Sports teams are valued based on the tax benefit that they provide the new owner.
And Tumblr at $1 billion actually isn't that bad. They have more monetization potential than Twitter, and are a great way for Yahoo to feed young people onto their sites and search engines.
Here's a quick breakdown of how Tumblr could easily make their money back:
1. Offer CPM advertising for big brands.
2. Put "native-looking" ads in between someone's posts.
3. Do this for 1 week.
4. Never do it again.
There's 420 million Tumblr users, meaning that Yahoo only has to make back $2.38 per user. However, using Tumblr instead to build Yahoo's brand is smarter. To put things into perspective, Tumblr has 6% of the world's population on their site. Interacting with 6% of the world for $1 billion is a steal.
