Braves CEO: “Baseball is not a widely profitable business” – NBCSports.com

In the past year the Braves have dealt a lot of talent, trading away Justin Upton, Jason Heyward and Craig Kimbrel, among others. Late last week the Braves traded shortstop Andrelton Simmons to the Angels. Yesterday Ken Rosenthal reported that Atlanta was now shopping Freddie Freeman.

While most of the trades the Braves have made have resulted in nice returns in terms of either young talent coming back or big salaries going out, the process of tearing down and rebuilding has been a painful and, at times, confusing one for Braves fans. Partially because some of the players — particularly Kimbrel, Heyward and Simmons — were fan favorites who, arguably, had better futures in front of them than years behind them. The same would go for Freeman, in spades, if he were dealt.

It’s also been painful because the Braves won 190 games between 2012 and 2013 and were in first place midway through 2014. The team cratered after that, of course, and had some clear holes on the roster, but many Braves fans wondered why fixing those holes required tearing off the whole dang roof, knocking down the support beams and bulldozing dirt into the foundation. Especially given the fact that the Braves (a) had what had been advertised by management as a good young core which had largely been locked up in reasonable long term deals; and (b) the Braves played in the NL East which is not, by any stretch of the imagination, the toughest division in baseball.

Whether a complete and total rebuild was necessary continues to be a point of debate among Braves fans. Distracting from and complicating all of this is the fact that the Braves are leaving Atlanta after next season and heading for a new ballpark in the suburbs. A ballpark which many, including your dear author, likewise believes was unnecessary. Indeed, seemingly incomprehensible decisions, many of which appear unnecessary, is the general gestalt of Braves Country these days.

Into that fog walks Braves Chairman and CEO Terry McGuirk who, last week, gave an interview to the Atlanta Business Chronicle about the state of the Braves. He had a lot to say, and for context one should read it all, but this answer, in response to a question about whether Braves’ profits are reinvested in the club or, rather, sent back up to corporate parent Liberty Media, was quite a head-turner:

Basically, all of the money at the Braves. We’ve never really lost money with the Braves. Baseball is not a widely profitable business. If you took all of the free-cash flow of all of the 30 teams, it’s pretty much zero. That’s sort of a fairly well known fact. If you actually, do have free cash flow, you’re among a minority. We have always managed the team to at least break even on free cash flow or make a little. Sometimes we’ve made more than a little. But, that puts in a minority in this business.

There are a lot of ways to measure the financial health of a baseball team and cash profit is only one of them. Indeed, it may be the least significant part of the financial picture for a team. The real game is the appreciation of franchise value, and the Braves have certainly appreciated for Liberty media. When they purchased the team in 2007 the franchise was worth $450 million. This year Forbes valued the club at $1.15 billion. And that’s despite the fact that the Braves have one of the worst local TV deals of any club. Of course, based on what McGuirk is saying, the Braves are pursuing both tracks: watching the franchise value appreciate and doing its best to break even on cash flow “or make a little.” The best of both worlds if you’re an executive in charge of a division of a large corporation.

I am highly dubious of what McGuirk says about profitability but, in reality, I don’t think there’s any way for outsiders to assess whether or not what he’s saying is true. Baseball teams are notoriously opaque when it comes to financial matters and have, for almost all of baseball history, claimed to be money-losing operations. Usually for tactical purposes having to do with convincing cities to build them new ballparks, fending off scrutiny and regulation from governments and, most of all, negotiating with the players over salaries and benefits. Add in the fact that many owners engage in self-dealing, siphoning off revenues in the name of “management fees” and casting those as hits against profitability as opposed to money in their pocket, and it’s virtually impossible to know what’s really going on with a team’s cash flow.

I have no way of knowing what the true state of the Braves’ finances is. Indeed, absent better information I have to take Terry McGuirk’s word for it. But even if he is telling the truth — i.e. baseball is not very profitable for owners but the Braves are, against the odds, one of the few teams which turn a profit — it’s hard to feel anything but deflated by it.

Deflated because early-21st century sports owners and early 21st century sport fans have fallen into something of a rough bargain. It’s not a consciously-negotiated bargain, but it’s one that, through practice and example, fans and owners have realized is the sweet spot for our relationship. That bargain is this: we, as fans, will endure you fleecing taxpayers for stadiums, taking your games off of over-the-air television in favor of big money cable deals which raise our rates, pocketing money in “management fees,” and selling anything and everything that isn’t nailed down with a team logo slapped on it. In exchange, you will at least pretend to be interested in delivering a winning team and, in your utterances and actions, demonstrate that you understand that fans want to see an entertaining and, occasionally, championship-caliber product a million times more than we want to hear about the financial health of ownership and the business vision of the franchise. Obviously not all teams do this. But the teams with the happiest, most engaged fans and with the owners who are less-loathed than their brethren generally fit this description.

To the extent the Braves have made news in the past few years it’s been because they’ve (a) decided to abandon their relatively new ballpark in the city they call, for marketing and territorial purposes, home in favor of a taxpayer funded ballpark no one but wealthy white suburban people can get to (and even they can’t without difficulty); and (b) sent off all of the players which have excited fans in the past several years. Against that backdrop, the largely faceless CEO of a division of a largely faceless corporation which owns the team is claiming implausible but, I suppose, unfalsifiable things about the business of baseball which read like a pat on the back for financial performance more than any sort of argument for the competitive prospects of the team (Q: “When can we expect to see the Braves in the top 10 in terms of payroll?” A: “I won’t give you a timetable, but you will start seeing major jumps 1/1/17”).

Given his job, it’s understandable that he does this. Given the ownership structure of the Braves, it’s understandable that he does this. Given that, as we so often have to remind ourselves, baseball is a business, it’s understandable that he does this. But given how thoroughly he and his bosses have sapped any semblance of baseball enjoyment from the Atlanta Braves and how thoroughly they have thrust the concerns of the team’s owners and their pocketbooks into the news and public discussion of the team, that rough bargain between ownership and the fans has been breached. Ownership hasn’t thrown the fans who care about anything other than five-year plans and prospect-fetishizing a bone in over two years and seems unwilling to do so any time soon.

In light of that, no matter how understandable Terry McGuirk’s position is, it’s far more understandable why Braves fans shouldn’t give a tinker’s damn about this club for the foreseeable future.

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