Billion-dollar status in sight for Blue Jays

Baseball team’s valuation near bottom of the league, Maple Leafs remain city’s most lucrative franchise

The last time Forbes magazine tallied the values of Major League Baseball teams, the Toronto Blue Jays checked in at $870 million, putting them 23rd out of 30 franchises.

The Leafs remain Toronto’s only billion-dollar franchise, while the New York Yankees lead a cohort of 11 baseball clubs valued at $1.2 billion or more. Will the Jays’ playoff run push the club to a10-figure valuation next season? Possibly. Not that success isn’t profitable. Jays attendance jumped to 2,794,891, up nearly 420,000 over last year. Since September, Sportsnet has been Canada’s second-most-watched network, its Jays-fuelled audience bump benefitting parent Rogers Media.

But winning is just one variable, which explains why the Leafs still lead the NHL in franchise value despite making the playoffs once since 2005.

Experts say a big market that’s willing to spend time and money on a team contributes heavily to its value. So joining the billion-dollar club won’t happen simply because the Jays made the playoffs once. They’d need to succeed in a long-term campaign to engage a massive market.

“It isn’t just a year-by-year, season-by-season issue,” says Drew Dorweiler, managing partner at the valuation firm Dartmouth Partners. “The Jays will have to win incremental new fans who continue to follow the team, and they very well might. There’s such mania surrounding this.”

In 2013, New York University professor and sports valuation expert Peter Schwartz pegged the Jays’ value at $950 million, and this week told Bloomberg that figure has probably grown by 50 per cent since then.

The rising price of broadcast rights has strengthened franchise values across pro sports, but while U.S.-based clubs only sign regional deals, the Jays’ TV rights span an entire country. In that sense, they have a bigger market than nearly every other MLB franchise.

“They are the sleeping giant,” says Thomas Hubbard, a professor of strategy at Northwestern University’s Kellogg School of Management. “With the possible exception of the Yankees, they have the largest potential customer base.”

Meanwhile, on-field success has boosted the club’s fortunes in the short and medium terms.

Acquiring Troy Tulowitzki and David Price cost them, with the Jays paying pro-rated portions of their $39.75 million (U.S.) combined salaries. But of Jays’ 30 most-attended home games, 25 came after the July 31 trade deadline as new talent helped them earn a division title.

Hubbard points out that in baseball, division champions are guaranteed three first-round games, all projected sellouts with the two teams involved splitting the gate revenue. He also expects the playoff run will translate into season ticket purchases, where even 1,000 extra sales can earn between $2 million and $4 million in revenue across a season.

But the Jays on-field success hasn’t boosted Rogers Communications’ share price, further illustrating the indirect relationship between immediate windfalls and lasting value. Even as the Jays climbed steadily through the standings, their parent company’s share price rose and fell, bottoming out at $43.61 on Sept. 14 and opening at $47 on Thursday.

According to Rogers’ second-quarter earnings statement, Rogers Media, which includes the Jays and the Sportsnet networks, brought in $582 million, up $107 million from same period last year but far behind Rogers’ wireless ($1.9 billion) and cable ($869 million) divisions.

But those numbers don’t include the late-summer success that swelled the team’s audience.

Sportsnet president Scott Moore says Jays’ TV audiences had grown 50 per cent between 2010 and 2012 before surging this year.

“The trade deadline happened and (viewership) exploded, but it exploded off of a base . . . We’re an overnight success in four years.”