Forbes has released their list of the values of each team in Major League Baseball earlier today. The Cincinnati Reds value has gone up 10% since last season and is now valued at $1,010,000,000. That’s right, the Cincinnati Reds are worth more than a billion dollars.

Here’s a non-shocker, despite the value over a billion dollars: The Reds are only the 28th most valuable franchise in baseball. Here’s how the Reds stack up to the other teams in the National League Central.

  1. Chicago Cubs – $2.9B (3rd)
  2. St. Louis Cardinals – $1.9B (7th)
  3. Pittsburgh Pirates – $1.26B (18th)
  4. Milwaukee Brewers – $1.03B (25th)
  5. Cincinnati Reds – $1.01B (28th)

The Pirates were actually a bit higher than I expected them to be. The Reds and Brewers are the two smallest television markets in baseball, so it’s unsurprising that when the TV contracts are the biggest thing that brings money into a franchise, that they are down near the bottom.

Now, we’ve heard Bob Castellini say that since he bought the team that no one in ownership has gotten a check from the organization as “profit”. I’ve said that I don’t believe that for a second, but since the Reds aren’t a publicly traded company, we’ll never know how true that is. He’s said that the team operates for zero profit, and puts all of the money back into the franchise. Again, maybe that’s true, but it’s hard to believe.

Forbes reports that only five teams lost money last season. The Cincinnati Reds weren’t one of them. They claim that the Reds profit was $14M. That, of course, isn’t a ton of money. The Cubs profit was reportedly $102M last year, the best in baseball. The Marlins lost $53M, which was the worst in baseball. For Cincinnati, their $14M in profit was tied for 23rd in baseball, and second to last among the teams that actually did turn a profit (the Nationals made $11M – then the remaining five teams lost between $1-53M).

Updated to add this paragraph

To add a little bit to that, according to Forbes, there’s only been one year in the last 10 in which the Reds have lost money (you can see that breakdown on the Reds specific page here). In that span, they guess that the team has had a profit of $122.7M. That’s an average of $13M per season. Again, that’s not much, particularly when the ownership group has as many people in it as the Reds groups do. But even if the Forbes numbers are off by HALF, which would be a terrible guess, it’s still tough to buy that no owner has gotten a single penny back from the franchise in that span.

Take these numbers for what they are: A very educated guess. They aren’t perfect, but they probably are quite close.

DALTON AND GREEN IN 2018 T SHIRT

33 Responses

  1. Optimist

    I don’t doubt Bob about his claim of no owner taking a check from the team. I’d bet the partnership agreement provides as much, limiting profits to long-term gains if and when you sell your share. IIRC they have 10-20 partners, so in any single year a profit is fairly diluted.

    Meanwhile, it would be interesting to see the auxiliary income arrangements – that’s where an annual profit would be – parking, nearby real estate, licensing, even related travel and entertainment.

    • Doug Gray

      You could be correct, but I guess I’d ask this then: Where’s that $123M at over the last 10 years? As I said, that’s really not much money, and even if Forbes is off a little bit on that number, that’s still money unaccounted for in the “no checks to owners” claim.

      And you are right. I believe there are 19 people in the ownership groups.

      • donny

        123 million might just be a build up for players for when the reds are ready to make that push. It clearly isn’t now.
        They can save this years profit sense there not ready to compete. To build on to that when they are ready. ”money saved”
        This might be how a small market team has to operate.

    • MK

      Didn’t say owners didn’t get any money but did say they got no money from profit. It is not unusual for Board members to get a salary and expense account which would come out of operating expenses which would reduce the profit but not be out of the profits.

  2. Patrick

    https://www.businesswire.com/news/home/20160809006274/en/Walt-Disney-Company-Acquires-Minority-Stake-BAMTech

    This is an article about Disney’s initial purchase into bamtech for 33% stake at 1B. This money was paid to owners in 2016 and 2017.
    Disney’s second purchase of ownership is what most people know about when they upped their stake to 75% for an additional 2B ie 50M per team that is being paid this year

    I am wondering in these evaluations that Money in BAMTECH(MLB still has 20% ownership) and MLB advanced media(completely owned by MLB) is taken into account. Could Reds ownership be getting money from these companies so they can say they are not taking money from the Reds.

    • Doug Gray

      I think that, yes, that could be the case. And I believe that the MLBPA has taken issue with that aspect of things, too.

