The New York Yankees are worth a Major League Baseball-high $2.85 billion after a group led by basketball Hall of Fame player Magic Johnson bought the Los Angeles Dodgers in a $2.3 billion transaction, according to an estimate by a media analyst.
Tony Wible, a Philadelphia-based analyst who covers media companies for Janney Montgomery Scott LLC, said his valuation was based on the number of television households in the team's designated market area, or DMA.
“We believe the television rights are the main driver behind the valuation of sports teams,” Wible said in a note to clients that focused on Liberty Media Corp., owner of the Atlanta Braves. “Therefore, we can compare transaction multiples based on DMA size.”
The Dodgers transaction translates to $386 per television household (Los Angeles has about 5.57 million TV households). Previous transactions for Major League Baseball teams during the past three years have been at valuations of $229 to $491 per household, with an average of $315, Wible wrote.
Using the same $386 number and multiplying it by the New York area's 7.39 million TV households yields a $2.85 billion value.
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The Yankees' success -- they have qualified for the playoffs in 15 of the past 16 seasons and won five of their record 27 World Series in that period -- might make them even more valuable, Wible said.
The Dodgers, who last won the World Series in 1988, missed the playoffs the past two seasons after qualifying for postseason play in 2008 and 2009.
Johnson and a group that includes Guggenheim Partners Chief Executive Mark Walter also obtained Dodger Stadium and the land around the ballpark in the transaction announced two days ago. Yankee Stadium, which opened in 2009, cost $1.1 billion. Wible's valuation of the franchise didn't include the ballpark or its regional sports network, YES.
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The Dodgers, who have a broadcast contract with News Corp. (NWSA)'s Fox Sports, might land at least $4 billion over 20 years in their next agreement, said former CBS Sports President Neal Pilson. The team's deal with Fox Sports unit Prime Ticket ends after the 2013 season.
Johnson and his partners could choose to start their own regional sports network modeled after the Yankees, who operate the YES Network.
Forbes values the Yankees at a baseball-high $1.85 billion. It listed the Dodgers' worth at $1.4 billion.
The Dodgers' sale price was more than twice the previous record paid for a U.S. sports franchise, the $1.1 billion developer Stephen Ross spent for the National Football League's Miami Dolphins.
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Also vying for the Dodgers were groups led by billionaires Steve Cohen, who runs hedge fund manager SAC Capital Advisors LP, and Stan Kroenke, who owns football's St. Louis Rams, hockey's Colorado Avalanche and Arsenal of English soccer's Premier League.
“This interest in this franchise and its historic sale price are profound illustrations of the great overall health of our industry,” Bud Selig, commissioner of baseball, said in a statement.
--Bloomberg News--
