FOLLOW THE MONEY
The 11 most valuable Major League Baseball teams, according to Forbes’ estimate of their worth:
1. Yankees $2.5 billion
2. Dodgers $2 billion
3. Red Sox $1.5 billion
4. Cubs $1.2 billion
5. Giants $1 billion
6. Phillies $975 million
7. Rangers $825 million
8. Cardinals $820 million
9. Mets $800 million
10. Angels $775 million
11. Braves $730 million
Note: The Tampa Bay Rays are the least valuable MLB team, according to Forbes, at $485 million.
Liberty Media CEO Greg Maffei scoffed when a Wall Street analyst recently suggested to him that the Braves are worth about $650 million, which is $200 million more than the company paid for the team seven years ago.
“Oh, that’s way light,” Maffei replied.
He added: “If you’ve got another Braves to sell me at 650, I’ll buy them, let’s put it that way.”
Forbes magazine just came up with a higher valuation for the Braves: $730 million, up 16 percent from its estimate a year ago but perhaps still below what Maffei had in mind.
According to Forbes’ 17th annual season-opening study of Major League Baseball franchise values, teams are now worth an average of $811 million, up 9 percent from last year. Two teams (Yankees and Dodgers) are valued at $2 billion or more and three others (Red Sox, Cubs and Giants) at $1 billion or more. The Braves rank No. 11 on this year’s list.
Three key factors driving values higher are MLB’s lucrative new national TV deals, which take effect this season; big jumps in many teams’ local TV revenue, resulting from the success of regional sports networks; and new stadiums, whether open or planned. All three drivers are in play for the Braves.
When Maffei shot down the analyst’s $650 million estimate during a presentation at an investment conference in Palm Beach, Fla., last month, he wouldn’t put his own number on the Braves’ value. But a recording of the event makes it clear that the Braves, acquired by Liberty as a vehicle to save on taxes, have exceeded the company’s financial forecasts.
“Not only were they part of a tax-oriented transaction with Time Warner,” Maffei said, “but the reality is two big upticks — a re-cut TV deal for a bunch of reasons and a new stadium — both are very helpful in increasing value for the Braves.”
When the same analyst said the Braves are “worth whatever a really rich guy will pay,” Maffei replied: “Somewhere, I’m sure that’ll happen.”
But he gave no indication of how long Liberty intends to own the team.
The Braves’ revenue increased by $36 million to $261 million last year, following a $17 million increase in 2012, according to Liberty’s financial filings with the Securities and Exchange Commission. The Braves’ operating income (revenue minus operating expenses) before depreciation, amortization and certain special charges increased by $20 million to $42 million last year, according to the filings.
Liberty attributed last year’s increases primarily to changes made in the local TV deal when the Braves moved an additional 45 games to the Fox regional sports networks from Peachtree TV.
The Braves won’t disclose the value of the reworked deal.
But team president John Schuerholz said the changes have elevated the Braves to the middle of the pack among MLB teams in local TV revenue, a significant improvement.
Liberty Media, a Colorado-based company that owns interests in a range of media, communications and entertainment businesses, acquired the Braves in an unusual trade in 2007.
At the time, Liberty wanted to sell a huge block of Time Warner stock it had long held and Time Warner wanted to buy back the stock. The Braves became a tool for Liberty to sell the stock without having to pay taxes on the gains.
The trade: Liberty swapped 68.5 million shares of Time Warner stock for the Braves (valued by Liberty at $450 million at the time), the Leisure Arts crafts magazines and $960 million in cash.
If Liberty had simply sold the stock for cash, it would have incurred a huge tax bill. But exchanging the stock for operating assets — the Braves and the magazines — in addition to cash allowed the transaction to be consummated tax-free under the law.
Despite the Braves’ increase in value, the team remains a tiny portion of Liberty Media. The company’s other holdings include controlling interest in satellite radio company Sirius XM and major stakes in cable operator Charter Communications and entertainment company Live Nation, among other businesses.
