Sports biz: Rock-Solid
With exuberant home crowds and playoff-caliber talent, your 2011 Colorado Rockies are the picture of baseball health: competitive, fun to watch and relatively young.
The favorable diagnosis extends to the business side, too. In a season where two of baseball’s most storied franchises are in financial tatters, the Rockies appear to have a clean bill of health, with a manageable debt load, positive operating income of $16 million and a valuation of more than $400 million.
That’s according to the latest Forbes magazine estimates of Major League Baseball economics, which peg the Rockies at No. 17 in a ranking of 30 MLB teams by estimated value. The $414 million value Forbes ascribes to the Rockies is nowhere near the $1.7 billion valuation for the New York Yankees, the team that tops the list. But it’s comfortably more than the $304 million value applied to the Pittsburgh Pirates, the team occupying the valuation low rung.
More important, the Rockies have steered clear of the financial convulsions afflicting the New York Mets and Los Angeles Dodgers, teams that have had to resort to extraordinary measures to cover steep losses and juggle stupendous debt loads despite operating in populous, media-rich markets.
The soap opera divorce proceedings between Dodgers owners Frank and Jamie McCourt continue to roil the Rockies’ divisional rival, which is now operating under the financial control of an MLB-appointed overseer who must approve any expense more than $5,000. The Dodgers, as of mid-May, were awaiting approval of a new TV rights deal that would deliver a much-needed upfront payment of $285 million in cash from Fox Television. Without it, press reports warned, the team was in danger of missing its payroll. (And damn, here’s where it really would be entertaining if Manny Ramirez still wore the blue.)
The turmoil surrounding the Dodgers occurs in a unique SoCal bubble percolating with domestic warfare, lavish overspending and over-borrowing, and a near-comic level of managerial ineptitude. More troubling to baseball at large, however, is the trouble surrounding the Mets, a team that had been relying on the sports industry’s reliable wellspring of good fortune – a new ballpark – to boost revenue. Instead, the combination of the lingering economic recession and a horrific season led to an attendance decline of 600,000 last season, contributing to an operating loss of $6.2 million.
Normally that’s the sort of shortfall you cover over lunch with your banker (if you happen to be a wealthy MLB team owner), but in the case of the Mets, operating deficits customarily had been covered by drawing from funds maintained by investment tycoon Bernard Madoff. And we know what happened to those. With a ready source of capital gone, the Mets had to borrow $25 million from the MLB mothership in a rescue mission that seemed almost unimaginable.
Thus, a season that should have presented a wealth of positive storylines – the post-steroid-era return of great pitching, the progression of phenoms like Cincinnati flamethrower Aroldis Chapman, the novelty of watching teams like the Pirates and the Royals actually win some games – is so far overshadowed, at least from a league vantage point, by the sorry decline of two great franchises that are now highly visible problem children for commissioner Bud Selig.
Viewed against the downward spiral of their bicoastal brethren, the Rockies very undramatic state of affairs seems like a blessing. It wasn’t so long ago, remember, that baseball watchers saw no way out for a Rockies team shackled with debt from expensive player contracts, limited in its ability to collect big-market media rights revenue and facing growing fan discontent.
Somehow, the Rockies ownership group managed to survive the lean years (a minority investment from Fox helped), dodge the need for a reorganization or outright sale, and emerge with a sound financial profile, as the Forbes numbers attest.
About the only news from LoDo these days concerns RBIs and ERAs, not divorce lawyers and appointed overseers. For that, Rockies fans can be thankful.