Via the Atlanta Journal-Constitution's Tim Tucker, we've got a long interview with Atlanta Braves CEO Terry McGuirk.
Braves’ TV Money A Problem Going Forward?
The Atlanta Braves are doing well enough in the arms race (literally), but when it comes to long-term financial health there are reasons to worry about them.
McGuirk has no reason to hold much back, because the Braves are owned by Liberty Media, which is a publicly traded company, which in turn means their books are relatively open. McGuirk says the Braves are committed to a $94 million payroll, which unfortunately includes the $10 million they're paying Derek Lowe to pitch for the Cleveland Indians.
When Liberty purchased the Braves in 2007, he -- because a corporation is a person, you know -- agreed to retain the franchise for at least four-and-a-half years. Well, the four-and-a-half years is up, but McGuirk says there’s been no talk of selling. Which of course could change if Liberty’s stock takes a nosedive, but he’s doing well enough lately and the status quo seems in order.
Unfortunately for the Braves, the status quo of their local television revenues is also in order, and for a long time. Here’s McGuirk on that subject:
“Whenever old [TV] deals are up and new deals get realized, there are big jumps in value. I have predicted that, knew it was coming,” McGuirk said. “And I think we have an undervalued local rights [deal].
“That being said, we inherited a deal that was done under [previous owner Turner Broadcasting/Time Warner] a little over four years ago, before the sale, that lasts out through 25 years. So there is no opportunity for a different deal than the one we have. Every single set of games on the different networks that we are seen on [Fox Sports South, SportSouth and Peachtree TV] are all 25-year deals or thereabouts.”
McGuirk said the deals call for “cost-of-living type increases” each year, but contain no options for renegotiation.
“They were at-market deals when they were done, but the market has changed,” he said. “We will have to look elsewhere for the increases that we will need in revenue to continue to build this franchise. It’s what the owners at the time decided to do, so we have to live with it. ... It’s nothing to be ashamed of, but it’s not going to be these newer deals where there is cash up front.”
Asked if the TV contracts will be a competitive disadvantage for the Braves over the next two decades, McGuirk said: “Let’s just say it won’t be an advantage.”
According to Tucker, the Braves' payroll will rank in the middle of the major-league pack this season, which is where their attendance was last year (15th out of 30). They could do somewhat better, based on their population; depending on if you count los Anaheim Angels of Orange County, only nine or 10 teams draw on a larger population base than the Braves. They don't draw better because (take your pick) so much of the population lives so far from the ballpark (i.e. suburban sprawl) or the traffic's terrible (true) or it's really hot in the summer (also true) or because of apathetic citizens (no idea).
Anyway, this news about the Braves' television revenues should be disheartening if you're a fan of America's Team. If they're really locked in for the next years, I suspect that at some point relatively soon, the Braves will rank at the bottom of the list in the majors. I can imagine them deriving less income from their TV deals than the Royals and the Brewers, both of whom play in relatively tiny markets.
At the moment, the Braves are actually in decent shape because their player-development machine's been in overdrive. But if that well ever dries up, they simply won't be able to afford to keep up with the Phillies and the Mets. Oh, and the Marlins play in the same-sized market as the Braves, and have a brand new ballpark and some great art in center field.
It’s too early to panic. Even if panicking worked. But the Braves might be on the verge of becoming just another franchise.
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