Royals estimated franchise value at $1.2 billion, according to Forbes

The valuation has gone up 8 percent despite the RSN troubles.

The Royals are valued at an estimated $1.2 billion, according to this year’s MLB franchise value estimates by Forbes magazine. The estimate represents an 8 percent increase over last year’s valuation, and a 20 percent increase over the $1 billion purchase price from when owner John Sherman acquired the club in November of 2019.

According to Forbes, only three MLB franchises are worth less than the Royals - the Reds, Athletics, and Marlins. Overall, MLB franchises increased 12 percent in valuation, despite uncertainty over the broadcasting landscape. Diamond Sports Group, which holds the broadcast rights to 14 teams, including the Royals, filed for bankruptcy earlier this month.

Forbes estimates the Royals brought in $255 million in revenues, including $45 million from local broadcast rights from Bally Sports Kansas City. The Royals brought in an estimated $54 million in gate receipts. The Royals drew just 1.277 million fans last year, their lowest in a non-capacity-restricted, non-strike season since 1975.

Despite the disappointing gate, the Royals had an estimated operating income of $27.8 million, according to Forbes, the 15th-highest operating income in the league. The Mariners led the league in operating income at $84 million while the Mets lost an estimated $138 million. The Royals last year fielded a roster that had an estimated $112 million in player expenses. Sportrac projects Royals’ 2023 payroll to be $77 million, the seventh-lowest in baseball. Forbes also notes the Royals have a 23 percent debt-to-value ratio.

Teams overall had a major increase in revenues - largely due to lifting of capacity restrictions at ballparks, but also saw expenses rise.

The top-line gain was driven by a 64% increase in ticket revenue (including postseason and spring training), to $2.4 billion (the 2021 season started with nearly all ballparks under capacity restrictions) and a 35% increase in premium seating (suites and club seating) revenue, to $$1.16 billion. But operating income (in the sense of earnings before interest, taxes, depreciation and amortization) came in at an average of $17.7 million per team, down 20% from the previous season as player costs (salaries, bonuses and benefits) rose 13%, to $5.2 billion, and an increase in SG&A expenses.

The New York Yankees top the valuation list, worth an estimated $7.1 billion, followed by the Dodgers, Red Sox, Cubs, Giants, and Mets. The San Diego Padres, who have dramatically increase spending and lost an estimated $55 million last year, are worth an estimated $1.7 billion, 17th-most in the league.

Royals owner John Sherman indicated his desire to move the team downtown in a letter to fans last fall, a move that could produce more revenues and make the team even more valuable. He is asking for a $2 billion ballpark district that would include restaurants, shopping, hotels, and housing, with private financing for the district portion of the project, but there have been no details yet on how much of the project would be publicly financed. Sherman has said that “whatever revenue that we grow through the development of this ballpark of the district, we’re going to put it on the field to make ourselves more competitive.”