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Atlanta Baseball entering a Brave New World with a Stock Spin-OffBraves are now Publicly Traded

On November 17, 2022, Liberty Media Corporation (“Liberty Media”), the public corporation that owns the Atlanta Braves and certain real estate projects associated with the club, announced that its board of directors authorized management to pursue a split-off of the team and its assets and liabilities into a new tracking stock to be known as Atlanta Braves Holdings, Inc. The move is pending approval from the current Braves holding company, Braves Holdings, LLC, and Major League Baseball.

Stated differently, this move will create a separate entity that will own the Braves and all associated liabilities and assets.

A stock spin-off occurs when a publicly traded company separates part of its business into a second public company and distributes its shares in the new business on a pro-rata basis to existing investors. Under this spin-off, Atlanta Braves Holdings, Inc. will hold all the businesses, assets, and liabilities currently attributed to the Braves Group, including Braves Holdings, LLC, which is the direct owner and operator of the Atlanta Braves Major League Baseball Club. Additionally, Atlanta Braves Holdings, Inc. will control certain assets and liabilities associated with the Atlanta Braves’ stadium and mixed-use development project, The Battery Atlanta, and corporate cash.

Historically, Liberty Media has had three divisions with their own Series A, B, & C common stock: SiriusXM, Formula One, and the Atlanta Braves.

The most notable difference between the different classes of common stock is the voting rights assigned to that particular series or class of stock. For example, a shareholder of Class A common stock shares could have their vote count thrice, whereas the holder of a Class B or even Class C would count twice then once respectively. This, of course, can and likely would vary from company to company.

In order to make this happen, Liberty Media will trade common stock shares in the divesting company, Atlanta Braves Holdings, Inc., in exchange for shares of its Series A, B, and C shares of the current Liberty Braves common stock. It is expected that as it relates to the intergroup interest in the Braves held by the Liberty SiriusXM and Liberty Formula One groups, these interests would be extinguished in a yet-to-be-determined fashion.

What is a publicly traded company?

A publicly traded company is a corporation whose shareholders have a claim to part of the company's assets and profits. Through the free trade of shares on stock-on-stock exchanges or over-the-counter (OTC) markets, ownership of a publicly traded company is distributed among general public shareholders. These corporations are registered with the Secured Exchange Commission (SEC) and sold the initial stock to the public via an Initial Public Offering (IPO).

Generally speaking, a company goes public in order to raise funds from the general public as opposed to a collective such as a private equity firm or just from one person like an angel investor. The advantage is that it becomes a publicly owned entity and has potential access to albeit at a slower pace, a larger influx of cash. The downside, however, is that the public entity is subject to more scrutiny from regulating authorities such as the SEC.

Are there any other publicly traded sports franchises?

There are three other United States-based sports franchises listed on public stock exchanges: the Green Bay Packers, the New York Knicks, and the New York Rangers. While the Packers are not actually publicly traded, the organization is not owned by a small ownership group as is common with professional franchises, but rather by a publicly held non-profit corporation comprised of 537,000 shareholders. The New York Knicks and Rangers, on the other hand, are not individually listed but are owned by Madison Square Garden Sports Corporation which is listed. Madison Square Garden Sports Corporation had a split that led to the creation of Madison Square Garden Entertainment. This split-off branch created a publicly traded company for its entertainment ventures including the venues Madison Square Garden and Radio City Music Hall.

While it is unclear why Madison Square Garden Sports Corporation and Madison Square Garden entertainment had a spin-off, one could rationally assume that it was to consolidate the assets of each branch and also to offset any potential losses. While the spin-off has been talked about going as far back as 2015, it is interesting that this happened in April 2020, during the “Covid Era.” Given that live performances and the sorts were not happening for the foreseeable future, but sports could resume in due time, and the sports teams drew in large sums of money from media rights, separating the assets and liabilities of the sports and entertainment entities seems like a rather logical move. However, worth noting, this is not the actual reason but merely a theory as to why it finally happened five years after the initial talks of it.

As it stands now, it appears that this new Braves organization will take a form similar to that used by Madison Square Garden Sports Corp and its ownership of the Knicks and Rangers. Namely, by separating the different “classes” of assets and liabilities. Formula One is proving to be quite lucrative, as is The Braves organization and its related ventures, especially coming off its World Series title in 2021. SiriusXM, on the other hand, has seen its subscribers decline over the years, with its peak being in 2019 after its acquisition of Pandora Radio. Again, this is also just a theory, this in no way means SiriusXM is going under or even really facing financial difficulties as it is hard to discern what goes on in the boardrooms. However, this theory does at least seem rational. Either way, the team is venturing into a Brave New World by becoming now the second publicly listed and traded sports organization in the United States, and it will be very interesting to see how the stock performs in the years to come.

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