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John Malone’s Liberty Media Corp. said Thursday that its board of directors has authorized management to pursue a split-off of the Atlanta Braves and its associated real estate development project, along with the creation of a new Liberty Live Group tracking stock, which will house the company’s 31 percent stake in Live Nation Entertainment, among other things.
After unveiling plans to split off the Braves, Greg Maffei, Liberty Media president and CEO, during an investor day presentation speculated about a higher valuation or even buyer interest in the Major League Baseball team. “You may have noticed there’s high demand out there for sports assets. Money is flowing into the ecosystem, with new players of all sorts driving demand,” he told investors of the industry backdrop.
“Among baseball teams, Baltimore and Washington are rumored to be contemplating a sale. We’d argue, I think with some reasons, that the Braves are a far more attractive asset,” Maffei added. He pointed to the Los Angeles Angels exploring a possible sale, with the team expected to be purchased for around $3 billion, a new record for a Major League Baseball team.
“We’ll see. But each new deal seems to set a new benchmark for sports assets, and the valuations as a multiple of revenue seem to continue to go up,” Maffei said. Tracking stocks are designed to let investors track specific businesses that are part of a larger company. Liberty has used such tracking stocks in the past in the hopes of highlighting the performance and value of parts of its wide-ranging portfolio of assets.
“We plan to split off the Atlanta Braves into an asset-backed stock to better highlight its strong value. Additionally, post-split-off, we plan to recapitalize all of Liberty Media’s remaining common stock into three tracking stock groups,” Maffei said in a statement on news of the company’s plans for the Braves. “These actions will provide greater investor choice and enable targeted investment and capital-raising through more focused currencies, while maintaining an optimal capital structure for Liberty Media and preserving optionality with respect to our subsidiary SiriusXM and our Live Nation stake.”
The split-off will be accomplished “through the redemption of Liberty Media’s existing Liberty Braves common stock in exchange for common stock of a newly formed company to be called Atlanta Braves Holdings Inc.,” the firm said. “Atlanta Braves Holdings would hold all of the businesses, assets and liabilities currently attributed to the Braves Group, including Braves Holdings LLC, which is the direct or indirect owner and operator of the Atlanta Braves Major League Baseball Club, certain assets and liabilities associated with the Atlanta Braves’ stadium and mixed-use development project, The Battery Atlanta, and corporate cash.”
In connection with the split-off, Liberty Media would redeem each outstanding share of its Series A, Series B and Series C Liberty Braves common stock for one share of the corresponding series of common stock of Atlanta Braves Holdings. As a result of the split-off, Liberty Media and Atlanta Braves Holdings would be separate publicly traded companies. It is expected that the intergroup interests in the Braves Group held by Liberty Media’s existing Liberty SiriusXM Group and Formula One Group would be settled and extinguished in connection with the split-off in a manner to be determined.
Following the completion of the split-off, Liberty Media wants to create a new tracking stock group, the Liberty Live Group. It would then have three tracking stocks: the Liberty SiriusXM Group, Formula One Group and the Liberty Live Group. The company said the third one would include “its interest in Live Nation Entertainment Inc., corporate cash, certain public and private assets currently attributed to the Formula One Group, Liberty Media’s 0.50 percent Live Nation exchangeable senior debentures due 2050, margin loan obligations incurred by its wholly owned special purpose subsidiary, which are secured by shares of common stock of Live Nation Entertainment Inc., together with other assets as may be determined from time to time by Liberty Media.”
Liberty Media said it expects to complete the split-off and the tracking stock reclassification in the first half of 2023.
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