Braves Print Money for Liberty Media

Generally speaking, exactly how much money baseball teams make on an annual basis isn’t public knowledge. We can take a look at the sale of MLB franchises and know that when they are sold, teams generally make 8% annually after accounting for inflation. Profits are more difficult to decipher because owners don’t want to disclose just how much money they make, though they are sometimes quick to trumpet an operating loss. The absence of many owners claiming losses is arguably deafening, but in addition to that silence, the publicly traded Braves report their revenues every year. Over the last two seasons, they have provided Liberty Media with nearly $150 million in profits.

Baseball ownership hasn’t traditionally been an avenue for massive yearly profits. In 2001, MLB self-reported unaudited numbers to Congress after MLB’s antitrust exemption was threatened. They had announced that two franchises might be contracted, and that drew the ire of the elected representatives in Washington. It’s fair to take these numbers with a grain of salt, but on average, teams lost around $5 million per year from 1996-2001. MLB did not have a great television contract during that time, but revenues have skyrocketed since then, with significantly better TV deals (both locally and nationally) along with increases in attendance and ticket prices.

Even so, when Liberty Media purchased the Braves in 2007, it wasn’t necessarily an expectation that the club would turn a profit every year, at least according to Liberty Media CEO Greg Maffei a year ago. It was that lack of profits that made many speculate that Liberty wouldn’t be holding on to the Braves for a long period of time, but they’ve had a change in philosophy, with huge profits affecting their previous strategy.

A year ago, the Braves reported $442 million in revenue, with $404 million of that baseball-related and $38 million from business development on the real estate surrounding the stadium. Expenses are not separated in the same way, but that totaled $348 million, giving the team $94 million in profits before writing off most of that in amortization and depreciation to avoid tax liability. That amount likely includes a $50 million payment for the MLB sale of BAMTech in 2018. Compared to Forbes’ numbers, which do not include the $50 million from BAMTech, they estimated the Braves’ revenues at $344 million, which is fairly close to the quarterly report numbers and a profit of $71 million, which would also be right in line with the team’s report assuming that business development expenses were fairly close to revenues. Forbes’ numbers do come with some skepticism given the closed-off nature of MLB teams’ books, but they come pretty close with the Braves.

The 2019 season was another banner year for the Braves on the field and off. As Liberty explained in their release:

For the full year 2019, baseball revenue grew primarily due to increased ballpark operations revenue driven by higher attendance as well as growth in local and national broadcast rights. Development revenue grew modestly in the fourth quarter primarily due to increased retail tenant rental income. For the full year 2019, development revenue was flat despite the absence of revenue from the residential portion of the Battery in the current year due to its sale on October 9, 2018.

Baseball revenue grew from $404 million to $438 million. The team drew 100,000 more fans in 2019 and played an extra home playoff game. The comment regarding an increase in local broadcast rights is an interesting one. I had previously indicated that the Braves had one of the worst local television deals in baseball. The club was able to renegotiate their contract in 2013, and those negotiations were more fruitful that I had imagined. Per an AJC article by Tim Tucker:

“It’s … 83 million dollars, rising to, like, 113 (million) in 2028,” Liberty Media CEO Greg Maffei said during a presentation at the Moffett Nathanson Media and Communications Summit in New York last month. He later clarified that the final year of the deal is 2027.

That figure is roughly double my previous estimates and gives the Braves considerably more money to work with than once thought. The club’s profits ended up at $54 million, similar to the 2018 figure without BAMTech money. The team was able to turn a good profit despite a significant $74 million increase in expenses. From the release:

Revenue growth was more than offset by growth in operating expenses due to higher player salaries, increased baseball operations costs related to the new spring training facility and higher player development costs, increased obligations under MLB’s revenue sharing plan and higher concession related costs due to increased attendance.

Construction on the Braves’ new spring training facility began in late 2017 with public financing covering roughly half the total cost and the club responsible for an estimated $50 million. Team payroll increased close to $20 million according to our Roster Resource pages once buyouts are included. The “increased obligations under MLB’s revenue sharing plan” is another interesting wrinkle. The Braves jumped from a revenue sharing recipient in 2018 to a team paying into revenue sharing in 2019, one of 16 teams to do so (with the Mariners somehow also making that jump last year). While there are ways to massage revenue-sharing numbers with stadium debt and interest payments, it’s fair to assume that the Braves’ revenue in 2018 at around $350 million without BAMTech money was fairly close to average for MLB teams.

The Braves have a brand new stadium that’s going to contribute to increased revenues and their television deal is better than once thought, but overall, this is a fairly average baseball team in terms of revenue and attendance and they made more than $50 million in profits with an average payroll. We can talk about issues that make the Braves different and unique from other franchises, but their similarities are tough to ignore. The business of baseball has undergone a drastic change over just the last half-decade, and how that business is analyzed must change as well. MLB payroll has been mostly stagnant over the past four seasons as revenues have risen. Moralizing the issue might not be imperative to all, but when it comes to player moves, salaries, and team payrolls, recognizing it is a must for accuracy and truth.