Baseball's billionaires
Navigating today's economy can be trickier than explaining the infield fly rule. But for a handful of billionaires faced with faltering markets and grim economic data, baseball has been the key to staying afloat – for now.
By Forbes' latest count, eight of the 30 Major League Baseball teams are wholly or partially owned by billionaires. Another two 10-figure plutocrats run the corporations behind teams: the Chicago Cubs are controlled, for now, by billionaire Sam Zell's faltering Tribune Co., and the Atlanta Braves are owned by John Malone's Liberty Media Group.
Two-thirds of Major League Baseball teams either rose in value or remained flat last year, including those owned by billionaires, adding stability to their owners' fortunes while other components of their personal balance sheet crumbled. Also holding up are the values of the regional sports networks that carry big-market teams like the New York Yankees and Boston Red Sox, further helping their owners.
Red Sox owner John Henry has watched his asset management firm, J.W. Henry & Associates, deteriorate in value as the stock market crashed in the past year. Yet he debuted on Forbes' list of the World's Billionaires in March with a net worth of $1.1 billion.
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More than 90 percent of his fortune comes from baseball assets. The Red Sox are valued at $593 million (net of debt) this year, up 3 percent in a year. Henry purchased the team in 2002 with partners Tom Werner and Larry Lucchino. Today his company, New England Ventures, owns the Sox, Fenway Park and a majority stake in the lucrative New England Sports Network.
Forbes 400 mainstay George Steinbrenner has kept his $1.3 billion fortune steady with the New York Yankees. The Bronx Bombers are baseball's most valuable team at $1.5 billion, up $194 million in a year. But nearly all of team's valuation is leveraged; the Yankees borrowed $1.4 billion for their new stadium. The team also committed $425 million in long-term contracts for pricey free agents Mark Texeira,
and
in the off-season.
Making up for the debt on Steinbrenner's personal finance sheet is the lucrative YES Network, which the team owns 35 percent of. YES carries all of the Yankees to the tri-state area and beyond; cable providers pay more than $2 per subscriber to have it on their system.
Several owners lost their billionaire status because their teams did not represent enough of their fortunes. Los Angeles Angels of Anaheim owner Arturo Moreno was worth $1.1 billion last summer. By February his shares of CBS and Viacom had plummeted 65 percent and 45 percent respectively, and he'd lost more than a quarter of his real estate holdings and other investments. The Angels, meanwhile, were growing in value, jumping from $465 million in 2008 to $474 million this year.
Similarly, Baltimore Orioles owner Peter Angelos had $1.2 billion as of the Forbes list of the 400 richest Americans last September, but we estimate his investments outside the team fell at least 30 percent during the recent market turmoil. That drop kept him off our list of the World's Billionaires in March despite the Orioles' value staying flat at $250 million this year. Angelos' stake in the Mid-Atlantic Sports Network (MASN), which broadcasts Orioles and Washington Nationals games, adds millions more to his fortune.
Baseball teams as bankable assets may not be a trend for long. Baseball is the first sports league to begin play during the recession, and attendance in the first few weeks of the season is down 7 percent compared to last year. Even the notoriously rabid Boston Red Sox fans have yet to snap up season tickets at Fenway Park for the first time since 2003.
Also being slashed: player salaries. According to an April analysis by the Associated Press, 16 out of 30 MLB teams have already sliced their payrolls this season, saving a total of $47 million.
Last week Hicks Sports Group, the holding company of Texas Rangers billionaire owner Tom Hicks, defaulted on more than $500 million in loans, opening the door for banks to eventually assume control of the Rangers and force a sale.
The top five:
1. Theodore Lerner: Slideshow
2. John Malone: Slideshow
3. Drayton McLane Jr.: Slideshow
4. Michael Illitch: Slideshow
5. George Steinbrenner: Slideshow
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