John Middleton, managing partner and principal owner of the Philadelphia Phillies, signs autographs before the 2024 London Series game between the New York Mets and the Philadelphia Phillies at London Stadium on June 9, 2024 in London. Mr.
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The Philadelphia Phillies recently acquired a new deal that valued the Major League Baseball team and a 25% stake in regional sports network NBC Sports Philadelphia at about $3 billion, according to two people familiar with the deal. The company reportedly raised nearly $500 million from three investors. .
As part of the deal, two existing owners, managing partners John Middleton and Stanley Middleman, also made additional investments in the Phillies, bringing the total capital injection to nearly $600 million, according to people familiar with the deal.
On November 1, Middleton announced that new investors would be joining the Phillies, including Mitchell Morgan and Guntrum Weissenberger Jr. The size of the investment and the third investor were not disclosed.
The $3 billion valuation translates to approximately $3.7 billion in control stock, given that limited partner stock is typically priced at about 20% less than control stock because LPs have no say in how the team is run. corresponds to the appraised value of
Considering the Baltimore Orioles were sold for $1.73 billion earlier this year and the highest amount ever paid to a franchise was the $2.42 billion that Steve Cohen paid the New York Mets in 2020. This is an impressive number.
A little more than a year ago, Mr. Middleman bought a 16.25% stake in the Phillies at a total valuation of $2.8 billion.
Based on revenue multiples, the Phillies’ control valuation of $3.7 billion would be 8x 2023 revenue, compared to 5.3x for the Orioles and 6.7x for the Mets, according to historical earnings calculations.
The Philadelphia Phillies celebrate after defeating the New York Mets 12-2 in a game played at Citi Field in New York City on September 20, 2024.
Dustin Satloff | Getty Images
The Phillies have the best local TV deal in baseball. In 2014, the team signed a deal with NBC Sports Philadelphia that guaranteed rights fees averaging $100 million per year over 25 years and a 25% stake in the regional sports network.
But cord-cutting has made the financial situation even tougher for regional sports networks, with the most egregious example being Diamond Sports Group, which filed for Chapter 11 bankruptcy protection in March 2023. Some baseball teams may see a decline in revenue due to a decline in pay-TV revenue. their television income.
Comcast owns 75% of regional sports networks, so the Phillies are unlikely to be at that risk.
It’s unclear what the Phillies will do with the proceeds from the fundraising, but there is some speculation that the team could target free agent Juan Soto.
Acquiring Soto, who could earn between $50 million and $70 million annually, would likely result in a hefty luxury tax bill for the team. Last season, the Phillies, led by superstar Bryce Harper, had an annual salary of $262 million, the fourth-highest salary in baseball, according to Cotto’s baseball contracts. According to Spotrac, the team is being asked for $10 million in luxury tax, formerly known as the competitive balance tax.
According to Kotz, the Phillies are targeting a salary of $240 million for the 2025 season. MLB’s luxury tax cap is set at $241 million.
Before the capital increase, the Middleton family owned 48.75% of the Phillies, the Buck family owned 32.5% and the Middleman family owned 16.25%, according to a person familiar with the team’s ownership. Pat Gillick owned 1.5% and David Montgomery 1%, the person said.
It is not clear what the exact ownership will be after the capital increase.
An MLB spokesperson did not respond to CNBC’s request for comment. A spokesperson for the Phillies declined to comment, as did a spokesperson for Galatioto Sports Partners, the advisory firm that represented the Phillies in the financing.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
