As a lifelong Yankee fan (proud owner of World Series rings with my last name on them), I am shunting my loyalties and coming out in favor of the Atlanta Braves (NASDAQ: BATRK) (NASDAQ: BATRA) following the split from Liberty Media in July of last year. The Braves, formerly a tracking stock, now represents a C-corp. Economically they are the same. With BATRA having one vote per share (~10 million shares outstanding) and BATRK being non-voting (~50 million shares outstanding).

Acquisition Potential

There are very few publicly traded sports teams, making the Braves an attractive asset as most teams are privately owned. Post-split, the Braves is well-positioned as an acquisition target for potential buyers, and historical trading prices of sports teams do not always reflect underlying current economics. For instance, the New York Mets were bought for $2.42 billion in 2020, despite not including the team’s television rights, the stadium, or any land around the stadium.

Revenue and Valuation

Unlike many sports teams, the Braves have been consistently profitable, with control over their television rights and a significant mixed-use real estate development around their stadium, Trust Park. The team’s broadcasting revenues have remained robust, and the Braves’ strength is underscored by the attractiveness of the Atlanta market, considered one of the largest and fastest-growing markets in the country. With a valuation supported by Forbes at $3.5 billion, the current market cap of $2.42 billion and net debt of $560 million further positions the Braves for potential growth.

Strategic Timing

I believe that the two years post-separation between Liberty Media and the Braves paves the way for a possible sale, making it an opportune moment for potential buyers. The deliberate structuring of this arrangement enables a clean tax transaction, potentially avoiding negative tax consequences for shareholders. This strategic setup could facilitate a sale at any point without adverse tax implications, aligning with the owners’ willingness to liquidate.

Considered Risks

Potential risks such as a downturn in the fortunes of the Braves, a league strike, another pandemic, or significant changes to the broadcasting contract could impact the value of the asset. Despite this, the team’s well-run operations and long contracts for costs provide a stable foundation. Given the rarity of class A sports franchises attached to high-quality real estate available for sale, the Braves present a unique investment opportunity.

Conclusion

The Braves represent a rare and attractive investment opportunity due to its strong financials, potential acquisition appeal, and strategic timing for a potential sale. It’s a compelling value proposition for investors looking for growth potential.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.