A new series investigates the Braves’ publicly traded business

The Braves have to file quarterly financial reports now, giving us some insight into their operations, and by extension that of the rest of the league. And now Rob Mains is on that beat.

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Last November, the Braves’ ownership changed hands. Well, sort of. They’re still owned by Liberty Media, but now the Braves are their own company, known as Atlanta Braves Holdings, LLC, with their own publicly traded stock. Which means they have to create detailed reports that other Major League Baseball clubs do not, as a window into their financial successes and failures.

Sure, they can still bend the truth or only show it through a lens that will trick you into seeing something that isn’t there — being publicly traded doesn’t suddenly make you ethical or moral or honest — but there’s a bit more reason for the Braves to be, at the least, more honest than the other 29 clubs, since they’re in the interest of attracting investors who are, comparatively, expecting things to be on the up and up. As Rob Mains explained for Baseball Prospectus:

Unusual arrangements have to be disclosed. The family-owned parking business has to be reported. Accelerated expenses usually can’t be used to reduce profits. The numbers released by the company will be scrutinized by professional investors and the government. This is nothing at all like the A’s saying, “We’re going to lose $40 million this year, take our word for it.” The Braves’ numbers will be visible to everyone, and must comply with generally accepted accounting principles.

The work of Mains is actually what I want to spotlight here. That quote comes from the first entry in what will be a series, in which he analyzes the quarterly reports the Braves file for the Securities and Exchange Commission, with the idea being that it will give us insight into what the economics for the rest of the league actually look like. All of that information is hidden, it’s all whatever the teams choose to report and how they choose to report it to the public, and as anyone who reads this newsletter knows, there’s basically no reason to trust that those reports aren’t just made up to make teams look like sympathetic mom and pop shops just trying to get by.

Mains basically presented the series as if it might be boring to a lot of people, but it’s certainly not boring to me: it should be a very useful endeavor, especially given Mains’ background analyzing reports just like these in a previous life. It’s actually already paid contextual dividends, too: the third entry in the series is actually on the Padres, and what their $50 million loan can tell us about the financial state of the organization.

Maybe you wondered why I didn’t cover that news when it hit on November 1, but there were some good reasons for that. The most significant one, for me, is that it was unclear what it even meant: as Evan Drellich and Ken Rosenthal even stated within their story, teams are able to take these loans out, for up to $100 million, with MLB’s approval. And MLB will even hook them up with the lender through a program they have if that’s what’s needed. Teams have debt, often in the service of that debt converting into larger profits down the road, and they’re allowed a certain amount of debt at a time, too, without MLB starting to panic about it. So it wasn’t clear if it was a big story or not that needed any kind of expanding upon, if it was anything more than the Padres cutting costs a little bit after the loss of their television contract, or if that event — which led to MLB covering most, but not all, of those lost funds — simply led to a short-term need for cash that the team would have otherwise had, and the loan is already safely on its way to being paid back or what have you.

As Mains explains, we still don’t know what the loan means. But his expertise in this arena did allow for a paragraph like this one, on the payments Diamond stopped giving to the Padres when the contract was broken, to help illuminate what it could mean:

Importantly, relative to the Padres’ loan, we don’t know the timing of the payments. Note that the Braves reported $69 million in broadcast revenues in the third quarter. (Some of that, as with the Padres, is from national rather than regional contracts.) But those are accrued revenues, the amount that the team earned during the quarter. It’s not necessarily the amount it was paid. Service contracts are often paid in arrears—that’s why you get paid on the 15th and 30th of each month for the work you performed over the prior 15 days—and it’s possible MLB’s check to the Padres for the last several weeks of the season got paid well after September. That would create the need for a short-term loan that would be easily repaid.

We still don’t know if there’s reason to worry about the Padres’ finances, if they’re going to quickly reverse the spending they’ve been doing of late, if the death of owner and chairman Peter Seidler will change the team’s financial outlook or willingness to spend. There’s a lot we don’t know. But thanks to Mains’ deep dives here on the Braves and these systems, we’ve already seen a little light shed on what could be going on in San Diego. It’s a series to keep an eye on, is what I’m getting at, as we should be able to learn something from these analyses.

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