M’s Change Ownership at $1.4B Valuation

April 30, 2016

Earlier this week the M’s changed hands, with Nintendo of America selling all but 10% of their majority stake to the minority owners.  The transaction is pending MLB approval, which is expected at an August owner’s meeting.

The $1.4 valuation of the deal is near Forbes’ $1.2B estimate alluded to last month.  The sale total seems high, and likely includes the club’s roughly 70% ownership of ROOT Sports Northwest.  Even discounting for the fact the value of ROOT is more valuable to M’s ownership, and ROOT is highly dependent on the M’s, $200M seems low.

ROOT gets $3.84/sub, according to SNL Kagan.  With approximately 3.2M subscribers, the network generates nearly $150M in subscriber revenue alone, not factoring in ad revenue. At 5x annual revenue, the value of the network would be $750M without ad revenue.  This too seems high.

My best guess is that the M’s are worth around $1B, with ROOT worth $400M or so.  But I’d need to run the numbers a bit more to get additional detail in my analysis, while also looking at comparisons across MLB and related RSNs.

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