Forbes: Tigers lost $46 million in 2017 while franchise value continues to soar

Forbes.com has published its annual list of franchise values, and the Detroit Tigers franchise is worth an estimated at $1.225 billion as of April 2018. That represents an increase of $25 million, from $1.2 billion one year ago. The club ranks 19th on Forbes’ list, down one slot from last year.

The Tigers showed an operating loss of $46 million for the year, following a loss of $34.6 million for 2016. Detroit was one of six teams to lose money in 2017. The Miami Marlins were the biggest loser at $53 million, according to Forbes. The average baseball team had operating income of $29 million, with an annual franchise value of $1.645 billion. That is up 7 percent over the previous year.

The New York Yankees continued to lead the pack with an estimated value of $4 billion and annual revenue of $619 million. The Los Angeles Dodgers at $3 billion, Chicago Cubs at $2.9 billion, San Francisco Giants at $2.85 billion, and Boston Red Sox at $2.8 billion round out the top five.

The Tigers’ bigger operating loss comes despite an increase in annual revenue, to a franchise record $277 million in 2017. Gate receipts declined for the sixth consecutive season, down to $70 million after topping out at $98 million in 2012. Attendance was down from 2.494 million to 2.322 million over the one year span, representing a drop of 172,000 fans. Average attendance fell below 30,000 per game for the first time since 2005.

The Tigers also experienced the biggest loss in television ratings, with a 36 percent decline. Still, the Tigers continue to be a top five team in local TV ratings, and their annual contract with Fox Sports Detroit pays them the same annual amount of $50 million per season through 2021.

Salaries continued to be a big factor in the Tigers’ operating loss, with player costs of $215 million. The club paid a luxury tax for the second consecutive season, costing them $3.6 million. The Tigers will not have to worry about that next season, as they have reduced payroll by about $75 million for the 2018 season as the team goes into full-scale rebuilding mode.

Forbes notes that the Tigers have yet to receive the benefit from lucrative local television contracts that are sweeping through the majors. The next contract could double their current revenue from Fox Sports Detroit, or the team could even take an ownership interest in the network. Major League Baseball also provides each club with over $50 million in annual revenue from national television contracts.

The Tigers figure to turn a profit for the 2018 season. Between the guaranteed local television revenue, national television revenue, continued revenue sharing with major league baseball, sharply reduced payroll, and a loyal fan base, the red ink will turn to black the next time this annual report is made.

The long-term financial health of the Tigers is in good shape, for reasons we explained here. Detroit baseball fans continue to be among the most loyal in the nation, and the Tigers are the only game in town during the summer for advertisers wishing to reach that market demographic. When the Tigers can once again put a winning team on the field, attendance, TV ratings, and revenues will increase along with them.