Sports have officially entered a new paradigm that has connected some of the most iconic sports franchises to Wall Street in ways that were unheard of previously.
The appeal from Wall Street's view is obvious. Values for sports franchises have shot up in recent years, and there are few signs that the trend won't continue in the near future.
"The values are skyrocketing for understandable reasons and will likely continue to rise at a healthy pace in the foreseeable future. Revenue streams, such as media rights deals, keep expanding. And there’s a bigger middle class around the world that can consume sports," Phil de Picciotto, founder of the Octagon sports agency, told TheStreet recently.
A LendingTree survey of about 1,600 Americans, shows that 41% of us will spend money on sports this fall. A total of 21% said they would spend on tickets for games, 16% for merchandise, 15% on food and alcohol and 8% on sports betting.
With all of that money flowing in, it's no wonder sports is receiving Wall Street's attention.
Liberty Media announced Thursday that its board of directors has authorized management to pursue a "split-off" of Major League Baseball's Atlanta Braves franchise into a new tracking stock.
The move brings the Braves closer to a sale.
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Braves For Sale, Maybe
The Braves will be part of an asset-backed stock that features the team, its associated real estate development project, a four acre project that will house an office building the team is building and leasing, and the Brave's stadium, Truist Park.
“These actions will provide greater investor choice and enable targeted investment and capital-raising through more focused currencies, while maintaining an optimal capital structure for Liberty Media and preserving optionality with respect to our subsidiary SiriusXM and our Live Nation stake," Greg Maffei, Liberty Media President and CEO said.
But the real significance of the move, is that it increases the value of the Braves, and makes the team easier to sell if it ever comes to that by eliminating some complicated tax issues, according to the Atlanta Journal-Constitution.
“Among baseball teams, Baltimore and Washington are rumored to be contemplating a sale. We’d argue, I think with some reasons, that the Braves are a far more attractive asset,” Maffei said during an investor day presentation, according to The Hollywood Reporter.
The Los Angeles Dodgers are reportedly also up for sale, with some people speculating that the team could go for an MLB record $3 billion.
The Braves beat the Dodgers to win the 2021 World Series.
Liberty Media Post-Split
Following the completion of the split, Liberty Media will create a new third tracking stock group, the Liberty Live Group, that will include Liberty SiriusXM Group and the Formula One Group.
Outstanding shares of Liberty Media's Series A, Series B, and Series C common stock will be reclassified into shares of the corresponding series of both new Liberty SiriusXM tracking stock and Liberty Live tracking stock.
“We plan to split off the Atlanta Braves into an asset-backed stock to better highlight its strong value. Additionally, post Split-Off, we plan to recapitalize all of Liberty Media’s remaining common stock into three tracking stock groups,” said Maffei.
Earlier this month, Breach Inlet Capital, a Liberty Media investor, sent a letter to Liberty's board saying that the company is undervalued and outlined reasons for the Braves to be spun off.
