Atlanta Braves Looking Strong for Cobb County

Liberty Media Analyst Conference Call Reveals Some Future Details

Tim Tucker of the AJC.com gave the run-down of a Friday morning conference call that Liberty Media held with Wall Street analysts, and once again, it represents an opportunity to pull back the curtain that typically covers the finances surrounding a major professional sports franchise.

Several things of note:

• While the Braves had obtained a credit line of up to $500 million to support their portion of stadium construction, it appears that they have used just $207 million of that resource so far.
• The Stadium itself is roughly half complete now.  Recent reports of winter weather delays are now concerning anyone – expectations seem to be that lost time will be able to be recovered.
• While the stadium is being built, so is the surrounding Battery Atlanta development – and Liberty Media is reporting that nearly 75% of that space is already either “leased or committed“, which is remarkable.
• The Braves’ tracking stock should be available for purchase by the end of April.

Certainly, if the goal of the new park and its accompanying development was to bolster team revenues, that 75% occupancy rate a year ahead of opening has to validate every goal the Braves have had for the facility.

Value of the Braves

Liberty CEO Greg Maffei painted the analysts an interesting portrait of how to assign a value to this new Braves’ stock.  He first pointed out that Liberty Media actually made a bargain-basement purchase of the club in 2007:  the initial purchase price was $450 million, but there was a $300 million tax savings involved as well.

Team revenue – not profit – has been in the $250 million range, though that is expected to be lower for 2015.  While Maffei reported that team selling prices tend to be 3-5X of this revenue figure, Forbes pegged the team’s value at $1.15 billion a year ago… consistent with Maffei’s figures.

On Revenues

Once again, the subject of the Braves’ under-performing TV contract came up… a deal that still has 12 seasons to run.  Maffei had an interesting means of characterizing this, suggesting that the Braves’ had a lot of long-term “upside” here, and indeed once they do get a chance to forge a new TV deal, the 2027 numbers could very well dwarf anything on the market today.

The deal recently agreed to between FOX Sports Arizona and the DBacks (Feb 2015) exceeds $1.5 billion over 20 years and even buys the team a stake in the network itself.  That averages at least $75 million annually… which doesn’t include MLB revenues to the team (MLB Advanced Media and shared merchandising) or additional revenue from National contracts (ESPN and FOX).

Phoenix’s market is the 11th largest in the United States.  Atlanta ranks 9th and could actually argue for a bigger share, given the fan-reach of ‘Braves Country’ that extends throughout the deep South.  By the time the Braves are allowed to get another TV contract, it would not be surprising if the numbers were something like 20 years and $2.5-$3.0 billion, or close to double the Diamondbacks’ deal.

But alas, that’s another dozen years off, which is exactly why Liberty Media and the Atlanta National League Baseball Club, Inc. are building SunTrust Park and Battery Atlanta:  to fill that gap of revenue in a manner that allows the team to remain payroll-competitive with a league that is increasingly willing to spend more and more.

But all of that was information provided to the analysts as Liberty Media attempts to ‘sell’ their new Braves’ Tracking Stock, soon to appear on the NASDAQ ticker as BATRA/BATRB/BATRK.

Next: Justin Jackson Has a Plan

Of course, what I’m looking at are the soon-to-come on-field assets, too.  There’s some considerable upside there as well with a robust future growth potential.