House That Hank Built
Fansided

The thrifty Atlanta Braves

By Fred Owens

Scott Boras' comments about the way teams spend money were designed to get fans riled up and put pressure on teams to sign his guys. (Photo by Elsa/Getty Images)
Scott Boras' comments about the way teams spend money were designed to get fans riled up and put pressure on teams to sign his guys. (Photo by Elsa/Getty Images) /
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The Atlanta Braves exceeded the debt service rule for the last two seasons.
MLB oversees each team’s debt to make sure they don’t borrow more than they can afford to pay and has the authority to punish teams that do to prevent the same fate as this commentary. The Atlanta Braves exceeded the debt service rule for the last two seasons. (Photo by David McNew/Getty Images) /

Pay up or. . .

Teams are generally not punished for failing to comply with the DSR for a season if it pinkie swears to fix it next year or at least in the next two years. When they continue to financially misbehave in year three, DSR provides the Commissioner with a laundry list of remedial measures.

The Commissioner’s remedial measures (punishment options) range from multiple levels of administrative oversight to forcing sale of assets to taking complete control of team finances. He may even restrict access to the Rule 4 and Rule 5 draft.  All good reasons to watch your cash flow and keep the commissioner out of the club’s business.

In 2014 Braves Holdings added $330M in debt to build STP and $470M in development costs for the Battery; $270M of that comes from new debt. At the end of last year the Braves had drawn $175M of an available credit line for that purpose as well as opening a $40M credit line for the new spring training facility.

On March first we heard that the cost of the facility had increased.

"“The total cost of construction. . .is estimated to be approximately $125 million, of which the Braves are contributing approximately $55 million using debt and cash on hand. . .”"

The report also discusses off-balance sheet obligations. That’s a long-winded way of saying the Braves have contracts with players and coaches with guaranteed contracts .

The Braves incurred additional expense because players were released and due to penalties for exceeding the 2016 international bonus pool. Those expenses totaled $278 million. How does this affect the Braves today?

In 2015 and 2016 the Braves failed to comply with MLB’s debt service rules (pg I-47.)  As a result they are “now subject to certain remedial measures” as well as being required to repay that debt. Those measures are not made public but it’s unrealistic to believe that those infractions weren’t taken into account when setting punishments last October.  Thank you Mr. Coppolella, Mr. Hart, and Mr. Schuerholz:  enjoy your golf.

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