Business side of Baseball

According to a recent Forbes article via ESPN.com, Major League Baseball's team values have increased an average of 15% for the second straight year. Operating income increased to $360 million from $132 million the year before. The Washington Nationals, who are on deck for a new stadium, reported the biggest gain of 42%.

Another interesting point Forbes makes is about the effect revenue sharing is playing. MLB's league sharing rule states that teams must pay 34% of their net local revenue in order for poorer teams to become more competitive. The New York Yankees paid a record $77 million and actually lost more than $50 million in operating income. The second highest totals belong to the Red Sox who paid $51 million and lost more than $18.5 in operating income. Revenue sharing is the reason why the Oakland Athletics, Minnesota Twins, and Kansas City Royals value increased by more than 20%. The Royals also earned more than $20 million by not following the intent of revenue sharing (not using subsidies to boost player payroll).

The Yankees and Red Sox may be paying the most, but according to Forbes they also are the two most valuable franchises in baseball. The Yankees are worth $1 billion while the Red Sox are worth $671 million due mostly in part to the money they receive by ownership stakes in regional sports networks (Red Sox have NESN while the Yankees has the YES network).

Baseball team values continue to grow. The Yankees spend the most money but constantly find themselves in a playoff race. The Royals come in last place every year but the owner is possibly sitting on a gold mine. The Red Sox and Yankees pay the price to win but do not necessairly make the most money. The Royals on the other hand do not do what it takes to win, but settle for the business aspect. Different strategies by owners and teams in sports play out in all leagues, but this is just proof that it happens in baseball.