Michael Ozanian, senior editor for Forbes who has been valuing sports franchises since the early 1990s, notes, "There is no correlation between rising team values and cash flow."
According to the most recent annual analysis by Forbes, which covers the 2000 baseball season, the Yankees are the most valuable franchise, worth $635 million. The Mets are second ($454 million), followed by Atlanta ($407 million), Los Angeles ($381 million), Cleveland ($372 million) and Texas ($342 million).
Coming up with those valuations is no small thing. Comparing one team's financial data to another can be a murky business. Many teams capitalize signing bonuses and amortize them over the contract term. But other teams expense the bonuses when they're paid. When looking at financial data supplied by Major League Baseball, it's often very difficult to determine which method a team used.
The reporting of broadcasting revenues is no more uniform. Some teams may recognize the payments as each game is played, assuring a steady, predictable stream of revenue. "It is not unusual, however, to incorporate provisions of a broadcasting transaction so as to justify the immediate recognition of advances made at the beginning of the contract period," noted the article in the CPA Journal. "Such contracts further complicate comparability of financial reporting among teams."
In fact, the only thing that's harder to understand than MLB accounting conventions is the balk rule. And that's saying something. Even Commissioner Selig anticipated flak over his numbers when he released selected financial figures for each of the 30 major-league clubs during his testimony before the House Judiciary Committee.
"I have read that the union and its economists will be skeptical about these numbers," Selig told the panel. "These numbers have been audited repeatedly, and...the union has represented that it accepts the veracity of the numbers we have presented."
The veracity, maybe. What the numbers actually mean...that's another matter. Back at Smith College, economist Zimbalist is keeping score at home. "The operating loss is really close to zero," he insists. "Baseball in aggregate is fine."
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