Atlanta Braves’ owner Liberty Media has made a startling SEC filing.
Technically speaking, this is the 10-Q report, which is a document as filed with the Securities and Exchange Commission by publicly-traded companies. The Atlanta Braves parent company Liberty Media made that filing on Monday, and it covers the quarter ending June 30th… the traditional beginning months of the baseball season.
The big thing that the media will note from this report involves the Braves’ revenue stream, so let’s look at that first:
Revenue is divided into “Development” and “Baseball” segments, which you can surmise represent things like Battery Atlanta vs. pure baseball operations. Here’s the breakdown:
- Baseball revenue for the past 3 months: a scant $5 million
- For the past 6 months: $17 million.
- Development revenue for the past 3 months: $6 million
- For the past 6 months: $16 million.
How bad is that? The baseball side is down from $198 million over the same quarter in 2019 to $5 million now… that’s a 97.5% reduction.
At least their renters are still (mostly) sending checks: that side is down “only” 40% from $10 million to $6 million.
Overall: that’s a revenue drop from $208 million to $11 million for this past quarter. Ouch.
The OIBDA Factor
Hang with me on this for a sec… the OIBDA is “Operating Income Before Depreciation and Amortizaton”. It’s not profit and it’s not revenue, but it’s closer to the latter.
Liberty Media says that their OIBDA numbers are “…an important indicator of the operational strength and performance of its businesses, by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends.”
If that’s so, then these numbers could be a lot better: for the entire ‘Braves Group’, this was +$61 million for the quarter a year ago. Today it’s negative $28 million.
At least their Sirius/XM group is making money… the Braves and Formula I racing sure aren’t.
The Debt Has Increased
On top of the lack of revenue, it appears that the Braves have increased their borrowing to replace some of that cash. At the end of 2019, the 10-Q report appears to suggest that their loan liabilities have increased from $559 million to $718 million, an increase of $159 million in the past six months.
Don’t forget: they borrowed heavily to construct Truist Park, Battery Atlanta, and the North Port Spring Training facility — all within 5 years. However, these amounts had been steadily dropping.
The increase is attributed to “Operating credit facilities” (+ $140 million) and “Mixed-use credit facilities and loans” (+ $26 million). Other loans have trickled downward to account for a $7 million reduction elsewhere.
One additional note about this debt from the report: “Braves Holdings is in ongoing discussions with counterparties to its operating credit facilities and debt related to ballpark funding to obtain waivers and covenant modifications.”
Sounds like they are preparing for the possibility that revenues may be slow to return – certainly not until the Spring of 2021 at the earliest.
So … nothing for the trade deadline?
Maybe… but this is speculation. Later in the report (page I-56), the Braves Group is said to have a total in cash and cash-equivalents (excess bobbleheads??) of $308 million. That money is likely what they are using to keep the business running in the wake of these huge losses.
That said, they’ve also noted these dramatic changes:
- Cash used by operating activities: down $63 million to $1 million (comparing the4 last 6 months, year-over-year)
- Cash used by investing activities: better by $16 million, but still under water by $39m.
- Cash used by financing activities: $185 million higher… similar to our discussion above
In other words, it’s quite possible that they’ve got cash available simply because they’re running on credit right now.
Bottom line: in 2019, this quarter netted the Atlanta Braves $36 million. This year, it’s a loss of $30 million.
The summary statement is, then, to be expected: “Formula 1, the Atlanta Braves and Live Nation have been, and will continue to be, materially impacted by COVID-19 and local, state and federal government actions taken in response, which will have a negative impact on our results of operations and financial condition.”
So the company is still afloat… but while the impacts of this virus continue to take their toll, all sports businesses will be hammered. Now we know just how bad those impacts are.