Forbes Ranks Mets Highly

Forbes Magazine released their valuations of baseball's teams, and the Mets came in fifth. That's right, according to their numbers, the Mets are the fifth-most valuable team in baseball. Their current value of $747 million only trails the Yankees ($1.7 billion), Red Sox ($912 million), Dodgers ($800 million), and Cubs ($773 million). So maybe things aren't as bad as they seem?

Not quite.

Once you unpack the rankings, there are plenty of reasons to be just as depressed as the recent headlines suggest you should be. If these rankings are to be believed, the Mets are not in good shape.

For one, the Mets have a 60% debt-to-value ratio. Only the Rangers (66%) and Cubs (75%) have worse numbers in that department. The recent revelation that the Mets took a secret $25 million loan from Bud Selig's office make more sense now. It's very difficult to get any entity to loan you money once you start approaching the two-thirds debt-to-value ratio.

There are other signs of financial stress. Other than the Cleveland Indians (ranked 25th overall on the list), the Mets are the only team that has lost value over the past year (-13%). Inflation alone should have bumped them close to zero - like the Padres, Mariners, Jays, Royals and Tigers, who all gained between 0% and 3%. To lose a double-digit percentage in overall value, in the second year of a new stadium, is a problem.

The Mets had the second-worst profit margin last year, as their -6.2% operating income number was only worsted by the Tigers (-29.1%), who were working with a much smaller overall budget. Along with the Red Sox, who lost a paltry million dollars, these were the only three teams in baseball that lost money. According to Forbes, the cause is a 25% drop in gate receipts - is the product on the field going to change that trend at the gate this year?

A wrinkle comes from the Padres' site GaslampBall, Surprised that the report pegged the Padres as the most profitable team in baseball (+37.2 million), the site asked the team for a comment. Padres President/COO Tom Garfinkel obliged:

"The Forbes numbers are grossly inaccurate.  It's curious how they can get financial numbers for 30 private businesses.  The only answer is that they manufacture them.  Our EBITDA was positive, but after interest, taxes and depreciation there was a loss.  The team lost money on a cash basis in 2010."

In 2010, Garfinkel wanted to affirm that the team spent all the revenues they made, and that most teams in baseball did the same. Then again, his statement that, as "the revenues grow, the payroll will also grow," suggests that he has an obvious motive for attacking the Forbes numbers. He doesn't want the Padres painted in the same light as the Marlins, who also took in revenue sharing money and were shown to have had a positive operating income in leaked documents to deadspin this year.

And so it goes. The Mets, in the process of wooing investors, probably would also like to poke holes in the Forbes numbers. How a magazine might place a value on 30 private companies is a good question, but if any magazine could do it, it's probably Forbes.

Once again, we're stuck wondering where the truth is. That the investors in town reviewing the Mets documents reportedly don't like what they see is probably a strong sign. The Mets cannot be on great financial footing, even with considerable assets on their ledger.

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