Atlanta Braves Morning Chop: Taking Stock, Catching Up

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Nov. 16, 2015. SunTrust Park via Atlanta Braves webcam. http://atlanta.braves.mlb.com/atl/ballpark/suntrust-park/live-webcam/

Lost in all of the trade chatter over the past few days have been some actually pieces of real team news, and it’s time to catch up on a bit of that.

Braves tracking stock could lead to spinoff, analyst says

MARK MELTZER / ATL BUSINESS JOURNAL

A move Nov. 12 by the Atlanta Braves’ parent company could set the stage for the team to be spun off, a securities analyst says.

More from Tomahawk Take

Liberty Media Corp. (Nasdaq: LMCA), which owns the Braves, said Thursday it is creating a tracking stock for the Braves and for its two other principal businesses, Sirius XM Holdings Inc. and Live Nation Entertainment Inc.

A tracking stock is actually not an official spin of the asset,” said Jeffrey Wlodarczak, founder and CEO of New York-based Pivotal Research Group LLC. “Basically a tracking stock is a tool for a company to highlight specific asset within the larger company.”

Liberty Braves will still be part of Liberty Media, he said.

“It does arguably set the stage for Liberty to eventually spin the asset out to shareholders.”

If a spinoff does occur, ownership of the Braves would pass from Liberty Media, which purchased the club in 2007 from Time Warner Inc., to Liberty’s shareholders. The team would be a standalone public company.

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[ Related story… ]

Liberty Media to raise $200 million for SunTrust Park construction

MARK MELTZER / ATL BUSINESS JOURNAL

Atlanta Braves owner Liberty Media Corp. (NASDAQ: LMCA) plans to raise $200 million to help pay for construction of SunTrust Park, Liberty CEO Greg Maffei said at an investor conference Thursday in New York.

The money will come from a rights offering that is part of Liberty’s plan to create separate tracking stocks to financially separate each of its three principal businesses — a move that could set the stage for the team to be spun off.

Maffei said Liberty Braves Group will have more than $1.8 billion in assets. He said the Braves are currently worth $1.15 billion, according to Forbes. To that, it will add $200 million from the security rights offering, $50 million in cash, and $450 million from the value of The Battery, the mixed-use development the Braves are building next to SunTrust Park.

“Valuing teams is not a simple process,” Maffei said. “Traditionally they have been valued at a multiple of revenue. Those multiples have expanded, and with our new stadium we are going to substantially expand, we believe, the revenues we have at the team. So actually knowing what value would be correct would be difficult. But here’s one, using Forbes.”

The Braves Group would have $1.026 billion in debt, including $374 million from SunTrust Park when it is completed, along with team debt, $285 million from The Battery and a $165 million “intergroup note” that is part of the financing structure being set up with the tracking stocks. The note represents funding Liberty Media has been providing to the Braves for stadium construction, and it will be paid back from the rights offering, Maffei said.

BATRA, BATRB, BATRK

ALAN CARPENTER / TOMAHAWKTAKE

No, these are not the monikers for 3 new-fangled hitting stats. According to CNN Money they are the stock symbols for the new Braves’ tracking stocks – should these be approved by the Liberty Media shareholders.

One thing unanswered by all of the information above: what’s a “tracking” stock?

Again from CNN Money, it’s a way to buy “a portion of Liberty Media that specifically tracks just the Braves’ revenue and profits and not other parts of Liberty Media.”

“Tracking stocks do not give investors true ownership of a company though. You do not get a shareholder vote.”

One of their last lines in that article is almost chilling: “So don’t buy shares of the Braves if you think your financial stake will convince the team’s general manager to not trade star shortstop Andrelton Simmons this winter.”

Oops.

[ Ed. note: of course it probably doesn’t help your ability to raise money via a stock offering if your most visible asset – the major league team – is being decimated. Perhaps the timing of these announcements might have been better left for a day in which the best shortstop in baseball wasn’t sent to the West Coast. Then again, if you buy stock when it’s low, that is a way to make some money later… ]

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