Arizona Diamondbacks: Franchise value up a reported 24 percent
By Mark Brown
Within the past year, the Arizona Diamondbacks have developed “a big market” mentality.
After recent figures released from Forbes magazine, there is a temptation to categorize the Arizona Diamondbacks in a fashionable way. Pushing teams like the Los Angeles Dodgers, the New York Yankees and Boston Red Sox, there’s a hint of characterizing the Diamondbacks as a “a big market” team.
At least, there’s the desire by decision-makers to create a “big market” mentality. Plus, there is also the appeal to place the Arizona Diamondbacks in a competitive media market. Yet, a look at some demographics indicate that managing general partner Ken Kendrick, who writes the checks, may miscalculate the Phoenix market.
In latest figures available, Phoenix is the 13th largest metropolitan area in the United States. With a population of around four million, Phoenix sits between Detroit/Flint/Warren (5.4 million) and Seattle-Tacoma (3.8). That’s according to the United States census bureau.
Relative to gross economic productivity, the New York area leads the country with $1,210,000,000. The greater Phoenix market is 13th with $190,000,000 and sandwiched between Seattle, at number 12 and Minneapolis-St Paul at number 14. These figures were produced by bizjournals.com.
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Relative to Phoenix as an important media market, numbers do not support that contention. According to newsgenration.com, Phoenix is considered the 12th largest media market in the nation. That’s between Tampa/St Petersburg (at number 11) and number 13 Detroit.
Given the reality of where the franchise is positioned and whether this market can support huge contracts and attract millions of fans through its turnstiles, these numbers could dispel the notion the Diamondbacks are in the same economic league as New York, Los Angeles Boston, Philadelphia and Houston.
This conversation resulted from Kendrick opening his checkbook. In signing right-hander Zack Grienke in Dec., 2015 to a six-year, $206 million deal, Kendrick believed he was acting within a significant market. Pushed by a lucrative television deal with FOX Sports Arizona, Kendrick found himself with a rather large revenue source. Here, his desire to push the Diamondbacks into a market where figures do not support this elevation was questionable.
The television stream produced by the relatively new FOX deal remains the catalyst for Kendrick’s economic incentive. Save Greinke, Kendrick also signed checks to Yasmany Tomas ($63 million) and Yoan Lopez ($16 million). The FOX deal, signed in February 2015 and went into effect for the 2016 season, was reportedly worth $1.5 million over a 20-year period.
Because of this revenue stream and the addition of new corporate partners, Forbes estimated the value of the Diamondbacks franchise at $1.150 billion. That’s a 24 percent increase from Forbes’ 2016 assessment.
From the beginning, Kendrick was instrumental in operation of the baseball club. When Major League Baseball awarded a franchise to an ownership group Arizona Baseball, Inc., headed by then-Phoenix Suns majority owner Jerry Colanglo in March, 1995 for $130 million, Kendrick was part of that team put together. In 2004, Colango sold his interest and Kendrick eventually became the club’s managing general partner.
With a win-now mentality, Kendrick developed that “big market” approach, signed Greinke, the highest profiled free agent in the 2015-16 market place, and hoped his vision would pay off with a strong ascendancy through the National League West Division.
That hope came crashing down with a 69-93 season and a significant disappointment to management, players and fans. For the current season, the club’s payroll is $90.4 million and that’s only a slight increase from $78.3 million from the 2016 season.
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In this age of numbers, economics and analytics, the Diamondbacks’ performance on the field last season, while unsettling, their rise in value and acquisition of a significant television contract, make this team economically viable.
Then again, the bottom line in this modern age of sports seems to be dollars over wins.