MLB Values, Football Trades: Sportfolio (10/31)

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Oct. 31 (Bloomberg) -- Reporter Peter J. Schwartz discusses Bloomberg's new analysis of MLB franchise values. Former NFL General Manager Mike Tannenbaum explains why the NFL midseason trade deadline passed with many rumors but almost no action. Also, celebrities help bring the New York City Marathon closer to meeting its fundraising goals by creating programs with added value for charity runners. (Source: Bloomberg)

The value of baseball teams just keeps going up and up.

A new analysis from bloomberg news shows the big-league franchises are worth even more than you thought.

Of valuing these teams now and just looking at the team itself is like valuing news corporation and looking at only "the wall street journal." do you wish your football team had made a move?

A former executive tells us why trade talks lead to very little action.

Oftentimes the landing spot for these teams is very small.

Plus, march to the mass -- it is completely their game.

We will find out how cc sabathia is pitching in to help new york city marathon meet its charity goals.

We want to be in the community we have sports business coverage that is truly priceless.

"portfolio starts -- "sportf olio" starts now.

When the los angeles dodgers sold over $2 billion in 2012, many analysts raised their eyebrows at the price.

Conventional wisdom said nfl teams might be worth $1 billion or more, but most major league baseball franchises didn't even come close to that valuation.

Last week, bloomberg news released a new study of baseball franchise values to suggest we have been seriously undervaluing teams.

Peter schwartz's reporter who compiled these valuations and determined that in fact 10 franchises are worth over a billion dollars trade how did you arrive at those figures?

We talked to dozens of folks over nine months of compiling information on including sports bankers, sports lawyers, team and league officials, and we looked at a broader view than just the franchise value itself but also team related businesses that are owned by the same ownership.

Wicked real estate or radio interests.

That $1 billion plus figure, which is an average for all teams, and 10 teams over that threshold -- it also includes team-related businesses that the team itself leverages to make more money.

The category that is clearly driving some of these teams skyhigh is regional sports networks.

In the case of the mets and yankees, you estimate they are worth about $1 billion.

Next year, the dodgers launching their own team-owned network.

The dodgers may be baseball's most medical team next year, were not?

Is going to be a horse race with the yankees.

I would say maybe not only just baseball, maybe not just in the united states, that they will be neck and neck for the most valuable sports franchise in the world.

The sale last year was a game changer in terms of how bankers and executives and team owners look at the value of teams.

The dodgers sports network is going to be a game changer in terms of escalating values of -- guggenheim management gives a discounted cash flow value of that network at $2.75 billion today.

Even if that is a little bit high, as our analysts think it probably is, it is safe to say that it is going to be neck and neck with the yankees going forward, above all other 28 teams in terms of overall value.

Looking at those numbers, it is really valuable.

Can teams of -- afford not to start their own networks?

A lot of teams aren't up -- in a position where they are able to.

It would be terrific if every are -- every team had their own regional sports network.

It is easier said than done.

A couple of teams over the course of my reporting, i've discovered, are investigating the possibilities of launching their own network in partnership with cable companies, those being the arizona diamondbacks and the tampa bay rays.

I believe an opportunity exists given the market dynamics for the saint louis cardinals to do the same.

The phillies, as well, but it seems, based on pulmonary negotiations, they are leaning towards a traditional rights fee agreement extension with comcast for a significant increase from what the currently have.

Let's look at another category which is baseball- related business.

Only six of 30 teams have this in their portfolio right now.

What kind of businesses are these, and could this be a growth area for more teams?

The most robust example is the yankees.

They rank beneath the dodgers in terms of overall value.

The dodgers are strictly tied to real estate joint enterprise at dodgers stadium with frank mccourt, the prior owner, and guggenheim, the current ownership.

The yankees have a 43% increase -- interest.

They have a plurality stake along with the dallas cowboys, also 43%. they have licensing agreements with avenue sports for six retail stores in manhattan.

They have an agreement with the hard rock cafe.

They are the best example of leveraging baseball toward other businesses.

The other teams that have other enterprises are the blue jays and the angels.

They both have radio interests.

There are five teams that owns stakes in their ballparks and adjacent property.

That is a component we have captured.

One of the sports bankers who help us compile the valuations said to us, valuing these teams now and just looking at the team itself, and not the related businesses, is like valuing news corporation and only looking at the "wall street journal." is a lot more to it.

Let's look at the relationship of value to wins in 2013. two out of the top five teams this year are in the bottom third of franchise value.

The pirates and is both, they received a combined 71 million dollars from mlb's revenue- sharing pool.

Does that prove that baseball's financial model is working?

If you look at this season and more broadly in terms of the last 10 years, i think it is fair to say that the pirates aren't an aberration.

Every so often, teams with lower payrolls are more competitive.

If you take a step further back and look in addition to revenue sharing, but new national money that is going to help level the playing field even more, starting next season, there are going to be eight your agreements with all the current major league baseball national tv partners.

This extension more than doubles the current contracts and will provide about $415 million to each team over the course of those eight years.

In addition to revenue sharing, there's going to be more resources all around to try to spend as wisely as the general managers can and the owners can to field more competitive teams.

