Why Minor League Baseball Franchises
-
Minor League Baseball’s 20 most valuable teams
have increased almost 35% since 2013, now worth
an average of $37.5 million. The buying and selling
of these franchises in recent years has shown that
there has been a surge in franchise values.1
-
There is also a trend in large sports management
companies such as Endeavor Group Holdings,
LLC, as well as private equity firms coming into
this space this will only drive valuations.
-
Endeavor Group Holdings is looking to partner
with private equity firm, Silver Lake Partners, to
purchase up to 17 minor league baseball teams in
total. It is looking to be an upwards of a $300 million
investment by the time Silver Lake and Endeavor
buys the teams and funds needed facility upgrades
to meet the new MLB specs. 2
-
The Triple-A affiliate of the San Francisco Giants,
the River Cats in the 2015 season averaged more
than 9,000 fans a game, with a total attendance
of almost 675,000, one of the highest in the
minors. The River Cats generated an estimated
$11.5 million in ticket revenues last season, over
50% of their total revenue.3
-
Pre-pandemic, Minor League Baseball and its
160 clubs in the U.S. and Canada combined for
a record $85.7 million in licensed merchandise
sales in 2019. Stadiums also make a lot of
money through hosting non-baseball events.4
-
According to Geoff Iacuessa President and
General Manager, Class AA, revenue from
non-baseball events grew about 40% from
2019 to 2020. The Dayton Dragons, which has
30 suites at its state-of-the-art Fifth Third
Field, generate as much as $2.5 million in
sponsorship revenue per season.5
-
Most franchises have a natural annual
appreciation of 1-5%, regardless of annual
financial performance. Franchises with strong
financial performance however, can have
higher appreciation rates.6
-
Long term payout is where investors make
their money, The costs of investing in a
franchise are low due to parent clubs
supplying the players, so salaries aren’t an
expense. Many ballparks lure teams from
other cities, so rent is either low or nonexistent.
-
In the minors, player costs can range from $10
to $15 million per season for scouting, salaries
and bonuses are paid for by big league affiliates.7
For this reason, there can be wide profit
margins, and many teams can put those
expenses that they would put into players, right
back into stadium operations.
-
Social media is the way to let fans know
everything that is going on. Through Facebook,
Instagram, Snapchat, and Tik Tok, social media
and technology helps to broaden audiences,
to people of all age groups through digital
marketing.
-
Instagram and Snapchat live streams play a
significant role in audience engagement.
With Instagram you are also able to post
pictures and updates of the players and
different games approaching, and posting
pictures of the lineups on game days and if
they are away, post pictures of the stadium.
-
Instagram is additionally used to inform the
public about different promotions that are
going to be happening at the ballpark. Twitter
is also used in the same way as Instagram
but you can also do play by play on Twitter
which is great for people that can’t be at the
game. You can also post different information
about the team on Twitter, such as roster or
lineup changes.8