    • Colt Holt

      If you own a movie theater and an ice cream shop next to each other, is the sale of ice cream shop related to the move theater? The MLBAM stake was an investment outside of the reds. Any cash out from that investment is irrelevant to the reds (unless they choose to treat it as additional funding to invest in the team, no different from raising capital any other way. I get teams appear to be lucrative investments, but owners are judged pretty harshly for their stewardship of its resources. If I own a rental, should the appreciation of the house value decrease the rent I charge?

    • Doug Gray

      Just to add to the above comment, here’s the list of Investors in the Cincinnati Reds from the Media Guide.

      • Kinsm

        There are 19 different shareholders with at least a 3% stake. Big Bob is the majority shareholder at 15% and he is also listed as the primary owner with MLB, the other 18 shareholders have a smaller stake.

        Reds Ownership Shares as of 12/15/16:

        Bob Castellini (15%), W. Joseph Williams (12%), Tom Williams (12%), Lindner Reds Baseball LLC (9%), Frank Cohen (6%), William Reik Jr. (6%), Buy Buy Baseball LLC (3%), EMK Investment Company LLC (3%), Larry Sheakley (3%), Jeff Wyler (3%), Harry Fath (3%), Jeff Gendell (3%), AACE LLC (3%), HKR Baseball LLC (3%), Ron Sargent (3%), John Wyant (3%), Queen City Diamond LLC (3%), Heading for Home LLC (3%), and Art Hauser (3%).

        LLC’s Above Broken Down –>
        Lindner Reds Baseball LLC – Carl Lindner III and Craig Lindner.
        Buy Buy Baseball LLC – Rick Steiner Trust, Jim Miller, Rocco Landesman, Gary Rabiner and Dale Rabiner.
        EMK Investment Company LLC – Steve Cobb and others.
        African American Capital Enterprises LLC – Edwin Riguad and others.
        HKR Baseball LLC – Joseph Rouse and others.
        Queen City Diamond LLC – George Vincent, Tom Neyer Jr., A.G. Lafley, Jim Johnson, Mike Ryan, Dinsmore & Shole, and Frank Woodside.
        Heading for Home LLC – David Drees and Ralph Drees.

      • Doug Gray

        Outstanding. Thanks for that.

        I believe it was Biz Journals that used to have the breakdown, but whenever they updated their website last it broke a secondary link that seemed to have this information.

      • Kinsm

        Keep in mind the guys with 3% have non-voting shares. The big 6 have all the voting shares.

  3. Tom B.

    The worth of anything is not one penny more , nor one penny less than what someone is willing to pay. The problem with numbers like this is that people equate worth to operating capital. If Bob Castellini does not want to commit more than 100 million in major league salaries, it doesn’t matter how much the Reds are worth. My problem with Castellini is that he seems to be content to stick to his payroll, turn a small profit, be a good corporate citizen, and hey, maybe “be competitive.” Great. Truth is, the Reds would probably be worth a lot more if they spent more money to become a championship-caliber team. I don’t think that Castellini and the Reds ownership group are considering the possibility that they are losing an entire generation of fans to other sports. Old guys like me will always be Reds fans and baseball fans. But younger generations of Cincinnatians have never seen the Reds in the World Series (27 years and counting). And the longer that streak goes, the more interest will wane, no matter how many times they wheel out the Great Eight or hand out Bob Ross bobbleheads. And you can’t place a monetary value on that.

  4. Krozley

    The $14M figure is not profit, it is operating income or more specifically, EBITDA (earnings before interest, taxes, depreciation, and amortization). Who knows what those figures are, but those could eat up that operating income down to $0.

    • Doug Gray

      You are correct. I’m not enough of a businessman/accountant to know how to make those numbers work.

      But, I’d imagine that $14M isn’t being eaten up by all of that. But, I’ve been wrong before.

      • Reaganspad

        I have not looked at their financials, but they could easily eat up the 14M in interest, taxes depreciation and amortization.

        one of my best friends is an accountant, and he always had a joke that went like this:

        what is one plus one?

        A: What do you want it to be

        for years, GE paid no income tax because they were investing in companies that had assets and tax loss carry forward that allowed them to fully deduct those expenses against earnings.

        So, it does matter how they invest the earnings, and how aggressively they account for it.

      • Doug Gray

        Correct. You can do a whole lot with numbers to make it look like you aren’t making money.

