Owning a portion of a baseball team through a stock ticker seems a little odd. You are not given a seat behind home plate. A jersey is not given to you. As the real team plays 162 games a few hundred miles away, you get a line on a brokerage app that fluctuates. The Atlanta Braves Holdings Series A shares, or Batra stock, have been doing something interesting lately.
Shares were trading at about $55.72 as of late August, which was close to the stock’s 52-week high of $58.37 and comfortably above its 200-day moving average. The stock has had a really successful year. Returns so far this year have exceeded 31%, far outpacing the S&P 500’s gain of about 12% during the same period. It’s strange to say that about a business that lost money in the most recent quarter, but sports ownership has never adhered to the same regulations as other businesses.
When you’re just watching the ticker bounce around, it’s easy to forget that the company itself is somewhat of a hybrid. Under one roof, Atlanta Braves Holdings manages two distinct businesses. Tickets, concessions, broadcasting rights, and the entire setup of a Major League team playing at Truist Park comprise the baseball side. Next door is a mixed-use development called Battery Atlanta, which has a hotel, restaurants, shops, and office space. It’s half landlord, half ballclub. That combination appears to appeal to investors, or at the very least, they aren’t penalizing it.
Compared to the share price alone, the financials provide a more nuanced picture. Although revenue for the second quarter increased slightly from the same period last year to $305.12 million, net income was negative at $12.23 million, and the company reported a 19 cent loss per share. A net loss of more than $23 million and negative free cash flow of more than $71 million become more apparent when you zoom out to the preceding year. There is no dividend, and since there hasn’t been a profit to split into the price, the P/E ratio is meaningless. So far this year, none of that appears to have deterred buyers, which suggests that people’s perceptions of sports assets differ from those of, say, a software company with the same red ink.
It’s important to note that not everyone believes the rally will succeed. Short sellers have been increasing their bets against the Braves, according to a Bloomberg report from late August. This indicates that at least some sophisticated money believes the stock has outpaced itself. The opinions of analysts are also divided; out of the five ratings that are monitored, three lean toward “buy,” one is at “hold,” and one advocates for “sell.” Price targets vary greatly, with a median of about $63 and a range of $49 to $73. That indicates real disagreement rather than a consensus disguised as one, and it’s a large spread for five people looking at the same numbers.
This is part of a larger trend that extends beyond a single Atlanta business. One of the more trendy locations for big money to park itself is now sports ownership. Private equity firms were reportedly considering investments in the Atlanta Falcons, the Los Angeles Lakers, and Liverpool FC during the same week that short sales related to the Braves made headlines.
Previously interested in yachts, wealthy buyers now seem to prefer box seats and a balance sheet. It’s difficult to ignore the trend: franchises, which were once billionaires’ vanity purchases, are increasingly treated like any other asset class, complete with short interest reports, public shareholders, and quarterly earnings calls.
Whether that’s beneficial for the stock or the sport is a different matter. As long as they are aware of it, there is nothing wrong with fans purchasing shares because they are passionate about the team. This is an emotional purchase disguised as a financial one. The Battery Atlanta’s performance as a real estate project and whether broadcasting revenue continues to rise at the rate it has throughout the league will probably determine what happens next, rather than wins and losses on the field. The next earnings report, which is anticipated in early November, ought to provide more insight into the story that is truly driving the price.
