The Braves’ Profits Provide Glimpse into Baseball’s Books
Major league baseball teams closely guard their financial information. They have no problem talking about how much money players make, but they prefer to be more circumspect when disclosing the revenue teams take in or the scale of the profits owners make after those players have been paid and expenses accounted for. Because baseball’s ownership is a fairly insular group composed mostly of individuals and privately held businesses– and because there relatively few franchise sales to use as gauge–teams have been largely successful in preventing their financial information from going public. The Atlanta Braves present an exception.
Liberty Media, perhaps best known for its subsidiary SiriusXM Satellite Radio, purchased the Braves in 2007 for $400 million. Two years ago, they began offering stock in their separate divisions, which means the public can buy shares in the Braves as well as the real estate holdings around the stadium. It also means that, as a publicly traded company, the public is entitled to more information regarding the team’s finances than is typical. As I wrote in 2016, the club disclosed an $18 million loss in 2014 before depreciation and amortization. They were on the plus side in 2015 by about three million dollars before recording losses of about $20 million in 2016. During those three seasons, the team averaged 90 losses, with an average annual attendance of 2.1 million fans and a payroll just over $116 million per season. The financial losses in 2016 were largely attributable to a huge international signing class, most of the players from which were later declared free agents after MLB’s investigation into Atlanta’s signing methods.
But focusing exclusively on a team’s year-by-year profits obscures the financial reality of owning a baseball team because it doesn’t address the most profitable aspect of team ownership: the value of the franchise. Based on the calculations above, the Braves lost about $45 million from 2014 through the end of 2016. But Liberty Media CEO Greg Maffei has admitted profits weren’t always the main consideration for the Braves, indicating that “historically, the measurement was we didn’t lose money.” Maffei’s remarks are consistent with statements from another team owner, Rogers Communications, which owns the Toronto Blue Jays, though the Blue Jays’ financials are harder to trace because Rogers owns a whole host of assets along with the baseball team. Per Forbes:
The media giant’s CFO, Tony Staffieri, said at a conference that Rogers wants to “surface value” from the Blue Jays, which he said is a “very valuable asset for us that we don’t get full credit for.”
For the Blue Jays, “surfacing value” would likely come in the form of realizing the profits from selling the team, as Rogers might not be getting “credit” if the team isn’t reaping huge profits. Then there’s the matter of Rogers also broadcasting Blue Jays games, which might further cloud the revenues from the baseball team. (The Braves used to benefit from some of that same confusion back when Ted Turner owned the club and TBS showed Braves games, but the financial model has shifted, and the Braves now have one of the worst local television contracts in baseball.) It is clear the calculus of franchise ownership is more complicated than mere gate sales. Read the rest of this entry »