The following includes author opinion in some parts, reader beware.
As you all may know, 2017 was Liberty Media’s first season in control of Formula 1. The grid saw a slew of changes in reference to social media, broadcasting, driver and garage exposure, etc. But this isn’t the first time Liberty Media has dipped it’s fingers in the sports world.
In 2005, Liberty Media entered into negotiations with Time Warner to purchase the Atlanta Braves baseball organization. The deal was ultimately finalized in the 2007 season and 2008 was Liberty’s first full season in control of the organization. Liberty Media vowed to not take an ‘active’ role in ownership as it pertained to day-to-day operations.
As a direct (or indirect) result of the sale, the Braves had actually jumped in the following categories:
Value: $497M in 2008 to $1.5B in 2017 and
Revenue: $199M in 2008 to $275M in 2017.
The organization’s operating income has fluctuated throughout the seasons, appearing to be directly related to the team’s on field performance at the time.1
Liberty Media and the Braves commissioned a new stadium complex (outside of the Atlanta metropolitan area, I should add) in Cobb County and claimed a 70% increase in revenue in Q3 2017. That number has an asterisk due to a few anomalies as the operating profit before depreciation and amortization showed $48M but after factoring in the depreciation and amortization AND including stock-based compensation, the Braves posted a $9M loss for Q3.2
The jump in stock-based compensation was “due to an increase in the estimated value of the Braves, combined with the continued vesting of outstanding awards,” Liberty said. The company didn’t specify which executives received stock compensation.2
In short, the organization serves as a stockholder ATM, a hazard in any corporate owned organization.
The organization became part of a publicly traded stock in 2016. The stock isn’t in the team so much as it is in a conglomeration of corporate entities that Liberty offered for public trading at the time. In a 2016 meeting of Liberty Media shareholders, chairman John Malone made the statement that the Braves have become a “fairly major real estate business” in addition to a major league baseball team.3
Malone was asked whether he agreed with Forbes’ valuation of the Braves at $1.2 billion.
“I don’t have a clue,” Malone said. “We’ll see shortly. We’ll see what the marketplace puts on it, and decide how efficient our monetization thesis is.3
Malone referred to SunTrust Park, the Braves new home, and Battery Atlanta, an adjacent mixed-use complex which cost the organization $1.1B to build.3
“It does give the team more heft. It gives the vision more heft, than just the club itself,” Malone said.
When asked on when the team would be able to compete again: “It’ll be awhile,” Malone joked. “We’re rebuilding.”3
Sounds like a man less worried about competition and results and more worried about his stockholders’ pockets.
Also in 2016, Liberty Media CEO Greg Maffei stated that Liberty would sell or spin off the Braves organization sometime in the future, but not anytime soon, acknowledging that Liberty “won’t own the Braves forever. “It’s in the nature of Liberty. Liberty has been a company that has tended to move through assets. It wouldn’t be forever. Here we are nine years later and I don’t know when that’s going to be. It could be another nine years. But yeah, someday I suspect the Braves will be out on their own.”4
Is this the type of business plan we have to look forward to in Formula 1? Could Liberty Media exploit F1 for what it is, turn it into a “fairly major media business” and “move through the asset”? Revenue and income-wise, the Braves organization has seemed to flourish, but on-field performance (due to trading away or dealing valuable players) has seen a decline during the Liberty era. Not saying F1 will go in the toilet; I, for one, am happy to see the more fan-based direction the new ownership has taken. And with an in-house streaming service having been announced for the 2018 season, I can’t be more excited. But I also couldn’t be more worried for the future of F1 at the same time. Make your own assumptions, but this is what Formula 1 can learn from the Atlanta Braves.