Braves Spin-Off Positions Liberty Media for Tax Break, Team Sale
The enthusiasm surrounding pro sports teams and their rising valuations is almost palpable, and the parent company of the one of the hottest teams in baseball has decided to take advantage.
Liberty Media stockholders approved the split-off of the Atlanta Braves during a special meeting on Monday, a reorganization that will roll the MLB team and its associated real estate development (The Battery) into a separate publicly traded company (Atlanta Braves Holdings). The transaction is expected to be completed after the market closes Tuesday.
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For shareholders, the move should add even more value and transparency to a holding that is already up nearly 30% in the first half of the year. The Braves are transitioning into a regular asset-backed stock, eliminating their current tracking stock structure, which allows for a cleaner and less complex look for investors. For Liberty, which has a history of prioritizing value and avoiding unnecessary tax leakage, the split-off provides not only clarity but also options on the attractive trophy asset it acquired in 2007.
“The split-off positions the Braves to potentially be bought by some billionaire in a couple years after a period passes and that couldn’t have happened under the current structure,” Rosenblatt Securities analyst Barton Crockett said in an interview. “When you look at the premiums being paid for premier teams around the world, this transaction positions the Braves to enjoy some of that going forward.”
The reorganization comes as the five-time defending NL East division champs look to capture their second World Series in three years while smashing revenue records in the process. But perhaps more importantly, the marketplace has reached fever pitch. The NFL’s Washington Commanders, NBA’s Phoenix Suns and NHL’s Ottawa Senators all sold for record prices earlier this year. English Premier League soccer club Manchester United, which is also owned by a publicly traded company, could fetch more than $6 billion.
The brain trust at Liberty, led by chairman John Malone, has taken notice.
“If he gets a big bid on the Braves, he’s going to sell it,” Jon Boyar, principal at Boyar Value Group, said in an interview. “And he’s going to sell it for a lot more than $39 per share… This is non-emotional, it’s cold-blooded capitalism.”
Liberty CEO Greg Maffei told Sportico in May that they’re “happy owners” and stopped short of saying that their baseball team would be on the market once the tax-free split-off was complete.
And that’s for good reason, as the media conglomerate must allow the newly formed Braves company to trade for a certain period to avoid suspicion from the IRS. Or if Liberty wants to sell sooner, the Colorado-based company must prove there weren’t previous discussions with the new potential buyer before the announcement of the split-off, among other things. Any capital gains tax from a transaction made after this week would be directed toward the incoming buyer instead of Liberty, according to Crockett.
There’s an underlying theme of anti-taxation at Liberty (hence the name), which also owns Formula 1 and other sports-related properties. Through his career Malone has done other examples, including spinning off Starz and its stake in Charter a decade ago. The Braves’ split is the latest example of this type of aggressive planning to make the most profit for its shareholders.
“This is John Malone being John Malone,” Boyar said.
The split will make the Braves’ value proposition more digestible to fans and interested investors, and it opens the investor base, since many companies avoid investing in tracking stocks.
“This is only going to be viewed by Liberty shareholders as a net positive,” Boyar said. “It simplifies the story and signals that they’re looking to unlock value. You also have a great team. It’s happening at the right time.”
The Braves, which are having one of their best seasons, have been considered undervalued in large part because of the company’s structure, which divides it into three share classes. Those three will remain and retain the same tickers (BATRA, BATRK, BATRB), but they’ll operate under a different legal structure. Malone, who owns most of the B class shares (which have 10 votes per share), will continue to have voting control.
While it’s rare, the Braves are not the only sports team owned by a publicly traded company; Toronto Blue Jays (Rogers Communications) and New York Knicks/Rangers (Madison Square Garden Sports) also have corporate overlords. And the Braves are now best positioned as an unencumbered acquisition target, especially if the Glazer family sells Man United.
The move comes as MLB is having a renaissance of sorts, driven by the pitch clock and a handful of exciting new stars. The league must also approve the transaction in the wake of the shareholder vote, according to a source, and that process will begin soon. It’s unclear how owners around the league feel about the tax-savvy move, but enhancing the value of any one franchise should help them all.
After all, a sale would likely set an MLB record, besting the $2.4 billion Steve Cohen paid for the New York Mets in 2020. But Liberty isn’t in it to help MLB. Like other major corporations, Liberty is motivated to increase shareholder value.
“They’re not in this for the glory,” Crockett said. “They’re in this for the money.”
(This story was updated in the second paragraph to reflect the results of the stockholder vote.)
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