Green Sox

How much are the Boston Red Sox worth? A Globe business columnist does the math, based on the recent sale of a 1 percent stake in the team. The answer: $1.54 billion, not counting the premium put on owning full control.

That's more than double the $700 million Henry, Werner and Otten put up to buy the team in 2001-02. No wonder Henry had no problems with the Matsuzaka posting fee. It was just 3.5 percent of the team's total value.

Comments

[Hudson]

I'm not buying the math in this article entirely. The writer assumes that the price would be 100 times what a 1% share is worth, or maybe "even higher" if a buyer paid a premium for a majority, controlling stake.

But generally one gets a discount for buying in bulk, right? And if all the shares were put on the market, that would make them less scarce, and lower the price.

$1.5 billion doesn't seem totally out of line for a franchise with international recognition and a very reliable annual revenue stream. But the reasoning used to arrive at that price is a little suspect to me.

[Lar]

Also, it's supply and demand.. when supply is "100%" or whatever, the value should go down to some stablizing point..

Way to extrapolate on one data point!

[Paul SF]

It did to me at first, but the premium logic does hold true. The Sox paid $250 million to buy out the 43 percent in shares controlled by the limited holders, and $430 million for the 57 percent controlling interest (plus $20 million in asummed debt to make $700M).

I think he should have at least mentioned, though, that on an individual basis, anything tends to be higher than on a bulk scale.

[Rob (Middletown, CT)]

So the Yanks are worth, what, $2 billion? $3 billion?

Yeesh. Only a few years ago I remember the numbers being ~$700 million for the Yanks and ~$400 million for the Sox.

Back in my day, we rode horses... ;)

[Nick-YF]

Wasn't it just this past season that the Yanks were valued at $1 billion. This seems too high for the Sox.

[Seth]

That is a large jump from where forbes had them not too long ago.
http://www.forbes.com/lists/2006/33/330700.html

Maybe the controlling party overpaid to get out a minority owner they did not want.

[Paul SF]

Very possible, Seth. The columnist clearly oversimplified the possibilities of the situation. Still, a 100 percent increase in four years, thanks to a World Series win, vast improvements to Fenway, skyrocketing popularity of NESN... I could see it.

[Vic SF]

If I'm not mistaken, the Yankees don't own Yankee Stadium. Will they own the new stadium being built?

The fact that they don't own the current stadium somewhat 'depresses' the franchise value, and could explain to some degree why the Red Sox have closed the gap in valuation (if in fact they really have). I expect a big jump from whatever level the Yankees are currently valued once the new stadium is completed.

[Seth]

I agree with the new price because it is far more accurate because cash changed hands on that valuation. Its the best way to tell. Now it would be worth to overpay a minority interest to get a higher valuation in order to get a better rate on debt service (posting fee comes to mind) and increase their ability to take on more debt if they want.

[Andrew]

I can't imagine the Yanks won't own the new Stadium. They're paying over $800 million for it.

[dc]

...assessing the value of a ballclub is interesting and unusual to say the least...the simple value of anything is what someone is willing to pay for it...in other words is there some bored mega-millionaire [or gang of investors] out there that might pay the sox in excess of $1b for the sox franchise?...it's a small market of them, but probably...