Lets say you have a pile of money and want to own a baseball team. There are only 30 major league clubs, but there are hundreds of minor league teams. All those minor league teams can't cost the billions that big league clubs cost. Today, I'm going to jump into the business side of minor league baseball, and try to determine what it would take to own a minor league franchise. If I was in the market for a minor league baseball team, there are three key questions I'd want answers to before getting serious:
How much does a minor league baseball team cost?
How much does a minor league baseball team make?
What is the value of a minor league baseball team?
Given that there are hundreds of different leveled MILB teams all over the country, in different markets with different draws, I realize that there are probably going to be a large variance in the numbers. As a small business owner, I want to get a general range of what it would entail financially to have my own team.
My interest in this type of story begins with Andrew Berlin, the owner of the Class A South Bend Cubs. When I interviewed Joe Hart, the President of the South Bend Cubs, he mentioned Berlin as being a wealthy business owner from the Chicago area who wanted to get a team of his own. Berlin got into the packaging industry in 1988, and oversaw massive growth and acquisitions in 25 years. As a big baseball fan, he purchased the then South Bend Silver Hawks in 2011, and they've since become a Chicago Cubs farm team.
How Much Does A Minor League Baseball Team Cost?
This question is next to impossible to get a straight answer. There's a huge disparity between AAA and A class teams, as well as regional specific values. A team that controls a local sports market like the Iowa Cubs can't always be directly compared to a single A team in a New York suburb that competes with the Mets and Yankees. It's very much apples to oranges.
Furthermore, I could not find any specific articles stating that "This new MILB owner purchased his team for $X," at least in my 2 hours of Googling. For what it's worth, The Sports Advisory Group does have a page for listings, but there aren't prices listed. It's not like shopping for a car or house. There aren't hard prices listed, and there are negotiations as well. I could find a list of top 20 MILB teams in terms of value, but I don't think that it comes down to a team being valued at a certain amount and you have to write a check for that number.
I think the answer comes down to being similar as if I asked "well how much does a car cost?" Are you looking for a basic sedan that costs $15 k, a top of the line pickup that costs $50 k, or a fancy $100 k sports car? There's a similarly large range for minor league baseball teams as well. Not Fangraphs lists that range as being $250k to $20 million.
How Much Does a Minor League Baseball Team Make?
Since teams don't typically post their numbers, this became a difficult question to answer.
I found this article from Sports Advisory Group from 2008, which outlines that the top 20 most valuable MILB teams pulled in $9.8 million in revenue, and average operating income of $3 million. In 2020 dollars, that's $11.67 million in revenue and $3.57 million profit. So we have our high end of the scale.
On that list of top 20 MILB teams from 2008, there are a couple of notables:
The Iowa Cubs were ranked 12th, with a value of $20.8 m, a revenue of $9.3 m, and an operating income of $1.8 m
Ranked 20th are my local Kane County Cougars: with a value of $16.4 m, revenue of $7 m, and income of just $.6 m
The top team was the Sacramento River Cats, valued at $29.8 m, revenue of $15.6 m and operating income of $8.5 m
The large range from 1st to 20th is very noteworthy. The Cougars were worth essentially half of what the top team was, and they are relatively close in ranking. How does this then compare to the 140 other minor league baseball teams? It's tough to know because numbers aren't posted.
I generated a spreadsheet, and discovered that among the top 20 teams, the average operating income (profits before taxes, interest, and depreciation) is 30% of revenue. The top teams had a profitability percentage of 45-54% of revenue, while some lower end teams were in the 8-12%. In terms of comparing profit to value, that number is 14%, but with a range of 3%-30%. So there can be a huge disparity. It's not like you can just buy a franchise that costs a certain amount, and know that you'll make 14% of that cost every year. Even if it is the average.
But to loosely answer this very open ended question, a top tiered minor league baseball team typically makes 30% of its revenue, and 14% of its value every year.
What is the Value of a Minor League Baseball Team?
So right off the bat, I googled the answer. MILB's website has an answer:
Going back to the Sports Advisory Group 2008 article, they say that the top 20 teams are worth an average of $21.2 million, which is $25.90 in 2020 dollars. That's the top 20 out of 160, or the top 12%. While I'd love a top tier team, I could settle for something a bit more average, which would likely put me in the range of $5-$10 million.
How much does a minor league baseball team cost? Millions, $5-$30
How much does a minor league baseball team make? $420,000 to $3.5 average annually
What is the value of a minor league baseball team? $3-$25 million