Forbes Magazine's finding that the New York Yankees are baseball's most valuable franchise is no big surprise. According to Forbes, that has been the base every season since the magazine started rating franchise values 14 years ago.
The surprise is the staggering gap between the value of the Yankee franchise and every other team in Major League Baseball. Forbes values the Yankees at $1.7 billion. The Red Sox, the second-most valuable franchise, are worth $912 million. That is an unbelievable difference of 86 percent. According to Forbes, back in 1998 the Yankees were only 12 percent more valuable than the then-No. 2 Baltimore Orioles.
Forbes calls the Yankees "a three-engine money-making machine."
The baseball team generated $325 million in revenue from regular-season tickets and luxury suites in 2010. The YES Network, the team's 34%-owned regional sports channel, is the most profitable RSN in the country and had over $400 million in revenue last year. The Yankees own a stake in Legends Hospitality Management, which manages stadiums, and generates $25 million in operating income. The enterprise value for the Yankees, YES and Legends is $5.1 billion. Although highly leveraged with $1.6 billion in debt (including Yankee Stadium's PILOT bonds), the team's enormous cash flow has easily covered the $64 million in stadium debt service payments.
Forbes pointed out that baseball as a whole seems healthier than it has ever been, with the average value of a franchise at an all-time high of $523 million. The only teams which fell in value from last season are the New York Mets, Cleveland Indians and San Diego Padres.