Part 1/3:

The Challenges of Valuing the A's

A Questionable Valuation

It's hard to fathom why anyone would value the A's at $2 billion, as recent reports have suggested. Owner John Fisher is reportedly looking to sell a 25% stake in the team, which would equate to a $500 million investment at that valuation. However, this number seems completely detached from reality.

The Debt Dilemma

The key issue is that the $2 billion "enterprise value" does not account for the team's existing debt. To properly calculate the equity value that a potential investor would be buying into, the debt must be subtracted. If the A's have $1 billion in debt, for example, then the true equity value is only $1 billion. In that case, a 25% stake would be worth $250 million, not $500 million.