account for a relatively small portion of its total revenue) are not required to disclose a significant amount of information about the franchise or its operations. Hence, Forbes is trying to value the Jays in an vacuum.

    Sports teams are also notoriously hard to value since most owners do not purchase them as money making ventures, instead they are typically purchased by high net worth individuals as status symbols. Most of these owners do not look to the team as a source of cash flow and instead enjoy the benefits of ownership and hope the enterprise value of the team appreciates overtime (because more rich dudes want their own team).

    • Very good post & very true. If the Jays went up for sale, they would almost certainly get more than 400 milion.

  9. And this, my friends, is exactly why MLB is taking away the tens of millions of dollars they’ve been handing over to Rogers for no apparent reason, and is also why you should be pissed that they are running a mediocre payroll.

  10. Seems to me like a lagged response to exclusive air rights for the parent company. The advertising revenue and control should increase the value. However, the sale value to a third party is likely lower than the actual value to Rogers.

  11. [...] is that? Are they removing a cut of a income saved — or value gained — by bang-for-the-buck group owners in Seattle and Toronto? Of march not. The usually [...]

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