You can read peter schwartz's story on baseball team valuations, and check out his consolations on bloomberg.com.

Thanks again for joining us.

Coming up, nfl general managers look for value, but very few actually pull the trigger and make deals.

Why do we see so little action at this week's trading deadline?

Former gm mike tannenbaum shares his opinion.

He is next up as "sportfolio" rolls on.

? welcome back to "sportfolio." midseason trades that always been relatively rare in the nfl.

The league moved to the trade deadline from week six back to leak it to hope that teams will have more time to make deals.

This year saw plenty of trade talk, which is entertaining for fans, but none of the juicy rumors actually came true.

Joining us to discuss nfl trading is a man who made his share of major deals, former new york jets general manager mike tannenbaum.

Just one trade made at the deadline.

Are you surprised?

A little bit given the activity we've heard.

I was surprised one trade did get them.

All the pundits talked about jared allen and peterson and fitzgerald.

Everybody said, let's move them.

It's harder than just picking up the phone and getting a guy on the line, right?

You've got to justify a lot of different things.

Grade-point.

For every trade we made, we were on the phone with 10-15 times.

Going back to jared allen, that reminds me of one of our trades.

We put in stipulations in the trade about if he signed an extension with us that the value we would send to san diego would augment from a third to second round pick.

That trade, we were hoping it to be a win-win.

In jared allen's case, with his big salary, proximally seven point $5 million left for the 2013 regular season -- knowing he's going to be a free agent next march -- teams were reluctant to give up that much money and a draft choice for eight or nine games.

When you look at when the trade deadline is in our sport, it is hard to find those landing spot.

The patriots made of trade -- a trade.

Assess that deal and assess the patriots.

I thought it was a good trade for both sides.

From the patriot side, losing a guy like that, it is difficult to replace.

Basically, with philadelphia new england did, they flipped picks.

A sixth round pick went to philly to new england.

New england gave up a fifth round pick in next years draft.

New england can clearly recoup that picked by exchanging picks with other teams.

I thought it was a good trade for both sides.

Isaac was not playing a lot for the eagles.

Not the blockbuster everybody was talking about, but there was a blockbuster trade in the nfl after week two.

Trent richardson went from -- went to the colts in a deal that looks good for both teams.

Why aren't more gm's making those bold moves?

Give a lot of credit to ryan greeks and.

While i was with the new york jets, we made our fair share of traits.

You have to look at what is best for the team and what are the other available opportunities for your team.

Going back to new england, to their credit, you look at three players.

Clearly, three players haven't really helped so far this year, but they have a chance to come back from injury.

You look at san francisco, michael crabtree -- a player that may come back and help them during the season.

From a gm's perspective, you want to look at avenues to improve your team.

Sometimes that can be from within.

Sometimes you have to go to the trade market.

Due to the complexities of the salary cap, you have to make sure you at the room to absorb this year's base salary from the team you are acquiring from.

Therefore, oftentimes the landing spot for these trades is very small.

Since many teams would lose free agents, they would be either to get any compensation midseason for players not in their long-term plans.

There is also something known as the compensatory draft system.

We are on bloomberg tv.

It is highly complex.

It is a kids of the soybean market.

The complexities have to do with the netting out process, the following free agency.

The players you lost, the players you can, how much they played, and a subsequent drafts -- if we are talking about the 2014 off-season, teams will get draft choices in 2015, and maybe the most notable pick we have seen in recent days has been the third round pick that the raiders got when the eagles signed him the big deal two years ago.

Trading soybeans for wheat.

That is how trades are made.

Mike tannenbaum, thanks for joining us.

Coming up, bloomberg's cease with program visits the seattle founders of major league soccer, a franchise that goes the extra mile to connect with fans.

We will take you along on the march to the match.

They can pick their own seats.

Here is our stumper.

In 2012, seattle was one of two cities whose major league soccer team has high -- had higher per game attendance than its major league baseball team.

Can you name the other?

The answer when "sportfolio" returns.

? here is the answer.

Other than seattle, the only city whose mls team out drew its major league baseball team in 2012? houston.

The dynamos averaged just over 21,000 fans per game, while the astros averaged just under 20,000. the seattle founders have been playing to full houses at centurylink field since entering major league soccer in 2000 nine.

The team's management doesn't take the passion of its fan base for granted.

On bloomberg tvs "c suite," jeffrey hayzlett learns one secret of the sounders success is the length they will go to to connect with their customers.

The march to the match, which we do before every game, came from our main fan club, the emerald city supporters.

They had this idea, and they wanted us to follow it.

Make some noise!

? [indiscernible] it is game day, and it is time to talk to the man whose vision spans the entire sounders movement, majority owner joe roth.

What am i looking at?

What you are looking at is unique around the world, it is called the march to the match.

We have it before every single home game.

It gets very, very loud.

You basically brought a minor-league team, a team that had been trying out a couple of different times.

What was the big change between the two that said -- the two?

I did my homework about seattle.

What i found out was it have the highest per capita youth soccer in the united states.

It had an adult league with 60,000 people.

It's a minor-league team was drawing 5000-8 thousand people while other minor league were drawn 1000 people.

