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Tuesday, August 11, 2020

How bad are team finances now? Ask the Atlanta Braves.

Technically speaking, this is the 10-Q report, which is a document as filed with the Securities and Exchange Commission by publicly-traded companies.  The Atlanta Braves parent company Liberty Media made that filing on Monday, and it covers the quarter ending June 30th… the traditional beginning months of the baseball season.

The big thing that the media will note from this report involves the Braves’ revenue stream, so let’s look at that first:

Revenue is divided into “Development” and “Baseball” segments, which you can surmise represent things like Battery Atlanta vs. pure baseball operations.  Here’s the breakdown:

Baseball revenue for the past 3 months:  a scant $5 million
For the past 6 months:  $17 million.
Development revenue for the past 3 months: $6 million
For the past 6 months:  $16 million.
How bad is that? The baseball side is down from $198 million over the same quarter in 2019 to $5 million now… that’s a 97.5% reduction.

At least their renters are still (mostly) sending checks:  that side is down “only” 40% from $10 million to $6 million.

RoyalsRetro (AG#1F) Posted: August 11, 2020 at 10:07 AM | 19 comment(s) Login to Bookmark
  Tags: braves, liberty media

Reader Comments and Retorts

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   1. snapper (history's 42nd greatest monster) Posted: August 11, 2020 at 11:14 AM (#5969023)
Literally no one except the owners should care about the finances of MLB teams. If every single one were to go bankrupt, it wouldn't make much difference.

The players would still be there, the stadiums would still be there, the networks would still be there. 30 other rich guys could re-constitute a professional league in very short order.
They'd even get the team names and logos as soon as the liquidation sales were finished.
   2. Ron J Posted: August 11, 2020 at 11:22 AM (#5969024)
#1 Funny. The Ottaw Rough Riders went under financially. They just folded without declaring bankruptcy so the previous owner expected payment for the name rights when the team came back a few years later.

Hence we've had first the Renegades and then Redblacks.
   3. Random Transaction Generator Posted: August 11, 2020 at 11:24 AM (#5969025)
30 other rich guys could re-constitute a professional league in very short order.

If you just saw 30 owners of a professional sports league go bankrupt at the same time, why would you think that 30 more people would jump in and invest their money in a sport like that?

   4. Rally Posted: August 11, 2020 at 11:44 AM (#5969031)
I assume they would be buying low, not pay 1-2 billion for teams in the smallest markets.
   5. winnipegwhip Posted: August 11, 2020 at 12:20 PM (#5969041)
I assume they would be buying low, not pay 1-2 billion for teams in the smallest markets.

Plus a new start with labor which would be looking for an opportunity to make money again...granted it would be a lot less but it is better than nothing.
   6. RoyalsRetro (AG#1F) Posted: August 11, 2020 at 12:41 PM (#5969046)

If you just saw 30 owners of a professional sports league go bankrupt at the same time, why would you think that 30 more people would jump in and invest their money in a sport like that?

Because we have seen a number of failed football leagues to rival the NFL, and they just keep happening despite lots of people losing lots of money.
   7. depletion Posted: August 11, 2020 at 01:49 PM (#5969064)
There haven’t been a lot, or any, 10-Q statements filed for ball teams, have there? I would want some expertise in reading such statements ( I have none), depreciation and so forth, before I drew conclusions about the Braves.
   8. John Northey Posted: August 11, 2020 at 02:26 PM (#5969068)
I suspect if MLB went kaput we'd see a couple of smaller leagues emerge ala the 1800's - an east coast one and a west coast one and maybe a central one as well. I suspect centers like Seattle would lose out or end up with a AAAA setup (Seattle/Portland/Vancouver Canada/not sure who else) while SF/Oakland/LA/Anaheim/SD all form their own league with Arizona probably to balance it out). It'd be very chaotic for a few years until a few started to merge together and we get a new World Series and the like. Players would hop leagues, some minor leagues might aspire to 'major' status, etc.
   9. JRVJ Posted: August 11, 2020 at 04:15 PM (#5969097)
Literally no one except the owners should care about the finances of MLB teams. If every single one were to go bankrupt, it wouldn't make much difference.

At a minimum, it would entail a lot of uncertainty for the sport, including the salary of MLB players.

Mid-to-long term, players could well end up making more money, but in the short term, surely they'd take a haircut (in some cases, especially FAs, a BIG haircut).
   10. Never Give an Inge (Dave) Posted: August 11, 2020 at 04:50 PM (#5969102)

The Indians were briefly a public company in the late 90s. You can find the filings, although I'm not sure how relevant the financials from 20 years ago would be to today.
   11. RoyalsRetro (AG#1F) Posted: August 11, 2020 at 05:50 PM (#5969116)
A couple prospectuses for the Marlins, Pirates, maybe a few other teams were leaked to Deadspin a few years back.
   12. Walt Davis Posted: August 11, 2020 at 06:43 PM (#5969126)
Possibly they and we are focusing on the wrong number. In one quarter last year, the Braves generated $200 M of revenue. Presumably they generated another $200 M in the other quarter they actually play baseball. Presumably they add some revenue in the other two quarters but probably not a lot relative to the big 2 (unless TV and league payments are spaced out quarterly). The Braves' 2019 year-end 40-man payroll (per Cots) was $136. They left them at least $264 to play with.

