• Exclusives

    Should Liberty Media sell the Braves? Careful what you wish for.

    By Kent Covington

    Commissioner, Bud Selig and Braves CEO, Terry McGuirk

    I hear it every day in the Twitterverse… “Liberty Media sucks! I wish they’d sell the Braves to someone who gives a @#$>*&# about the team!”

    But be careful what you wish for.  You see, Liberty Media doesn’t suck as an owner quite as much as you think. In fact, they don’t suck at all.

    If you’re among those pining for new ownership, I understand why you feel the way you do. We all saw the division rival Philadelphia Phillies outspend the Braves nearly twofold last season. And we hold fondly the memories of Ted Turner opening wide his checkbook throughout the 90’s, when the Braves were among baseball’s biggest spenders. We understand that the team’s last corporate owner, the callous and miserly AOL-Time Warner, slashed payroll while referring to the Braves as a “non-core asset”.

    Then we watched as AOL-TW unloaded the team to its present owner, fellow mega-media conglomerate, Liberty Media, in a stock swap. The amply reported details of that exchange revealed Liberty Media’s primary motivation for consummating the deal… tax savings. And all the while, an actual flesh-and-blood suitor, Home Depot Co-founder and owner of the Atlanta Falcons, Author Blank, was left standing curbside like a girl stood up by her prom date.

    All of this is true.

    Now, I have both good news and bad news for you. Since most people prefer to get the bad news out of the way first, we’ll start there.

    The bad news: It’s unlikely that the Braves ownership picture will ever get much better.

    The good news: The bad news isn’t that bad.

    Step back in time with me for a moment. It’s the roaring 90’s in Atlanta. The Braves are clanking turnstiles at the gate with the best of them, and “America’s Team” is drawing solid national TV ratings on TBS. Attendance is up, media revenue is high, and Braves owner, Ted Turner, isn’t shy about reinvesting all of that income into attracting/keeping talented players.

    Sadly, all of this would soon begin to change.

    Around the turn of the new century, Braves ratings on TBS began to slip. Each year, ratings were lower than the last. TBS gradually reduced the number of Braves games it carried before removing Braves broadcasts from the network all together in 2007. It wasn’t that the team wasn’t winning. When ratings began to weaken, they were still years away from the end of their mind-bending 14-year division pennant streak.  Burgeoning media competition was likely responsible for the decline. More ways to watch baseball, nationally, and more media competition in general.

    Almost simultaneously, Braves home attendance also began to fall off. Again, the team was still winning, so lack of a quality product certainly wasn’t the problem. Why the decline in attendance? I believe there was a combination of several factors that artificially inflated attendance throughout the 90’s and that those factors dissipated as the decade drew to a close. But that’s a topic for another day.

    And of course, somewhere in the middle of all of that, Turner Enterprises was gobbled up by Time Warner, which was gobbled up by AOL, and… well, you know the rest.

    Fast forward to 2012. The Braves no longer benefit from national broadcasting revenue, and mediocre attendance is the new norm at Turner Field. The team’s revenue ranks somewhere near the middle-of-the-pack. Therefore, their payroll is also middle-of-the-pack.

    Here’s the thing: The truth is that revenue, not the frugality or generosity of a team’s owner, is by far the greatest determining factor in that team’s payroll. While some owners demand their teams earn a yearly profit, rare indeed is the owner who is both willing and able to eat giant annual losses. Even Ted Turner didn’t absorb huge deficits.

    When revenue was up, spending was up. Now that revenue is down, spending is down. You’ll find a close relationship between income and spending totals throughout baseball.

    So what about Liberty Media?  Does it allow the Braves to reinvest most of its income?

    Atlanta Braves President, John Schuerholz

    Yes. According to a recent report, the Braves have operated within a few percent of break-even level since Liberty acquired the team, and they even lost money last season.

    Liberty Media has made clear the fact that they view the Braves as an appreciating asset. One day, they will sell the Braves. When they do, they want the franchise to be worth substantially more than it’s worth today. For this reason, Liberty’s not concerned with annual profits, and the team is free to reinvest everything it makes to keep the franchise strong and its value growing.

    But it’s not all about spending. When you evaluate the quality of a MLB owner, you should also pay attention to what I call “the Angelos factor”.

    I happen to know a few Baltimore Orioles fans, and to a one, they all share the same gripe.  “Peter Angelos (team owner) is willing to spend, but he keeps screwing things up!”  Angelos has a reputation for meddling in the affairs of team management; of dictating personnel moves from the owner’s box.  Angelos is not a faceless corporation, but a human being who is passionate about his ballclub and is willing to open his wallet. In short, he’s all the things Braves fans long for. Yet, he is not beloved by the Orioles faithful.

    There is something to be said for dispassionate corporate ownership. Such owners are more likely to stay out of the way and allow team management to do its job. Liberty Media, for example, has zero involvement team operations.

    Could the Braves’ ownership situation be better? Possibly. Perhaps Author Blank, for example, would be willing to swallow an even bigger loss than the deficit the Braves posted last year. Maybe he would even be willing to do the same every year.

    Maybe not.

    Again, it’s hard to find an owner willing to take a bath every year on the balance sheet. Revenue largely dictates spending throughout Major League Baseball.

    Maybe a private owner would abstain from meddling in team operations.

    Maybe not.

    Liberty Media allows the Braves to spend everything it makes, and they stay out of management’s way. Not bad. Not bad at all. In fact, that’s pretty good. Things could be a little better, but they could also be a lot worse.

    Whenever Liberty decides to sell the team, new ownership may or may not be an improvement. Either way, contrary to popular belief, it ain’t all that bad right now.

    By the way, the Spring Preview Fried Baseball podcast up now. You can hear it here.

    Also, before you go, check out the Lineup Card on the BravesWire homepage with headlines from over a dozen Braves news/opinion sources.