Ravens' worth may exceed $400M Experts agree stadium makes team valuable

November 05, 1998|By Jon Morgan | Jon Morgan,SUN STAFF

They play in a state-of-the-art stadium, and in a league on a roll. And if they were to be sold, the Ravens could fetch $400 million or more, according to experts on sports franchise value.

That would represent impressive appreciation for owner Art Modell, who bought the franchise in Cleveland for $3.9 million in 1961. However, Ravens executive vice president Jim Bailey said there are no plans to sell.

Like the Orioles, the Ravens owe much of their worth to the generosity of taxpayers. Both teams are playing in stadiums built by the state and crammed with money-making skyboxes and other amenities.

"Mr. Modell owes a great debt of gratitude to the taxpayers," said Marc Ganis, a Chicago-based financial consultant and owner of SportsCorp, which is active in the sports business. He puts the worth of the franchise at $350 million or more.

"Make no mistake about it. This is one of the sweetest deals provided by government for a team owner," Ganis said of the $223 million stadium deal.

But he said the Ravens probably wouldn't attract the $530 million that was paid for the new Cleveland franchise, for several reasons related to specifics of that recent expansion deal. And $54 million of that price wasn't for the team; it went toward stadium construction.

Michael Megna, a consultant with Megna Valuations of Milwaukee, also puts the worth of the Ravens at more than $300 million.

"I don't think you'd be invited to breakfast if you didn't put $300 million on the table and $400 million is not a bad number," said Megna, who specializes in evaluating franchise values for buyers and sellers.

"They are getting a lot of money from that stadium. That's where the bucks are," Megna said. "It's a license to steal. The revenue figures are mind-boggling."

Andrew Zimbalist, an economist at Smith College and an expert on sports finances, said the value could hit $500 million.

"Depending on what the balance sheet looks like, that team could be worth $400 million to $500 million," said Zimbalist, author of "Baseball and Billions" and co-editor of "Sports, Jobs and Taxes."

"There are two things that are driving this. One is the new TV contract. It's an enormous amount of revenue. The other thing that drives this is the new stadium revenue," he said.

NFL teams share among themselves the revenue made from network television and ticket sales. But the home franchise keeps most of what's generated from in-stadium ads, sales of beer and other concessions, and luxury boxes.

Pursuit of those lucrative items is largely to blame for the spate of team relocations in recent years -- including the Browns' move to Baltimore after the 1995 season.

An analysis of projected revenues by The Sun shows the team making virtually the same amount of money from its 7,900 club seats and 100 skyboxes -- about $21 million a year -- as it gets from the other 60,000 seats in the stadium.

Toss in the money made from concessions, non-NFL events at the stadium, parking, and ads around the seating bowl, and the Ravens could very well be making $35 million or more from the building. The team paid the state $10 million for the right to resell the name to a sponsor, a deal that would bring $2 million to $3 million a year.

On the expense side, the Ravens' lease with the stadium authority is one of the most team-friendly in sports. The franchise, which contributed the equivalent of $12 million toward construction, keeps all revenue derived from games.

Instead of rent, it reimburses the state for the cost of operating the stadium, now estimated at $5 million to $6 million a year. The team also books non-NFL events at the stadium and splits the profit with the state 50-50.

Maryland leaders contend the stadium provisions were essential to lure a coveted NFL franchise after the Colts moved to Indianapolis. In 1986, the legislature approved public funding, through lottery-backed bonds, for the twin-stadium Camden Yards complex.

"The reason we were going to get a team in Baltimore was the economics of our package would take a team [that was] in a poor financial position and improve it," said stadium authority chairman John Moag.

The Orioles have seen proof of their value rising with a new stadium. The team was purchased for $70 million in 1988. It moved into Camden Yards in 1992 and was sold for $173 million in 1993 -- a $100 million appreciation in five years.

Pub Date: 11/05/98

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