Mains: A capitalist critique of the Royals’ sale

From SABR member Rob Mains at Baseball Prospectus on September 3, 2019:

David Glass, a former Wal-Mart executive, is selling the Kansas City Royals for about $1 billion (the exact figure hasn’t been announced) to John Sherman, an energy executive (LPG Services, Dynegy, Inergy, and Crestwood, if you’re keeping score at home) and minority owner of the Cleveland Indians. Sherman will sell his stake in the Indians to complete the deal, which is subject to MLB approval.

The transaction has elicited the usual populist-tinged comments from both wings of the commentariat. So much money for a child’s game! A billion dollars, but they don’t pay minor leaguers minimum wage! This is why families can’t afford to go the ballpark! Billionaires getting richer!

Underlying these complaints (some of which, I’ve written, have more validity than others) is an accepted truth that, well, that’s how the market rolls. Glass bought the team $96 million in April 2000. An investment rising more than tenfold in the ensuing 19-plus years, well, that’s a feature or a bug, depending on your political persuasion, in an economy such as ours. The market assigned a value of $96 million on the Royals at the turn of the millennium. Its valuation today is a reflection of market forces and entrepreneurial acumen, like it or not.

Read the full article here:

Originally published: September 3, 2019. Last Updated: September 3, 2019.