Warren Buffett has a longstanding interest in sports.
The Berkshire Hathaway (BRK.B) -) chief executive once owned a piece of a minor league baseball team and has counseled wealthy athletes from baseball’s Alex Rodriguez to basketball’s LeBron James.
Now Berkshire has a stake in the Atlanta Braves (BATRK) -), after Formula One Group (FWONA) -) distributed its stake in the Major League Baseball team to Formula One shareholders including Berkshire.
As a result, Berkshire (BRK.A) -) owns 223,000 shares of the Braves, valued as of Wednesday at $8 million.
Chris Marangi, a portfolio manager at Gamco Investors, says Berkshire has come on to something good. “It’s one of my favorite ideas of the last year or two,” he told TheStreet.com, referring to the Braves stock.
“It’s one of the few ways that investors can participate in the growth of sports-team values. Sports teams are an excellent store of value in an inflationary environment.”
The stock’s market capitalization implies a value of about $2 billion for the team, Marangi said. In June, a minority stake in the Philadelphia Phillies was sold at a valuation of $2.7 billion for the team, he said. And the says the Braves have value similar to that of the Phils.
$3 Billion valuation for the Braves
“I believe the Braves are worth over $3 billion, or $50-plus a share,” Marangi said. The stock traded Wednesday at $35.70. Forbes valued the team at $2.6 billion in March.
So what makes the Braves worth so much?
“Teams in general have value because of the tribal nature of fans,” Marangi said. “It cuts across generational and socioeconomic lines.”
The Braves are particularly well run, with a large and growing regional market in the Southeast, he said. They have had success on the field in recent years, including baseball’s best record in 2023 and a World Series title in 2021.
On the cost side, the Braves' player payroll is within baseball’s soft cap, Marangi said.
And good news for shareholders could be coming.
“The split off from Formula One should facilitate the sale of the Braves in the next year or two,” he said. Demand is high enough so that the company should get an offer it can’t refuse.
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