Major League Baseball (MLB) is a massive business. The league and the teams participating are not public companies, meaning there is no obligation for them to reveal their financial spreadsheets to the public and MLB fans. But that hasn’t stopped some savvy finance professionals from sourcing data from secondary sources and pulling together a bigger picture.
The crew over at Forbes recently calculated that an average MLB team is worth just short of $2 billion, with above 50% of teams valued above $1.5 billion. With all of this wealth in the game, it’s no surprise then that a lot of it comes from partnerships.
MLB has been driving the attention of late, with many companies jostling for a slice of the action, including gaming company Entain, which is breaking into the market and offering a Canadian sportsbook through their renowned PartyCasino brand.
TV Deals
TV deals are a lucrative source of money for pro sports around the globe, and the MLB is no different. Major League Baseball signed an eight-year deal in 2012 with ESPN, as well as deals with Fox and Turner Sports. In fact, Fox recently put pen to paper on a seven-year partnership that will start in 2022. This deal is attractive because the contract is valued at 50% more than the previous deal, highlighting the increasing value of the League to broadcasters. This should be reflected in other deals that are set to be renewed, namely with Disney’s ESPN and Warner’s TBS.
Let’s not forget that smaller localized TV channels pay handsomely as well. Some MLB teams own their own sporting networks. An example in point is SportsNet LA, the channel where you can exclusively watch home Dodger games.
One reason that sporting Tv deals are so valuable is because of the growing trend in Netflix and other streaming sites. Sport is one of the only viewing experiences that is watched live by a mass audience, making commercial breaks during these sporting occasions prime real estate for marketers willing to pay through the roof.
Licensing Agreements
Another source of revenue for MLB is licensing agreements. Baseball has struck deals with the biggest brands in sport, namely New Era Cap Company, and Nike, which provide apparel to fans and players. Sales figures are not posted publicly, but secondary sources suggest these sales are constantly increasing. Similarly, gaming companies wanting to create video games in the MLB name have to pay significantly to do so.
Sponsorships
MLB boasts some of the biggest company sponsorships in all of sport. For example, Amazon Web Services, Apple, Bank of America, and MasterCard are all involved with sponsoring aspects of the League. Total sponsorship revenue was close to $900 million in 2017 alone. And that doesn’t include stadium naming rights which bring in colossal amounts of money each year. The Mets’ Citi Field name draws in around $400 million over two decades.
