Forbes: Value of Reds $375M, Up 13%

According to a report on Forbes.com, the value of the Cincinnati Reds increased by 13% in 2010. A nice jump considering the Reds status as a small market team. The link involves a slideshow, but it also provides a link to all 30 teams. Here’s the list for all the NL Central teams along with their overall rank and value.

4. Chicago Cubs, $773 million
11. St. Louis Cardinals, $518 million
14. Houston Astros, $474 million
22. Milwaukee Brewers, $376 million
23. Cincinnati Reds, $375 million
30. Pittsburgh Pirates, #304 million

(The links on this list are directly to each team’s page of the report.)

So, how were these values determined?

To account for each team’s value, Forbes used the grand total of the following four values (via Forbes):

"Sport: Portion of franchise’s value attributable to revenue shared among all teams.Market: Portion of franchise’s value attributable to its city and market size.Stadium: Portion of franchise’s value attributable to its stadium.Brand Management: Portion of franchise’s value attributable to the management of its brand."

So you look at that list and think all is doom and gloom. Not even close to being true.

As the title of this post suggests, the value of the Reds increased 13% in one year, up from $331 million value last year to this year’s $375 million. Yes, winning a division can do that. In fact, the Reds experienced the largest increase among those teams within the NL Central. The next closest was the Brewers at 7%. But there are two distinct rankings that the report covers that may open you eyes a bit.

First, Forbes developed a “stat” called “player cost-to-win ratio”. This figure basically affixes a value to player payroll and its correlation to team victories. It also takes into account wins and payroll in relation to all 30 MLB teams. It’s almost like a “bang for the buck” ratio, if you will. A score of 120, for instance, would reflect that a franchise attained 20% more victories per dollar. You could, if you wish, consider a score of 100 a form of “breaking even”.

That all now being before us, here’s how the NL Central teams fared on that ratio:

Reds = 123
Pirates = 113
Cards = 94
Brewers = 92
Astros = 84
Cubs = 57

Yes, I believe you can see how this works already. You can rub your eyes all you want on the Bucs being second within the division. When you have that low a payroll, it even makes it look good when you lose 100+games. And I think you can alsosee that if you have a high payroll and don’t produce a lot of wins, your ratio is pretty much shot.

It’s also worth noting that the Reds have had only 2 seasons where this ratio has been under 100 over the last decade, second within the division behind the Pirates (1). In fact, their lowest ratio over that period is a 95. Compare that to the ratio of the Cubs which have only posted one year within the last decade in the triple digits (100 in 2004).

Here’s another fact that will surprise you. The report also tracked the TV ratings for each team based on its ratings on the team’s regional sports network. Note that as it is very important. It does not take into account any nationally televised games. Only the regional network(s) that have contract to carry the games. Here’s the rankings for the division and the MLB ranking.

1. Cards
4. Reds
7. Brewers
18. Pirates
21. Astros
24. Cubs

Yes, those numbers are correct. TV ratings for the Reds on FOX Sports Ohio last season were up an astounding 95% (according to Forbes). The two teams between the Cards and the Reds were the and Twins (2nd) the Phillies (3rd).

Three more nuggets:
1. The overall value appears to be in direct correlation to average ticket price and gate receipts. The Pirates have the lowest average ticket price and fewest dollars from gate receipts while the Cubs are tops in both. But this will grab your attention. The Cubs had gate receipts of $146 million. That’s greater than that the total ($132 million) of the Pirates ($27 million), Reds ($46 million) and Brewers ($59 million) combined.

2. Did you realize that the attendance at GABP was up 18%?

3. Bob Castellini purchased the team in 2006 for $270 million.  For that year, the Reds were valued at $274 million.

You could look at the 23rd overall ranking and be a little put off. Don’t look at it that way, but look at it this way. Take all these numbers Forbes gives us and we can create our own financial version of sabermetrics.