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Braves’ struggles extend to the stock market

Accustomed to being assessed by the standings, the Braves now have another daily gauge: the stock price. And by either measure, they are faring poorly.

As the Braves have settled into last place in the National League East, the team’s stock has fallen more than 50 percent from the level at which some of it opened trading on the Nasdaq exchange two weeks ago.

“This has been off-the-charts crazy,” Robert Routh, an analyst who follows Braves owner Liberty Media for New York-based FBN Securities, said of the team’s stock performance. “I never thought this would get as low as it has.”

The Braves stock was created when Liberty Media divided its holdings into three tracking stocks, each tied to a subset of the company. Investors now can buy and sell shares in the Braves separate from the rest of the Colorado-based conglomerate.

The Braves’ Series A shares (symbol BATRA) closed Friday at $15.64, down 56.5 percent from their opening price on April 18. The team’s Series C shares (symbol BATRK) closed Friday at $14.92, down 44.7 percent from their opening price on the first day of trading. The different series have different voting rights for shareholders.

The Series A shares debuted April 18 at $36, which some Wall Street analysts later attributed to mispricing by market makers. The shares plunged to $19.95 by the end of the first day and have dropped another 21.6 percent from there.

While the Braves’ on-field results have been criticized by sports media, the team’s stock-market results have received similar reviews from financial media.

Business news network CNBC ran this headline on its website: “Atlanta Braves — bad baseball team, worse stock.” The article began, “Note to sports team owners: Don’t float stock in your team when they have the worst record in their league.”

Liberty Media, controlled by billionaire mogul John Malone, replaced its previous stock with the new tracking stocks — one for the company’s majority stake in satellite radio provider SiriusXM; one for the Braves, including the mixed-use development under construction next to the team’s new Cobb County stadium; and one for Liberty’s assorted other holdings.

Each share of Liberty’s previous stock was exchanged for one share of Liberty SiriusXM Group stock, 0.1 share of Liberty Braves Group stock and 0.25 share of Liberty Media Group stock (which includes the company’s stakes in concert promoter Live Nation and other businesses).

Analysts and other observers have offered a number of reasons for the Braves stock’s early performance: lack of clarity about how the Braves should be valued, given that there are few other publicly traded sports teams for comparison; selling by shareholders who had no interest in a baseball team as part of their Liberty holdings and now can dump the Braves while keeping the parts of the company they prefer; and the team’s on-field performance and its expected impact on attendance.

The delicate balance between sports and stocks surfaced during a recent investors meeting in Atlanta, when Braves CEO Terry McGuirk was asked if he is ultimately building the team for wins or for profits.

McGuirk: “We’re going to build it for wins and value.”

Investor: “Not for profits?”

McGuirk: “Profits are sort of an irrelevant thing in baseball. We all go towards value creation.”

Routh, who attended the meeting, understood McGuirk’s point: The biggest paydays for MLB owners long have come on the appreciation in franchise values.

Still, Routh said, “people didn’t necessarily take that as a good harbinger for the stock,” given Wall Street’s attention to quarterly results.

“There’s a reason why most sports teams are not publicly traded,” Routh said, “and that reason is they’re very hard to value.”

Liberty Media reported in a filing with the U.S. Securities and Exchange Commission that the Braves had operating profit before depreciation and amortization of $3 million last year, out of $243 million in revenue.

Based on current stock prices, the Braves have a market value below $700 million, far short of the $1.175 billion Forbes magazine estimates the team is worth.

“The discount is somewhat ridiculous, especially if you look at recent sales of sports franchises,” said Routh, who believes a Braves sale would fetch a price much higher than the current market capitalization.

“The ultimate highest price would be … in some form of a sale, usually, ” Liberty Media CEO Greg Maffei said. “As an investor, you’re sort of betting on that long-term prospect that somewhere down the road there’s value.”

The Braves stock had its best day Thursday, snapping a four-day losing streak by gaining about 6 percent from Wednesday’s close, after news that another MLB team, the Seattle Mariners, would be sold at a valuation of $1.4 billion.

Liberty Media, which acquired the Braves in a complex 2007 deal driven by tax savings, has drawn much scorn from Braves fans, especially for the team’s low player payroll. Maffei said the company has no current plan to sell the Braves, but he acknowledged it wouldn’t be in Liberty’s nature to own the team forever.

“Liberty has been a company that has tended to move through assets,” Maffei said.

Typical of the company’s financial maneuvers, the new stock structure is complex.

A 20-percent interest in the Braves is assigned to the Liberty Media Group tracking stock rather than to the Liberty Braves stock. Why? “Pure and simple to have some additional firepower, some additional liquidity, we could tap into over time,” Chris Shean, Liberty’s chief financial officer, told investors.

McGuirk said the Braves “don’t intend to change anything” in how they operate the team as a result of having baseball’s only publicly traded stock. But the stock affects top team executives financially because, according to Maffei, part of their compensation will be in the form of stock options.

“One thing about sports franchises is they can change on a dime,” Routh said. “That’s the positive for a team like the Braves because it’s hard for them to get much worse.”

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