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Forbes: Team values rose 4 percent in the last year

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Forbes has released its annual team valuations report. It estimates that the average Major League Baseball team rose in value 4 percent from last year to $1.85 billion. That’s the smallest annual appreciation since a 2 percent rise in 2010, but the never-ending increase in team value remains pretty astonishing. Forbes’ data shows that the average team value is up 400 percent from a decade ago. An investment in the S&P Index over that time rose less than 2.5 times before dividends.

Forbes, not surprisingly, estimates that the New York Yankees are baseball’s most valuable franchise at $5 billion, up 9 percent over last year and 47 percent more than the No. 2 Los Angeles Dodgers at $3.4 billion. The Boston Red Sox are third at $3.3 billion followed by the Chicago Cubs ($3.2 billion), San Francisco ($3.1 billion), the New York Mets ($2.4 billion), St. Louis ($2.2 billion) and Philadelphia ($2 billion).

Miami was dead last at $980 million, which is actually a drop of $20 million from 2019, when all clubs were valued at at least $1 billion. Also near the bottom were the Royals ($1.025 billion), the Rays ($1.05 billion), the Reds ($1.075 billion), and the Athletics ($1.1 billion).

How accurate are these valuations? Eh, hard to say. MLB and its teams laugh it off, saying that Forbes has no idea what it’s talking about, but then again, Major League teams do not open their books for anyone and to the extent certain clubs have annual reporting requirements like the Atlanta Braves, who offer a tracking stock in the team, the information is only partial. If MLB has issues with Forbes, it’s never put up the goods to actually refute it. Either way, the true driver of team value — franchise sales, which represent what someone is actually willing to pay for a team — are rare enough that it’s hard to extrapolate where things truly are.

Still, Forbes has generally had a good take on the overall trends when it comes to ever-increasing franchise value, so it’s worth noting all of this as a broad gauge.

Red Sox employees “livid” over team pay cut plan

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Even Drellich of The Athletic reports that the Boston Red Sox are cutting the pay of team employees. Those cuts, which began to be communicated last night, apply to all employees making $50,000 or more. They are tiered cuts, with people making $50-99,000 seeing salary cut by 20%, those making $100k-$499,000 seeing $25% cuts and those making $500,000 or more getting 30% cuts.

Drellich reported that a Red Sox employee told him that “people are livid” over the fact that those making $100K are being treated the same way as those making $500K. And, yes, that does seem to be a pretty wide spread for similar pay cuts. One would think that a team with as many analytically-oriented people on staff could perhaps break things down a bit more granularly.

Notable in all of this that the same folks who own the Red Sox — Fenway Sports Group — own Liverpool FC of the English Premier League, and that just last month Liverpool’s pay cut/employee furlough policies proved so unpopular that they led to a backlash and a subsequent reversal by the club. That came after intense criticism from Liverpool fan groups and local politicians. Sox owner John Henry must be confident that no such backlash will happen in Boston.

As we noted yesterday, The Kansas City Royals, who are not as financially successful as the Boston Red Sox, have not furloughed employees or cut pay as a result of baseball’s shutdown in the wake of the COVID-19 pandemic. Perhaps someone in Boston could call the Royals and ask them how they managed that.