Braves owner Liberty Media disclosed the team’s second-quarter financial results Monday, revealing dramatic losses that underscore the impact of the coronavirus pandemic on the sports and live-events industries.
The Braves’ revenue plunged 95% in the April-through-June quarter, compared with the same period a year ago, falling from $208 million to $11 million. The team posted an operating loss before amortization and depreciation of $26 million for the quarter, compared with a profit of $62 million in the same period last year.
The Braves have taken aggressive steps to reduce costs in recent months, team president and CEO Derek Schiller said in an interview with The Atlanta Journal-Constitution.
All Braves employees making more than $50,000 per year, including those in baseball operations and across the front office, have had their pay reduced, Schiller said. He declined to disclose the percentages by which salaries were cut.
“It’s a situation that a lot of organizations are facing,” Schiller said, “and anybody who is in the live sports or entertainment business is certainly impacted significantly during COVID. And we were no different.
“When we can’t have fans (at games), and with all the other impacts COVID brings, it creates a very difficult financial situation for us. We were grateful that all of our organization understood, but nonetheless it doesn’t make it any easier. It’s just a really difficult situation.”
The pay cuts are expected to be in place at least through the end of the year. Other expenses also have been reduced.
“We have done our best to manage all operational expenses down, given the fact we have significantly less revenue coming in,” Schiller said. “(From) the very beginning of this, there has been an aggressive effort to manage all of our expenses, and that has continued to this day and will continue until we emerge out of this.”
Braves players, like others across MLB, are being paid their full prorated salaries for each game played. But with the regular-season schedule cut from 162 games to 60, they will receive no more than 37% of their contracted salary this year. The Braves’ player payroll, which was to have been around $150 million for a full season, currently is projected to be about $55 million if 60 games are completed.
As one of the few U.S. sports franchises with publicly traded stock, the Braves are required to disclose financial results that most teams keep private. Monday’s disclosures figure to draw attention across the sports business landscape as the first extensive public accounting of the financial impact of the pandemic on a team.
The Braves played no games in the April-through-June quarter, compared with 85 (41 at home) in the same period last year. The Braves’ 2020 season was scheduled to begin in late March, but the start was delayed until July 24 because of COVID-19. Although games now are being played, many revenue streams – ticket sales, concessions, parking, etc. -- remain shut off as no fans are being allowed in stadiums.
Liberty Media divides the Braves’ revenue into two categories – that from baseball and that from real estate development in mixed-use complex The Battery Atlanta. In the April-through-June quarter, baseball revenue plummeted 97%, falling from $198 million in the same period last year to $5 million. Development revenue tumbled 40%, from $10 million to $6 million.
The delayed season resulted in a “reduction to all primary sources” of baseball revenue, including local and national broadcast deals, Liberty Media said. The drop in development revenue “was primarily driven by the deferral of rental income from certain tenants” at The Battery, the company said.
In the second quarter, Liberty reported that the Braves’ operating expenses totaled $37 million, down from $146 million in the same period last year. The reduction largely was attributed to player salaries and game-day expenses.
As of June 30, the Braves carried debt of $718 million, up from $698 million March 31. Most of the debt stems from the construction of Truist Park and the continuing construction of The Battery.
The Braves are “expected to be out of compliance with certain debt covenants,” Brian Wendling, Liberty Media’s chief accounting officer and principal financial officer, said on a conference call with investment analysts Monday. “We continue to work with the lenders to obtain waivers and covenant modifications. These discussions are going well, and we are optimistic that we will have a favorable resolution by the end of the month.”
Liberty said that as of June 30, the Braves had liquidity of $329 million in cash, cash equivalents and revolving-credit capacity.