Liberty Media Is Splitting Off The Atlanta Braves

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Hey Friends,

Liberty Media, the American-based media company that owns Formula 1, SiriusXM, the Atlanta Braves, and other sports-related assets, has announced it will be splitting off the Atlanta Braves (MLB) into its own stock.

The newly formed company will be called Atlanta Braves Holdings, Inc., and the entity will hold everything that currently exists under the Braves Group, including:

• The Atlanta Braves

• Current assets & liabilities belonging to Truist Park (their stadium)

• The Battery (the team’s $400M development project near Truist Park)

• Corporate cash and more

“These actions will provide greater investor choice and enable targeted investment and capital-raising through more focused currencies while maintaining an optimal capital structure for Liberty Media and preserving optionality with respect to our subsidiary SiriusXM and our Live Nation stake,” says Liberty Media President and CEO Greg Maffei.

The split-off will result in Liberty Media and Atlanta Braves Holdings acting as separate publicly traded companies, and it should be completed in early 2023.

There is a lot of financially-related nuance that goes along with a decision like this, but I decided to write about this topic today for two main reasons.

First, this feels like a net positive for Braves fans. The team has drastically improved its financial position under the ownership of Liberty Media — the opening of Truist Park in 2017 has also played a significant role — and separating these assets will clean things up and offer a more direct look into the team’s financials.

Atlanta Braves Annual Revenue

• 2016: $275 million

• 2017: $336 million

• 2018: $344 million

• 2019: $382 million

• 2020: $132 million (pandemic)

• 2021: $443 million (+61% from 2016)

Atlanta Braves Annual Operating Income

• 2016: $15 million

• 2017: $46 million

• 2018: $71 million

• 2019: $92 million

• 2020: -$67 million (pandemic)

• 2021: $83 million (+453% from 2016)

This increase in financial health has enabled the team to increase its spending. For example, the Braves went from 23rd in payroll in 2016 ($87 million) to 8th this past year ($150 million) — and they might soon move into the top five.

"We were eighth in payroll this season, up from the mid-teens the last couple of years, and I fully expect in the next few years we are going to be in the top five. We can afford it,” says Liberty Media President and CEO Greg Maffei.

But secondly, this specific type of financial restructuring could potentially foreshadow a sale of the Atlanta Braves.

For example, Liberty Media purchased the Braves in 2007 for $400 million, and the franchise is now valued at $2.1 billion. That is an 11.7% compounded annual growth rate, and it makes Atlanta the 10-most valuable team in Major League Baseball.

But more importantly, the team would eventually have to be converted to an asset-backed stock before being put up for sale, and this new structure eliminates a lot of complicated tax issues that could arise during the sales process.

“Malone hasn’t said the Braves are for sale. According to tax accountants, however, companies with tracking-stock structures have to convert them into asset-backed stocks before the companies can be sold,” says Mike Ozanian of Forbes. “It appears the Braves’ conversion will happen in 2023. Malone would then have to wait a while to sell, perhaps in 2024, according to analysts.”

So maybe Liberty Media wants to cash out on its big investment win and focus on other sports properties that offer more financial upside. Or perhaps they are simply offering a more attractive way for investors to access exposure to the business, potentially unlocking more value as a standalone entity vs. a combined one.

The truth is we probably won’t know for some time. But regardless, Liberty Media is currently sitting in the driver’s seat and has control over an extremely valuable asset —that’s never a bad place to be.

I hope everyone has a great weekend. We’ll talk on Monday.

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