|ESPN.com: Baseball||[Print without images]|
“"Let me tell you, if the Dodgers are worth $2 billion, the Yankees are worth $3.5 to $4 billion," Ganis said Wednesday. "The Red Sox are worth $2.5 billion. And the Mets go from being worth, say, in the low $1 (billion)s to the mid- to high-$1 (billion)s. ... The Yankees have a much better cash flow, a much better market, a much better stadium situation (than the Dodgers)." The Mets, recently buoyed by a settlement of the Madoff-related lawsuit and $240 million in minority investments, could stand to be one of the biggest beneficiaries of the Dodgers' elevated sale price. The Mets have hundreds of millions in loans against the team. If the value of the franchise is $1.5 billion rather than $719 million, the team's debt-to-equity ratio dramatically improves. Still, Ganis cautioned: "It can have a positive effect. The problem the Mets have is they're losing money every year. So it's not just a matter of the debt-to-equity ratio, but rather they're going to be missing all the metrics that are typically included in debt deals. They, of course, have a negative cash flow. So banks will be somewhat lenient because they'll say, 'OK, there's more asset value here,' but only if there's a bankruptcy proceeding. And baseball, I think, is going to be very loath to let that happening again. And I don't think the Wilpons want to go through a bankruptcy proceeding." That the Mets own their own television network, SportsNet New York, actually keeps them from a higher valuation because they essentially are locked into that arrangement. The Dodgers, on the other hand, freely can solicit open bids for their local TV package, which is up after the 2013 season, Ganis explained. "The Dodgers being open for bidding, they can try to set the higher bar than the Mets set with SNY," Ganis said. "That's why the Dodgers (now) would still probably be worth more than the Mets. But the Mets' value does go up relative to the Dodgers." However, entering the bankruptcy process could present the Mets with a TV network loophole that could raise their sale price to either match or exceed the Dodgers. "If the Mets had the same (bankruptcy) thing, had they rejected the SNY contract and there could have been a fresh broadcasting deal, I suspect the Mets would have went for more than the $2 billion the Dodgers went for," Ganis said. "If they kept the SNY deal, probably $1.5 billion or so would be the value." But the Dodgers' sale price doesn't change everything. Ganis says only the "top of the food chain" can expect to see a sizeable jump in their team values. "It only relates to the Yankees, the Red Sox, the Cubs, the Mets. That may be it," Ganis said. "Maybe there is some relevance to a lesser degree to the Giants and the Padres. But no one should expect this has any meaningful impact on the Pittsburgh Pirates or Kansas City Royals or the Cleveland Indians. It's really just the big-market clubs that have unique local broadcasting opportunities." Wilpon, who served on a committee that screened prospective Dodgers owners, said he could not discuss the yet-to-be-officially completed sale of the West Coast ballclub because of his place on the panel. But the high sale price certainly reverberated throughout baseball. "It is an incredible price," Yankees president Randy Levine told ESPNNewYork.com's Andrew Marchand. "If they are worth $2 billion, one can only imagine how high the Yankees' value is." Of course, it's still possible the Magic Johnson-Stan Kasten group purchasing the Dodgers is an outlier that would not be repeated if another big-market team went up for sale. "It's the craziest deal ever; it makes no sense. That's why you saw so many groups drop out," Mark Rosentraub, a University of Michigan sports management professor, told Arash Markazi of ESPNLosAngeles.com. "I don't get it. The numbers just don't work. It doesn't make business sense. Nobody came up with this number." "Under the most favorable circumstance you broke (even at) $1.1 billion, with $1.4 billion getting crazy. Now you're up in the $2 billion range, which is over $800 million more than what pencils out for a profitable investment for a baseball team," Rosentraub continued. "If making money doesn't count, this is a great move. But now we're into buying art and I can't value art. I can just run the model numbers and this doesn't make sense."
Let me tell you, if the Dodgers are worth $2 billion, the Yankees are worth $3.5 to $4 billion. The Red Sox are worth $2.5 billion. And the Mets go from being worth, say, in the low $1 (billion)s to the mid- to high-$1 (billion)s.” -- Sports business consultant Marc Ganis