Monday, September 21, 2009

What are the Chicago Cubs Worth?

In an interesting article from Yahoo! Sports, the different revenue (income) streams from the Chicago Cubs are broken down. (Note that David Berri, lead author of The Wages of Wins is quoted in this article.) One see's that the Cubs generate an average of about $2 million per game when accounting for the various streams of revenue, which works out to over $160 million per year. (Of course costs must still be deducted from the overall revenues). Thus the potential value is the discounted stream of net income (i.e. profit) over the time period the new owner is planning on owning the club, plus the discounted future value of the club upon sale of the club, and you can start to see how an $850 million offer is not out of the lines of good business decision making.

Notice that gate revenues are the majority of the Chicago Cubs overall game day revenues.

No comments: