16 May 2017
Last year we had the novel idea of asking what the White House would be worth if it was ever sold on the open market. The idea was to figure out what an asset — with significant historical and political value — could be worth when we use the principles of asset valuation.
Read more: What's the value of the White House?
This year, we set our sights on a more complicated target than the presidential structure at 1600 Pennsylvania Avenue. We wondered how one would determine the value of the World Series and, specifically, the Chicago Cubs who won the title for the first time in 108 years (breaking the longest losing streak in US sporting history). We chose the World Series because Chicago was also where we held our fifth Summit of the Americas, an event that brings together industry leaders from various specialist fields, such as real estate, valuation, construction and facility management.
Tangible and intangible assets
Forbes and Bloomberg had both tried to figure out what the historic victory is worth in monetary terms by looking at aspects such as the income generated through advertising, broadcast rights and other earning streams. We wanted to broaden the scope by determining the value of the World Series by applying the rules of valuation on tangible and intangible assets.
In the process, we assessed what the memorabilia could be worth, how much the Cubs franchise as a functioning business concern could be valued at and asked a life-long Cubs supporter to return to his home ground of Wrigley Field, as an appraiser rather than a fan.
This multifaceted valuation revealed a number of interesting insights as our three valuation experts pored over a number of public documents, trawled the Major League Baseball’s (MLB) online records and made various hypothetical extrapolations in a bid to find the an approximate value of the World Series and its 2016 champs.
- Valuation Expert: M Barden Prisant FRICS, President and Founder, International Art Advisors
- Expertise: Arts and Collectibles
Prisant examined recent pricing trends and collector values for several items, such as baseball cards, bases, bats, balls and apparel. Following the win, a number of items were auctioned. A pair of stadium seats, for example, were auctioned for $1,000 (See this similar set now on auction for $799). Or a base that sold for $101,237. Want to buy a patch of grass from the field? You could pay $135 for a six-inch square patch.
Not everything goes up in price, Prisant noted. An Ernie Banks baseball card could be worth more before the Cubs win than after, depending on peak interest. And that, he says, is because "sports memorabilia has two markets: collectors and fans. It’s the fans that drive up the prices." Determining the value is not just about items from the actual World Series win. Any collectible, such as a Javier Baez bat from 2014 that sold for $23,000, must be included in the valuation.
Estimate value for memorabilia: $144 million
Asset: The Chicago Cubs Franchise
- Valuation Expert: Bruce B Bingham FRICS, Managing Director, Berkeley Research Group
- Expertise: Business Valuation
Bingham, a Yankees fan, employed the three traditional methodologies to value the Cubs franchise: the cost, market and income approach. He looked at a range of aspects from stadium ownership and its bargain lease, to naming rights, broadcast contracts, advertising, the parking stubs and facilities. He found that payroll was the most significant expense and that the Cubs' salary payments increased approximately 50% over the last year with further escalations likely.
Given that all the approaches are significantly subjective and that assessments were made on the available public documentation, Bingham concluded that $2.3 billion is a likely figure for the Cubs franchise as a whole. His parting shot was that the "ego value" when buying a sports franchise cannot be ignored, especially in the case of the historic Cubs victory.
Estimated value of the Cubs franchise: $2.3 billion
Asset: Wrigley Field
- Valuation Expert: Joseph J Calvanico FRICS, Managing Director, Loop Capital Financial Consulting Services
- Expertise: Real Property
Calvanico is a life-long Cubs fan and season-ticket holder who took great delight in returning to his beloved Wrigley Field, not as a fan, but as an appraiser. In assessing the actual structure, he considered the surrounding neighbourhood, any construction and improvements that occurred in the off season over the last few years and also researched what land the stadium is built on. An interesting fact about the land: If Wrigley Field were ever demolished and a new structure replaced it, the new building would still have to have "Wrigley" in its title as the name is linked to the land it is built on.
Joseph J Calvanico FRICS at Wrigley Field
Taking all his calculations and the three aforementioned valuation methodologies into account, as well as using comparable transactions, such as the sale of the Dodger Stadium in 2012, Cavanlico determined Wrigley Field’s property value over $200 million if it were sold today.
Estimated value for Wrigley Field: $225 million
Pulling all the aspects together, the three valuation experts reiterated the hypothetical approach taken to deliver this valuation. The total value as calculated by our three experts came to $2,525 billion.
Like valuing the White House, which was Barden Prisant’s idea, this valuation was theoretical. It’s not about the actual number but rather about illustrating how various elements can provide insight into transparent and consistent asset valuations as a basis for efficient financial markets.
We aspire to do other valuations over the next few years, each a little more complicated than the next. We already have our sights on other US landmarks, including the Statue of Liberty and the Grand Canyon.
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