... for 1 Billion Dollars...

 

 

Bought the team for $96 million about 20-25 years ago... 

That's called return on investment, kids.

For the Royals?  Better of buying a billion McDonald's cheeseburgers.

 

... for 1 Billion Dollars...

 

 

Bought the team for $96 million about 20-25 years ago... 

 

And people say there is risk for these guys....no chance there is risk. Zero.

CC to Jim Pohlad. Strike while the iron is hot, my friend!

1 Billion dollars!!!!

 

 

I think that works out to around 10% a year appreciation, compounded across 25 years. A good investment, but nothing totally out of the ordinary in the business world.
 
I disagree with what Mike said about no risk. The risk is baked into the above appreciation. We look back now and see that the investment worked out. But truly low-risk investments carry much lower returns. In 25 years we've gone through some major ups and downs in the economy - there was no guarantee that 2008 wouldn't turn out much worse than it did, for instance.
 
I don't side with the Tycoons. But I do try to understand how they think.
 

CC to Jim Pohlad. Strike while the iron is hot, my friend!

And whoever bids the highest will be doing so in a hopes or expectations of good return on investment too. A charity that wants to win pennants for the masses will not be that high bidder. It just won't.

 

I think that works out to around 10% a year appreciation, compounded across 25 years. A good investment, but nothing totally out of the ordinary in the business world.
 
I disagree with what Mike said about no risk. The risk is baked into the above appreciation. We look back now and see that the investment worked out. But truly low-risk investments carry much lower returns. In 25 years we've gone through some major ups and downs in the economy - there was no guarantee that 2008 wouldn't turn out much worse than it did, for instance.
 
I don't side with the Tycoons. But I do try to understand how they think.
 

And whoever bids the highest will be doing so in a hopes or expectations of good return on investment too. A charity that wants to win pennants for the masses will not be that high bidder. It just won't.

 

Name the last team sold not for huge profits. I'll wait. Forever.

 

Name the last team sold not for huge profits. I'll wait. Forever.

It's true. Been good run.

The sale price gives us some insight into the baseball business.

 

When buying a corporation, buyers consider the future NET PROFIT value of the franchise for the next four years.

 

Using standard models, a $1,000,000,000 sales price today means the Kansas City ownership was took a profit of $150,000,000 over the past year if you assume a rather ridiculous 10% growth rate. With lower growth rates, which I would assume is the case in the calculations, the Royals took even more profit for the team to be selling at a billion.

 

Most of us would not debate that the Twins take in more cash than the Royals in a typical year.

 

Enjoy!

 

 

Edited August 31, 20197 yr by Doomtints

Shows how the divide has grown between the haves and us that sit in the cheap seats. Wow. One billion for the Royals.

 

Nothing against Kansas City, and they did do the World Series thing, but they always fight (worse than Minnesota) being a lesser (i.e. cheap) team in the game of baseball. Great Stadium, though.

 

One billion dollars.

 

When a franchise talks of losing money, we have to look at what offsets any of those losses...take a hit in one business to lessen tax payous in another is an example.

 

So what could the Twins be worth. And doesn't Minnesota get a piece of THAT action if the team ever sells by the Pohlads, or do they have a limit on that payout?

 

One billion dollars for the Royals. Be interesting to see what the new owners 10% share of the Indians brings him back to offset this purchase. That is going to be an interesting hit to the Indians bottom line!

https://www.forbes.com/mlb-valuations/list/#header:operatingIncome

 

The Royals sold for just about what Forbes valued them at.  Twins are valued at $1.2 billion, which is about a 10% growth in value since 1984.

 

Interesting the Twins Operating Margin last year was the 6th lowest in baseball, with 3 teams losing money.

 

 

 

CC to Jim Pohlad. Strike while the iron is hot, my friend!

If the Royals are worth a billion, the Twins are worth $1.2 billion +

 

Shows how the divide has grown between the haves and us that sit in the cheap seats. Wow. One billion for the Royals.

 

Nothing against Kansas City, and they did do the World Series thing, but they always fight (worse than Minnesota) being a lesser (i.e. cheap) team in the game of baseball. Great Stadium, though.

 

One billion dollars.

 

When a franchise talks of losing money, we have to look at what offsets any of those losses...take a hit in one business to lessen tax payous in another is an example.

 

So what could the Twins be worth. And doesn't Minnesota get a piece of THAT action if the team ever sells by the Pohlads, or do they have a limit on that payout?

 

One billion dollars for the Royals. Be interesting to see what the new owners 10% share of the Indians brings him back to offset this purchase. That is going to be an interesting hit to the Indians bottom line!

Hennepin County gets a share if they sell, but that provision is already expired or nearly expired. It started at 18% and declined 1.8% for 10 years. I'm not sure when the clock started, when the bill passed or when the stadium opened. 

Edited August 31, 20197 yr by howeda7

My god, think how much beer you could buy with that money. I'm not just talking Miller Lite, either. I'm talking the good stuff, like Heineken. Forget the team; just buy the stadium, seal the exits, then fill it with beer!

Edited August 31, 20197 yr by jimbo92107