How Valuable are the Houston Astros?

May 29, 2015; Houston, TX, USA; General view of a Houston Astros helmet and glove before a game against the Chicago White Sox at Minute Maid Park. Mandatory Credit: Troy Taormina-USA TODAY Sports
May 29, 2015; Houston, TX, USA; General view of a Houston Astros helmet and glove before a game against the Chicago White Sox at Minute Maid Park. Mandatory Credit: Troy Taormina-USA TODAY Sports /

Professional sports franchises, like the Houston Astros, are worth oodles and oodles of money.

One can argue more than oodles and oodles. Maybe oodles times a thousand? Anyway, you get the point that franchises throughout the professional sports world are worth an unbelievable amount of wealth. And this isn’t a fact that just pertains to baseball. The Dallas Cowboys of the NFL and the New York Knicks of the NBA are each worth upwards of $3 billion in 2016! And as we all know that the Houston Astros aren’t worth quite that much, but the estimated value of the franchise per Forbes Business is still something to behold in a strange way.

So what is the value of the Astros? After all, didn’t the franchise just sell for $610 million in 2011? Well, even though that was five years ago, the actual figure today will surprise you.

More from Astros News

That’s right, a whopping $1.1 billion is the estimated current value of the Astros per Forbes, which is good for 15th overall in baseball. My, oh, my, what a difference five years could do. And if you’re curious, Forbes released their annual value for the other 29 MLB franchises yesterday if you want to check it out.

But what variables and financial data are used in these team values? Well, I’m glad you asked.

As you can tell from above, the list includes a breakdown of each team that gives the total team value along with last year’s revenue and operating income. But there are a large amount of variables in play when it comes to calculating these overall values, though. Per the 19th Annual MLB Team Valuations article from Forbes Business by Christina Vega, the publication creates their team values based on enterprise values, which is essentially equity plus net debt. These enterprise values are derived from “revenue multiples of past transactions”. Non-baseball assets, such as equity from sports networks or real estate, are excluded from these calculations. But the net revenue provided by Forbes includes the money that the team draws in through various avenues associated and not associated with baseball. The annual debt service for a stadium is included along with any financial activity within baseball’s revenue sharing program. Lastly, the luxury tax figures are taken out of from the operating income. That was quick rundown, and I recommend reading the article firsthand to sift through the variables that come into play in these financial calculations.

All of that said, it is evident to see that the Astros have seen quite an increase of value from past years. Don’t forget that Forbes valued this same franchise to be $800 million. So where is the primary cause of the overall jump? Well, a major reason for the increased value appears to be driven by the new broadcasting deal that kicked in recently for the team.

More from Climbing Tal's Hill

Here is an excerpt from that same article above from Christina Vega of Forbes:

"The financial strength and big value increases of MLB illustrated in Forbes’ valuations is due to new, or anticipated, richer national broadcasting deals. The Astros rose 38% in value, to $1.1 billion, as Houston’s new cable deal kicked in last season."

You read that right; a 38% rise in value! Now we know why it is important for teams to gain these lucrative television deal; it does indeed drive up the value of a professional sports franchise.

Next: Houston Astros: Key Trades of the Luhnow Era, So Far.

This now begs a question about how much money do the Astros have to spend in the future. Is it possible that the team will be even bigger players in free agency as revenues are likely to grow if the team continues to improve? Hopefully, yes. We would all like to believe that the current ownership group headed by Jim Crane will spend money when the time comes. Will that day eventually happen? Probably, yes. But it is clear that the Astros are rising up to upper tier of the most valuable franchises in baseball. And if the team continues to win and make smart investments with its own assets, there is no reason not to expect that number to rise over the upcoming years. But by how much remains to be seen.

**Financial information provided the 19th Annual MLB Teams Valuation article by Christina Vega of Forbes Business**