Lakeland, Fla. — The minute the words came out of his mouth, even he had to know they were going to come back to bite him.
Toward the end of a 30-minute press briefing in a resort hotel outside of Disney World Thursday, Major League Baseball commissioner Rob Manfred was asked if owning a big-league baseball team was a good investment?
Manfred replied: “We actually hired an investment banker, a really good one, actually, to look at that very issue. If you look at a purchase price of franchises, the cash that’s put in during the period of ownership, and then what they sold for, historically, the return on those investments is below what you get in the stock market, with a lot more risks.”
Hoo-boy. It was only a matter of time before the economists had a field day with that.
Forbes senior contributor Maury Brown promptly posted three examples disproving Manfred’s investment banker’s findings.
►Frank McCourt bought the Los Angeles Dodgers for roughly $430 million in 2004 and sold it for $2.3 billion in 2018. Adjusted for inflation, that’s a $1.73 billion profit.
Had McCourt invested the $430 million in Standard and Poor’s, it’s adjusted value would’ve been $1.334 billion in 2018.
►Jeffrey Loria bought the Miami Marlins for $158.5 million in 2002 and sold it for $1.2 billion in 2017 – an adjusted profit of $952.3 million. Had he put his money in S&P, it would have been worth $530.56 million in 2017.
►David Glass bought the Kansas City Royals for $96 million in 2000 and solid it for $1 billion in 2019 – an adjusted profit of $834.26 million. Had he invested in S&P in 2000, it would have grown to $321.64 million by 2019.
Back in 1992, Mike Ilitch bought the Tigers for $82 million. According to Forbes, the franchise was valued at $1.26 billion in 2021.
The Athletic’s Evan Drellich pointed out that PitchBook Data reported that all four major U.S. sports leagues have outperformed S&P, with baseball franchises’ return on investment hitting 669% over S&P.
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On average, teams are worth $1.45 billion more today than when they were purchased.
“Twenty years ago MLB franchises were UFOs: unidentified and financially overlooked,” player agent Scott Boras told the Athletic Thursday. “Today that UFO has landed in the clubhouse with a true definition: Ultimate Financial Opportunity. Players are aware teams are coveted by investors, and smart owners will not sell.
“All teams carry a minimum billion-dollar franchise valuation. Hundreds of investors want the opportunity to be a part of the MLB market.”
Manfred’s ill-conceived characterization of franchise valuation served to dim his message from what otherwise might have been an encouraging session.
The owners plan to present a new economic proposal to the players association in New York on Saturday. It will be a proposal that Manfred characterized as “better in every respect than the expired contract.”
MLB lockout talks to resume Saturday after 11-day break
Manfred said the owners have made concessions to players demands in several areas, including a draft lottery, “significant” increased minimum wages, a bonus pool for the top non-arbitration eligible players and removing draft pick compensation on free agents.
Unfortunately, Manfred’s quote about the stock market being a better investment than buying a baseball team got more play out of the press conference than the proposal. Unfortunate because, even with the misstep, Manfred seemed sincerely committed to at least creating momentum toward a new collective bargaining agreement.
“It is part of my job to get us to an agreement that gets the game on the field,” he said. “I take that responsibility really seriously. It is my responsibility to do everything I can to reach an agreement.
“We are going to make a good-faith, positive proposal in an effort to move the process forward. Whether or not that happens is a part of the process. I just don’t know. But this is a good proposal.”
It is expected that spring training will be officially delayed following the bargaining session on Saturday. Which means Grapefruit League and Cactus League games could be in jeopardy. Manfred said clubs would not sanction the use of minor league players to play in those games.
“I don’t intend, and the clubs don’t intend to play what would otherwise be a Major League activity with minor league players,” he said.
chris.mccosky@detroitnews.com
Twitter: @cmccosky