The Margin: Are the Chicago Cubs really worth $2.5 billion? Some back-of-the-napkin math says so

The defending World Series champion Chicago Cubs are just two games over .500 in this still-early 2017 season, far from the start that the formerly lovable losers had at this point in their historic run last year. Their middling record simply means that assessing the Cubs’ “value” right now depends largely on who you ask.

Three professionals, however, brought together by a global real estate and land management trade group called the Royal Institution of Chartered Surveyors, or RICS, have this month engaged in a largely for-fun valuation exercise for the Cubs.

The appraisers considered revenue stream but other tangible and intangible assets, too. Using public documents, trawling Major League Baseball’s records and leaning on hypothetical extrapolations, they landed at a sum of about $ 2.5 billion for the Cubs after the team snapped a 108-year championship drought with a Game 7 win over the Cleveland Indians last November.

That’s a lot of ballpark peanuts (and a couple of the micro brews that took over the Old Style taps at Wrigley Field).

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The same group last year assigned an estimated value to the White House and is aspiring to do more hypothetical valuations over the next few years, including the Statue of Liberty and the Grand Canyon.

The Cubs breakdown looks like this:

M. Barden Prisant, president and founder of International Art Advisors in New York, considered Cubs’ memorabilia for his part of the exercise. Prisant examined recent pricing trends and collector values for baseball cards, bases, bats, balls and apparel. After the World Series win, a pair of stadium seats, for example, were auctioned for $ 1,000 and a base sold for $ 101,237.

Not everything goes up in price, Prisant noted. A baseball card of Ernie Banks — the beloved “Mr. Cub” who played from the 1950s to ’70s and died in 2015 — could be worth more before the Cubs’ win than after, depending on peak interest. And that, Prisant said, 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, was included in the valuation.

Prisant’s estimated value for total known Cubs’ memorabilia: $ 144 million.

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Bruce Bingham, who handles business valuation as a managing director at Berkeley Research Group, took a look at the Chicago Cubs franchise. Bingham, a New York Yankees fan, no cheap franchise itself, employed these traditional methodologies to value the Cubs: 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 past year with further escalation likely. 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.

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Acknowledging subjective inputs and that assessments were made on the available public documentation, Bingham offered a possible figure for the Cubs franchise as a whole: $ 2.3 billion.

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During many years languishing in last place and a few postseason runs that came up inches short, it was loyalty to Wrigley Field, the second-oldest MLB stadium after Boston’s Fenway Park, that often kept the fans coming to home games. The stadium and its surrounding neighborhood have had a few nips and tucks under the Ricketts’ family ownership, drawing mixed reviews from Chicagoans.

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Enter Joseph Calvanico, a managing director at Loop Capital Financial Consulting Services, for his assessment of the property where the Cubs play their home games. It’s increasingly a packed concert venue, too.

Season-ticket-holder Calvanico 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 neighborhood, construction and improvements that occurred in the off-season over the past few years and also researched the 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. He also considered the sale of Dodger Stadium in 2012 as a reference.

Cavanlico’s estimated value for Wrigley Field: $ 225 million.

The total of these three components gets close to $ 2.5 billion.

RICS is attempting to illustrate that value is derived from more than drawing up a ledger of income and expenditures. Asset valuations provide insight to the complexity of what can drive the value of billion-dollar businesses, especially in the world of competitive sports, the group said.

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