Anyway, sure, in a quarter in which no baseball is played, I'd imagine the revenues of a baseball team are quite low but then so are the expenses. (Isn't that essentially their argument regarding minor-league pay, that it's equivalent to a traveling summer carnival not regular employment.) The "shocking" bit this year will be this quarter when it's being played in front of no fans.
   13. Zach Posted: August 11, 2020 at 06:57 PM (#5969128)
I read an economics riddle one time: "You wake up one morning and learn that your closest competitor has gone bankrupt. Should you be happy or sad?"

The point being that when someone who is in *almost* the same business as you is facing hard times, you're likely to be facing hard times yourself.

Players and owners aren't even competitors. If the owners go broke, the players won't be far behind.
   14. The Duke Posted: August 11, 2020 at 07:14 PM (#5969130)
1. That’s a bizarre view of macro-economics. A general principle in most business settings is not to invest in businesses that will bankrupt you. Now, if your argument is that there will be 30 owners with vanity wealth that don’t care, that’s possible but not likely. If your argument is that the economics will return to 2019 stability, that’s a fine theory.

13. The answer every time is “sad”. No one can out run a declining or disappearing market. I’ve been working in one for 10 years and one by one our competitors go away and each year we do worse.

At any rate, the real losers will be the players. Salaries will be so low next year and the year after, it will boggle the mind. Bryce Harper and manny machado are SO happy.
   15. Rally Posted: August 11, 2020 at 07:47 PM (#5969134)
Mookie and Mikey did well to lock in their earnings when they did too.
   16. John Northey Posted: August 11, 2020 at 08:19 PM (#5969136)
Unlike 1994 the players who waited might find themselves with less. I remember reading that Gord Ash, the Jays GM at the time, felt salaries would go down after the strike so he held off negotiating with Roberto Alomar until it was all done. Instead new records were set over the next few years and the Jays had a mess at 2B for decades.
   17. Walt Davis Posted: August 11, 2020 at 10:07 PM (#5969153)
There was a "contraction" around 2002-3 as well. We went from guys like Sosa at $18 and Manny at $20 (and of course ARod at $25) to Vlad and Thome getting about $13-14 and of course the Rangers eating a lot of ARod's salary. (All from memory so don't bet on them.) Took a good bit before salaries really kicked back up. Revenues had flattened out over those years as well I believe but "flat" is not "decline" so the "contraction" was still more about owners hardballing.

Salaries will be clawed back this time as well I'm sure but it's also likely to be a case where it's not really necessary. Obviously this year is a revenue disaster on an unprecedented scale and next year will probably be bad but revenue growth over the last 15 years has far outpaced salary growth so assuming there's a reasonable rebound next year and things are back where they were after (total WAG) 5 years, MLB could afford to maintain salaries at these levels. But they won't and the players won't have a lot of options for alternative employers.

And if baseball is in that big of trouble then so are all the other professional sports.

On dying industries ... it's often more a case of overcrowded industries or businesses not returning enough profits. What was once a "broad market" industry collapses, most go out of business, but then it often becomes a niche market industry. As #4 implies, there are lots of firms out there that specialize in vulturing bankrupt firms, dying industries, etc. I mean there is apparently more demand for LPs than there is capacity to produce them.

And there are always restaurants. How often do you see the same space roll over every 6-12 months? No shortage of suckers even though that spot has proven itself to not be an ideal place for a restaurant. I recall one such spot where I used to live -- must have had at least 10 different restaurants there for the first 10 years I lived there then a decent all-you-can-eat Chinese buffet spot went in there and it became one of the most popular lunch spots around, packed every day. They were certainly still going strong when I left town about 8 years later.

So sure, if MLB revenues are decimated then MLB payroll will be decimated. But I'm pretty confident there will be MLB in 2050 by which time I'll likely be some combination of dead and demented. (I wouldn't bet on how many teams there will be nor what revenues/payroll look like.)
   18. The Yankee Clapper Posted: August 11, 2020 at 11:49 PM (#5969168)
Before we shed too many tears over the MLB owners ‘desperate’ financial situation, let’s remember that in the midst of a pandemic the Mets are for sale, and reportedly will fetch a price in excess of $2B. Unless that drops significantly, MLB is doing OK.
   19. Karl from NY Posted: August 12, 2020 at 03:06 PM (#5969291)
There was a "contraction" around 2002-3 as well.

This was because the 2002 CBA substantially raised revenue sharing and introduced the luxury tax. A superstar is worth only 70% as much if the other 30% of the marginal revenue he adds goes to other teams.

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