(Bloomberg) — The Atlanta Braves are on a big winning streak. But the company that owns the team isn’t faring as well in the stock market as the baseball club is on the field.
With the global pandemic necessitating a shortened baseball season that saw fans outlawed from attending games in person, shares of Liberty Media Corp.’s baseball assets, commonly known as Liberty Braves, remain about 27% lower than their pre-pandemic high. Second-quarter revenue fell by 95% due to the loss of games and the restriction on fans.
Still a group of investors, spurred on by the recent sale of the New York Mets and the spread of legalized sports gambling, see the potential for a windfall profit.
Investors like Hawk Ridge Capital Management and Shapiro Capital Management were lapping up shares even while the fate of the baseball season was still up in the air.
“We don’t think there’s any permanent impairment to the value of sports franchises,” said Hawk Ridge founder David Brown. “That view is bolstered by the recent transaction with the Mets and the Red Sox rumor.”
The Mets are set to be sold to hedge fund titan Steve Cohen in a deal that values the franchise at a record $2.42 billion. Fenway Sports Group, which owns the Boston Red Sox, is reported to be in talks with RedBall Acquisition Corp. to go public through a merger that would value its holdings, which also include Liverpool Football Club, at a valuation of $8 billion, including debt.
Brown also cited the uptick in sports gambling and the opportunity for the Braves to strike a more lucrative television deal once their current agreement with Sinclair Broadcasting ends in 2027 as reasons for buying the stock.
Hawk Ridge purchased 1.2 million of the Class C shares during the second quarter, according to a 13F filing.
“We think it’s selling at about half the value of the franchise which is ridiculous,” said Shapiro Capital Management Chief Financial Officer Louis Shapiro. “You can’t justify many of these franchises on a stand-alone basis anyway. They trade on what a multibillionaire wants to pay, there’s scarcity value there.”
Atlanta-based Shapiro Capital Management increased its holding in the Class C Braves shares by more than 10% in the second quarter, according to a 13F filing.
Part of billionaire John Malone’s Liberty Media empire and the only major U.S. sports team to be publicly traded, the Braves are the last remaining undefeated team in this year’s Major League Baseball playoffs. After a 8-to-7 victory Tuesday over the Los Angeles Dodgers in the second game of the National League Championship Series, the team stands two wins away from their first World Series appearance since 1999.
“The class of billionaires in the world is growing and the number of sports franchises is effectively a constant,” said Brown. “There’s the social prestige of owning a sports franchise and that creates a favorable supply-demand dynamic. The Braves are a trophy asset in that regard.”
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