from Amazon
Wednesday, December 12, 2007
Franchise values could skyrocket?
Have you heard of NBA China? It’s worth 2 billion$. All 30 MLB teams are currently worth something close to 15 billion$. How much of that is MLB.com? I don’t know, but I wouldn’t be surprised if it’s 5 billion $. And MLB.com will likely comprise 50% of the 30 team’s combined value, and eventually exceed it. But, if NBA China can be worth 2 billion$, why isn’t there an MLB Japan? And NHL Europe?
I’ve been using 10% growth rate (for payroll, franchise value, and revenue) because that’s been the growth rate for the last 5, 10, and 20 years. Isn’t it possible that this is fairly conservative, in the face of internet and internationalization? Forbes reported 5.1 billion in revenue last year, and Selig reported 6 billion this year. That’s a 17% gain already. And, with more centralization of revenue, there’s no real reason for teams to pass those revenue gains to the players (i.e., marginal revenue goes to marginal wins… in this case, the revenue exists, regardless of which team wins). This will further accelerate franchise values (i.e., margins will increase, since expenses won’t match the pace of the revenue).
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