      • Colt Holt

        I am an accountant and I am working in finance support for the GM of one of the key segments in our company. If I proposed making an investment in development with the justification that the other segment was printing money, so we can afford to bleed money, I would be laughed out of my bosses office with a pink slip. Those on this thread may be right that the valuation could improve if the team were winning, but part of the valuation of a franchise includes future commitments. Even if they win more and increase their revenue, if the cost exceeds the revenue boost, it would be a poor business decision.

    • terry m

      Depreciation (Whatever its called for players) is a non cash expense. Isn’t cash flow the real number ? Net income plus depreciation ??

  5. Keith

    I’m guessing there are owner distributions or cash surplus arrangements that maybe don’t meet the definition of profit as Bob is describing it but still allocate cash to the ownership group. There’s a lot of entities involved in the ownership, it’d be pretty easy to collect money through an entity that didn’t count as taking money from the Reds.

    • Colt Holt

      See above. If they own additional assets and take profits out of those, that is not the same thing. (Nor is there a problem if the ownership group chose to take 100% of profits out). They are the owners, not anyone else.

    • Kinsm

      Bob and the Williams brothers took out 35M$ in debt to purchase this club (was initially 100M$ before minority non-voting shares were sold).

      I would assume any profit goes to paying that down. Doesn’t negate the fact that if he were to sell the club he’d easily double or triple his investment.

  6. AirborneJayJay

    Lets see now. This ownership group paid about $270MM for the Cincinnati Reds back in 2006. And now the franchise is worth $1.010B. That is over 3 times it’s original value when they purchased the team.
    Beisbol has been berry, berry good to Bob Castellini.
    Bob Castellini, in turn, has not been berry, berry good to the Reds fans. Here we thought Castellini was genuine in his declaration about caring about bringing winning baseball back to Cincinnati. Castellini has failed miserably at bringing winning baseball back to Cincinnati. Looks like Castellini cares more about the $$$$.
    Looks like 2018 is going to be losing season #8 out of the 11 seasons Castellini has been majority owner. 8 out of 11 seasons on the losing end. Now that is bringing winning baseball back to Cincinnati–Castellini style.

  7. Cguy

    I see little question about the Reds having a competitive ML roster. They do not. But, had they completed the Cozart for Gohara deal midseason of the 2016 season completed the Iglesias to Nationals deal involving Robles plus others last midseason, then completed the Hamilton to Giants trade involving C. Arroyo this spring- at least they’d have 1 of the top 3 minor league systems. Williams places a premium on his players. That’s not good. Reds have a lousy ML roster plus a slightly above mediocre minor league system. What the Reds have is a complete absence of excellence.

    • Michael Smith

      Was William’s the GM in 2016? Pretty sure he took over at the end of the year and Walt was GM during the 2016 season.

  8. Simon Cowell

    How much a company makes should never reflect on spending nor on how much the staff makes. Its all about supply and demand. If the reds created a quality product the product would be in demand as well as the players. Value is determined by what people are willing to pay not by what we think they should spend or pay players. America versus Venezuela. Now that would be a game id pay pay to watch

    • Doug Gray

      I wish people would stop acting as if sports teams should be run like Toms Stereo Emporium when it comes to what they spend/what they make. No one is rooting for Tom or his stereos. Taxes aren’t being taken for 25 years to build the building that Tom uses. The city isn’t directly relying on Toms business to bring in revenue around Toms Stereo Emporium because of how well they do with their sales.

      • Colt Holt

        I completely disagree with the premise that they are different. Even referencing fandom, how about Apple? Samsung? They have an even larger audience who is constantly grading one product versus another. There is more of a cult following to cell phone choices than there is teams. In regards to stadiums, I think that cities have no business paying for the development of these stadiums. Pure stupidity. But, the city is doin it to promote the city, no different than citi bank paying for naming rights of the field. I pay this, I will get a return through taxes on tourism and thriving businesses. The city is not entitled to make decisions for the team just because they made a stupid decision to offer to pay for the stadium.

      • Doug Gray

        We’ll have to just disagree on it to the extent of that in which there’s a difference between how sports franchises should be tied to the city versus just about any other random business.

      • Simon Cowell

        Sorry Doug this is by far the dumbest and misinformed post you have ever made. You are acting like a sports franchises wealth should be distributed in equal portions. That will never happen. Well maybe in a fantasy league but not in the real world.

      • Doug Gray

        Well, first off, I didn’t say that at all. But, in the NFL and the NBA, the franchise wealth is absolutely distributed in equal portions. That’s the real world. Not fantasy league. So, take a step back just a little bit on that one.