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Are the Braves Now Less Attractive to Potential Buyers

One of the large centers of profitability for the Atlanta Braves over the last two decades has been its ties to its cable networks. The joint ownership of the Braves, TBS, and Turner South by Ted Turner and then Time Warner resulted in an increased revenue stream for Braves baseball operations. This increase has enabled a medium market team like Atlanta to compete financially with larger market teams. With the proposed sale of Turner South to Fox, that financial benefit may decrease.

With this sale, any potential buyers for the Braves are left with the knowledge that there will not be a regional cable station tied to the team. Turner South was the logical network to be included with the Braves, and early indications from Time Warner were that all attempts would be made for the two to be sold together.

With TBS lowering its broadcast of Braves games to 45 after the 2007 season, and the uncertain future of Turner South, the Braves may now be left without a flagship TV station. While many other teams are moving towards networks that are directly tied to the team, the Braves who were the pioneers of this concept, are moving away from the team owned network. The big markets of New York (Yankees and YES; the Mets and their new cable network) and Boston (NESN) are exacting ever larger profits from their proprietary networks. These profits are then being put back into the team in the form of higher payrolls.

This separation of the Braves and their cable networks though, may have been in the works for a long time; ever since the Tuner merger with Time Warner. Time viewed the networks and baseball operations separately, and chose to label the Braves as unprofitable by not reflecting the full baseball broadcast revenues of their stations in the bottom line of the team. This has led them to continually cut the Braves payroll for the last 5+ years.

But there is also more than one side to this picture of profitability between Braves baseball operations and its cable networks. The Braves' revenue from TBS was cut sharply in the early `90s, due to Major League Baseball's increase in royalties paid for nationally televised games. Since the `Superstation' can be viewed in virtually every cable market, the profits that Turner Broadcasting makes from its broadcast of Braves games must be shared with all 30 major league teams. This has led to the shifting of games from the national cable network TBS, to the regional cable network Turner South. Regional networks do not have to share their revenue with other major league ball clubs.

Now, with the sale of Turner South, this separation of baseball and cable operations is complete, and any potential buyer of the Braves will ultimately make less from the broadcasts of the majority of Braves games. Is this why Arthur Blank suspended discussions for the team? Does this move make the team less attractive to a single owner, someone like Ted Turner? That solo owner would be more financially burdened if they chose to start their own cable network to carry Braves games. This probably means that the Braves are looking less attractive to a single investor, and are more likely to draw the interest of a group of investors or a corporation.

Fox, having had its fill of baseball ownership with the Dodgers, is likely not a candidate to purchase the team. Some have suggested that Comcast might have some interest, and they would certainly be able to muster a regional network to carry the team. But we may be seeing the end of the connection between two of the cogs in the old Turner empire; the Braves and the Turner cable networks. And unless an owner with extremely deep pockets buys the team, whoever buys them may have to find other means of additional revenue other than that which would come from a team-owned cable network. All of this may make the Braves less attractive to many potential buyers, and may delay the attempted sale of the team.

(Some sourcing for this post was found here, here, here, here, here, and here.)