Forbes places RSL’s value at $155m, but their numbers may be meaningless

As happens every year, Forbes released their MLS club valuations, and they’ve got Real Salt Lake pretty near the bottom.

Fourth from the bottom, in fact — above only Colorado Rapids, Vancouver Whitecaps and Columbus Crew.

That’s probably reasonable, but their numbers are estimates, and they actually give us no reason to believe their estimates aside from their billionaire name. Nowhere in the article do they give us a reason to hold that Real Salt Lake is worth $155 million, fourth worst in MLS.

Let’s do some very quick and very dirty estimation here. I’m citing costs, but of course, that’s not necessarily evidence of value — it just gives us some semblance of numbers to work from.

• The RSL academy project in Herriman was estimated to cost about $60 million
• Construction cost for Rio Tinto Stadium was $110 million; obviously, value and cost are different things, but it’s safe to assume there’s some value still there
• In 2006, the land for Rio Tinto Stadium was given to the club and then-owner Dave Checketts; it was estimated at $10 million
• Stadium naming rights with Rio Tinto are between $1.5 and $2 million per year until 2023
• Kit sponsor LifeVantage pays about $3 million per year over 10 years
• Combining stadium and kit sponsors with other values gave Sports Illustrated an estimate of around $12-13 million in sponsorship in 2016.

Where things get difficult, of course, is in separating what Dell Loy Hansen owns from what the club owns — for example, how do you separate the ownership of Broadway Media from the ownership of Real Salt Lake when they’re both Hansen, and when they intersect in some key areas?

At any rate, in addition to property values, building values and sponsorship money, there must be some inherit value behind owning an MLS franchise — one should hope, at least, considering new franchises start at $100 million. I doubt that’s part of the valuation, but it ought to be a consideration, shouldn’t it?

I guess the real lesson here is that you should never trust an estimate which doesn’t provide at least some sense of the methodology by which an estimate was developed. Simply knowing that Forbes estimates RSL as having a value of $155 million doesn’t really tell us anything.

Really, when it comes down to it, do you actually believe that Real Salt Lake is worth less than, say, Houston Dynamo? What about New England Revolution? Is it merely market size that puts them ahead of us? Or how about San Jose Earthquakes? This stuff is Forbes’ bread and butter, but an appeal to authority like that is a dangerous one.

We may never really know the truth of this one, particularly as MLS clubs are invested in and operated by folks like Dell Loy Hansen, not owned outright. But some pieces of the puzzle are owned outright, and that leaves us in an uncertain position.