Half a Billion Reasons for Optimism

Apr 8, 2014; Atlanta, GA, USA; A general view of Turner Field during the game between the Atlanta Braves and the New York Mets at Turner Field. The Mets won 4-0. Mandatory Credit: Daniel Shirey-USA TODAY Sports

In a story written for the Atlanta Journal-Constitution today, Tim Tucker quotes Liberty Media CEO Greg Maffei (head of the corporation that owns the Atlanta Braves) as declaring that their television contract redux (in 2013) will ultimately generate $500 million in new revenue for the corporation and the team.

There are two unknowns about this statement that the story did not get answers for:

• The length of the TV Contracts involved.  Originally, this was slated to run through 2027.  If that date remains in place, then this amounts to a sizable increase of $33.3 million per year – on average.  Do note, however, that I would expect the numbers to rise over time, so the Braves probably do not get to see $33m extra this year… or maybe not for a few years.  But it will happen.
• The total value of TV package.  Prior estimates had placed this figure at something in the neighborhood of $10 million annually with a modest escalator clause.  Obviously if that estimate was even close, this represents a huge jump from the deal imposed on Liberty Media just prior to their arrival in 2007.

Given the statements made by Maffei, I believe that this increase likely does not include the bump that all teams are receiving from the new ESPN national contract, estimated to be in the $20-25 million range.  Thus, the team is looking at a possible total revenue increase of perhaps $55 million per year for… a while.

This report comes on the heels of news that the Braves and Cobb County are close to finalizing their contract that specifies the respective groups’ contributions toward the new stadium.  In that report, costs are a bit higher than had been first advertised – for both parties – though the figures are a bit up-in-the-air, given uncertainties over the amenities that will be provided, actual construction costs, insurances, and rent that the Braves will pay to Cobb County.  Even as much ($622-$672 million) as the stadium will cost, it is now fairly evident from this declaration that Liberty Media – and the Braves – will certainly be able to afford both this construction project and their newly extended players.

In the article (recommended for a full read), Maffei praises the management of the team for being payroll and cost conscious, practices that have apparently built confidence that the team could manage this new, huge project.  Certainly there have been recent concerns (from this writer in particular) that the team might not be able to keep up with the rest of the league over the next decade or two in terms of payroll.  But since the shocking stadium announcement from last Fall, news on the revenue front has continued to be strongly positive.

Color me impressed.