Atlanta Braves postseason bumps annual revenue to $404M

Follow the money out

A year ago I wrote about LMC’s 2017 financial report and as far as possible where the money went. One issue of concern for the Atlanta Braves came in the form of excess debt.

In 2015 and 2016 the Braves failed to comply with MLB’s debt service rules (pg I-47.)  As a result, they are “now subject to certain remedial measures” as well as being required to repay that debt.

The Atlanta Braves made a significant effort to come into compliance and prevent MLB from taking direct control of team finances. According to Tim Tucker writing for the Atlanta Journal-Constitution, total debt dropped by just over $130M.

The financial results released Thursday show that the Braves reduced their debt to $494 million at year’s end, compared to debt of $626 million on Sept. 30 . . .

The Braves had about $107 million cash on hand at the close of business on 31 December. They will (or may have already begun to)  spend about $55m from cash and borrow about $145M in the future to fund the next phase of construction at The Battery.

Atlanta Braves

All said and done the Braves Operating Income Before Depreciation and Amortization (OIBDA) amounted to $98M.

Last year that number was $7M.  Part of the OBDIA was the $21.6M paid to Adrian Gonzalez, so he not only freed up (as yet unused) payroll space this season, he reduced taxes.

Yay, I’m happy. How about you?

About that payroll space

Tucker’s post also included quotes by Liberty Media CEO Greg Maffei concerning the Braves and Tucker apparently broached this with Maffei because he noted that payroll is currently down from last year.

“We are super-excited with the signing of Josh Donaldson, along with the return of Brian McCann to the Braves. We want our team to win the World Series and believe our team has the potential to and is on the right path to do so . . . The management team has our full backing to do what they believe is right to win,” Maffei said.  (my emphasis added)

That seems like a response to those who suggest LMC is reining in Braves spending and points the finger at the decisions of the front office.

Last year CEO Terry McGuirk that few teams would have as much to spend the Atlanta Braves. Since then GM Alex Anthopoulos said many times the Brave’s could shop in any aisle. I’d hate shopping with them as much as I hate shopping with my wife.

The frustrating part wasn’t the trip, it was watching her not make choices. She’d find a dress, said she liked it, then put it back at least a half-dozen times, and we’d leave without any of them.

I made this mistake of going back a week later and buying one. When I gave it to her, she asked why I bought it. I returned it and don’t bother to go along anymore.  At the same time, she buys things at a yard sale because they’re cheap, never mind that they’re worn out or obsolete.

Sound familiar?

As I grow older, I pay less attention to what men say. I just watch what they do. Andrew Carnegie

Who’s that under the bus?

In their interview with Jeff Schultz for the Athletic (subscription required and recommended), the GM danced around the payroll number, claiming (correctly) that revealing it damages his bargaining position. The interview turned into a public relations disaster as soon as it published.

Anthopoulos said the goal was not just to be good but to be good a long time.  That’s a statement no one can argue with and one Crash Davis might have had in his book of clichés. It seemed hollow then; more so today.

McGuirk followed the GM’s statement with something I took as supportive at the time… but now I’m not so sure.

Spending now is about winning. It’s not about building as much. Alex’s mandate is to advance the ball from where we were last year in the playoffs . . . that we can take (payroll) to $126 million and put it on the field, plus an appreciable move beyond that, is unprecedented for us. We’ve been a bottom-10 payroll team . . . we want to get to the middle, and I think this year begins to get us (there) . . .

I could easily read that as saying, ‘He can spend what he wants to move towards a median size payroll. He hasn’t brought me a deal so he hasn’t seen one he likes. I’m not a baseball guy, it’s up to him.’

The GM’s New Spin

In 2011 Michael Bedard called Alex Anthopoulos the Spin Master when he tried to convince Bedard that his draft was a success even though he failed to sign his first-round pick.  Wait . . . that sounds familiar. . . It’s not surprising that he jumped into action to put a bandaid on the public relations wound he and McGuirk caused in that interview.

In a follow-up, “we-have-to-fix-this-mess interview” later, Anthopoulos said the fans didn’t realize how much the Braves spent since the off-season began, then he listed those expenditures.

I think we do, and we know what were aren’t spending that we were last year. (All last year contract amounts from COTs)

* To pick a few nits, Flowers and Markakis have one year, $4m deal with an option year that has  $2M buyout giving them a $6M guarantee this year. Without that guarantee, he’s spent only $51M.

Gausman and O’Day don’t count. We traded for them intending to keep them, and in O’Day’s case we knew that cost, and it isn’t a new cost.

What’s this all mean for the Atlanta Braves season

I wish I could answer that. We know that the Braves brought in about $34M more in revenue this year a good chunk of that from their postseason run and the sale of residential space at The Battery.  Unless the Braves get to the postseason again and sell more residential space, part of that revenue can’t be budgeted.

We know that they paid down the debt, presumably enough to get MLB out of the front office. They also incurred more debt along the way so that it totaled $494M on December 31 and will add more to finish phase II of The Battery.

We know that on December 31 they had $107 on hand and $55M of that is earmarked for Phase II.

We know that the Braves have something like $15 to $18M of payroll space now but the GM hasn’t found a deal he likes.

We know the roster needs a player or two.

That’s a wrap

The news of LMC’s press release will ignite the passions of many who want more spending. I want more spending – whether it’s money or player capital – because I feel the roster’s not good enough.

LMC pointed their finger at McGuirk and Anthopoulos and retrospect suggests McGuirk pointed at the GM.

I don’t want to spend for the sake of spending, that’s just stupid

When my wife did all that dress ‘non-buying’ we knew we had a dining-out to attend and she’d need one. A week before the event she said she had nothing to wear so she had to go buy a dress that cost more than those she looked at earlier and she wore only once.

The GM appears to be waiting for an invitation to the postseason before he buys his new dress. Of course, if the invitation doesn’t arrive he won’t need one.