There was a time when the Colorado Rockies were baseball’s fourth most valuable franchise.
The Blake Street Bombers had just come off their first postseason appearance in 1995, a mere three years into the team’s on-field existence. Financial World valued the Rockies in 1996 at $184 million – nearly double what owners had paid for the expansion franchise.
Though the team’s value has increased by 72 percent since then – to $317 million, according to Forbes – other teams have fared much better. Now valued 22nd among 30 teams, the Rockies are at their lowest ranking since public valuations began in 1993.
But things started looking up for owners Dick and Charlie Monfort when October rolled around.
Picked by nearly every expert and media outlet to finish dead last in the National League West this year, the Rockies substantially increased in value the moment they snatched the wild card berth from the San Diego Padres in a one-game, extra-inning playoff.
“Colorado has put a team together that’s doing well and to the extent it can continue, its value is likely to increase,” said Craig Parmelee, managing director of leisure, sports and media at Standard & Poor’s Ratings Services. “There’s no downside to the postseason for them.”
It’s unclear how high the Rockies’ value can go, though some venture it could reach $400 million. That would rank the team firmly at 14th – far from the $1.2 billion New York Yankees, who hold the top spot.
The fan base is there, too, though after setting a number of attendance records in their first years, the Rockies have been below the National League average since 2004. And their $54.4 million payroll is among baseball’s lowest, keeping expenses low.
“The advantage the postseason brings to the Rockies is mostly in the form of potential value if the owners do the right things to build and solidify the new fan base,” said Andrew Zimbalist, an economics professor at Smith College who writes on the business of baseball.
Victory boosts the tag
As the team vies for a World Series title against the Boston Red Sox, the third most valuable team according to Forbes and the second-highest payroll, financial experts say the Rockies’ worth can only grow with each postseason victory.
“It’s partly driven by playoff appearances and World Series championships,” Parmelee said, “and the more they can put under their belt, that drives attendance and revenues and the underlying value.”
Other medium- and small- market teams have seen their value increase substantially after playoff appearances, even more so with a World Series victory, Forbes data show.
“There is no magic formula here,” Zimbalist said. “Generally, the more people who get excited by the team’s postseason success, the more the team’s future revenue (and) general potential grows, giving it more resources to be aggressive in the players market.”
The value of the Florida Marlins, for instance, was $123 million in 1996. It spiked to $159 million when the team won the 1997 World Series, but dipped to $153 million the next year as owners dismantled the championship roster.
By 2002, the Marlins were next-to-last on baseball’s value list at $136 million. That changed when the squad beat the Yankees for the 2003 title, vaulting it to $172 million.
“With a World Series, a franchise certainly becomes more valuable, bringing in many more revenues in ticket sales, licensing agreements and concessions,” said Jeffrey Phillips, managing director of valuation and financials at Stout, Risius & Ross in Mclean, Va. “But it has to be sustainable. If it’s just a winning blip, then you’re back to where you were within two years.”
Fervor worth millions
But if winning teams can keep winning, the increase will hang around for more than a year or two, according to John Beamer, a writer for The Harball Times who studies the values of baseball teams.
“A postseason appearance certainly increases the revenue, profit and value of a franchise over a period of five to seven years,” Beamer said. “Roughly, a World Series win will add about $50 million to the Rockies’ value.”
That sort of happened to the Arizona Diamondbacks, whose value plummeted to $245 million after a third-place finish in 2000, then roared to $271 million when the team beat the Yankees in the 2001 World Series. A number of mediocre third- and second- place finishes kept the value from dropping again; this year’s division title means it will likely increase from its current $339 million.
The bottom line, Standard & Poor’s Parmelee said, is fan reaction.
“Market is one of the most important drivers of value,” he said. “With a substantial population per team and a baseball-minded market, where attendance is consistent and there are many sellouts month after month, a team will rate very high.”
So is next year the right time for the Monforts and their consortium of partners to consider selling the Rockies? Yes and no.
“It’s absolutely the optimum time to sell next year based on past performance,” Parmelee said. “It’s the point of peak value.”
Phillips thinks that if the Monforts want to sell, they should wait one more year so fans can flock back to the team.
“Buyers will want something they can look at,” Phillips said. “They have a good, young team, and with a payroll that’s not out of control, they’re more likely to get a good look.”
David Migoya: 303-954-1506 or dmigoya@denverpost.com