We sold twice as many tickets as any team in the united states.

We are top 20 in the world.

Clearly unique in the united states.

You are a bottom-line kind of guy.

In the end, you've got a make money.

What are the conditions of satisfaction that you put in?

The measurement is, this team is worth for five times in value than it was where we were five years ago.

The galaxy -- again, they don't sell more than 20,000 tickets.

We sell 44,000. it is an advertiser's dream.

18-49, 50% male.

We're going to be run over.

Is part of what you're doing creating some kind of culture run the sport?

It is completely their game.

The city named the team.

They can pick their own seats.

We have nothing to do with this march.

It is what they are doing.

It has started organically.

The whole thing has been a viral effort.

Now it is worth five times when we started.

I had no idea it was going to be this big.

If anybody said that, they would be crazy.

Now that it is, i can see that soccer is generational.

20 years from now, this will be like the washington redskins, where the only way you get a ticket is if you inherited from your father.

[indiscernible] we lost two l.a. 4-0 my second year.

I was so angry i gave everyone their money back.

For you, is it the emotion that is a big part of it?

Yes.

If you feel like you don't have a connection, you shouldn't be in the game?

Exactly.

If you aren't connected that way, if you aren't willing to stand up here and be part of everything, then i think you're missing something.

You can see full episodes of "c suite" tuesday's at 9:30 eastern and pacific, as well as online at bloomberg.com and on the bloombergtv plus app for ipad.

Still plenty left on "sportfolio." the new york city marathon faces a short of -- a shortage of charity runners.

You're not getting all these incentives.

Stay with us as we sprint to the finish on "sportfolio." ? last year, the ing new york city marathon was canceled due to hurricane sandy.

Thousands of runners and spectators came to new york for the race and many stayed to help with relief efforts.

It was a feel-good story in the midst of a disaster.

But the effects of the cancellation have been disastrous for the many charities that participate in the marathon fundraising programs.

Veteran philanthropic consultants carried -- harry backs and sarah weinstein gave us their perspective on the problem and some creative solutions that are hoping to address the shortfall.

The new york city marathon charity program is a $33 million program.

About 250 to french are edible organizations are part of the new york city marathon charity program.

Everyone who runs on behalf of the charity gets automatic entry.

Usually, the new york city marathon has about 150,000 people apply for only 50,000 slots.

Because of cancellations, if the thousand runners were given the option to have -- the 50,000 runners were given the option to have guaranteed entry for 2014 or 2015. an estimated 40% of last year's runners enacted guaranteed entry for 2013, meaning that the whole model of the marathon was sort of flipped on its head.

Me and my business partner sarah, we work with a variety of different celebrities and athletes such as sean penn, cc sabathia, james blake.

We really work with them to implement their partnership for races such as the new york city marathon and create a unique experience for runners.

It is not just about guaranteed entry anymore.

We are really cute looking beyond that to try to get the -- really looking beyond that, to try to get the average donation up.

This is the first year the charity partnership.

Sarah and i discussing it with agencies like his, and creating a unique and efficient way for them to fund raise for the charities.

We want to be in the community, not just donate our time or drop things off.

There are so many events that were hit because of the past two years of the weather.

This year, we are so thankful to be a part of that as well.

We have these runners that are out there running for us, supporting the foundation, and raising money and funds and awareness.

We have a handful of runners, six runners.

It is made up of fans.

It is a $5,000 minimum donation.

It is double the roadrunner minimum donation.

It is no longer enough to offer a guaranteed spot in the marathon as an incentive for somebody to go out and raise money.

You have to come up with these specialized programs.

We have been working with sean penn's organization for a long time on some of their bigger events.

We went to the charity with the idea of building a team.

We were able to secure 10 spots for their charity.

Sean had the great idea to say, let's do a team that is made up of hype -- of high-profile supporters.

That is an opportunity to showcase the incredible athleticism.

He worked with the haitian government.

We had a half marathon in haiti.

The top three male runners in the top two female runners won qualifying spots to be on the new york city marathon team.

We put together a team of high- profile business people, and pamela anderson has also joined the effort.

All the runners on the team will get one-of-a-kind uniforms that have been made by armani sportsline.

New balance is providing shoes for the team.

Morgans hotel group is putting together a really fun after party in honor of the team.

If you sign up for just a charity, you're not getting all of these incentives.

With athletes and celebrities, a lot of their charity fund-raising is so dependent on them being summer.

The new york city marathon charity program offers a really unique and efficient fundraising platform for them.

Are you guys running?

I will definitely donate.

[laughter] i will be there at the finish line.

I will meet you guys.

As of this week, sean penn's 10 person team had raised over $170,000 for haitian relief through its participation in the new york city marathon.

That will do it for this edition of "sportfolio." our thanks to peter schwartz, mike tannenbaum, and all the other guest on this week's program.

Thank you for watching.

Bloomberg.com is the place to go for sports business coverage and plenty of great video, including "sportfolio," "c-suite," and other shows.

If you are taking part in the marathon this weekend, run fast, and have fun.

I'm rick horrow.

See you next time on "sportfolio ." ? . .

This text has been automatically generated. It may not be 100% accurate.

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