Own A Professional Baseball Team For Just $50
If you follow baseball, then you know one of its professional teams is about to be sold.
If you’re quick and have $4 billion lying around, you might be able to outbid them.
However, it’s very unlikely any of us have those funds.
But it doesn’t mean we can’t own a baseball team… well, at least own part of a baseball team.
The Atlanta Braves Holdings Inc (ticker: BATRA / BATRK) owns the popular Atlanta Braves franchise.
The tickers BATRA and BATRK are two different share classes for the same company.
What’s the difference?
BATRA has voting rights, so its stock price is a bit more than BATRK.
We’ll get back to the different share classes in a minute, but first, let’s talk about baseball.
Unlike other baseball teams, the Braves own more than just the team.
The company also owns and rents out over 2 million square feet of entertainment space near its ballpark, ranging from hotels and restaurants to office space.
Last year, the Braves generated almost $100 million in real estate revenue, which accounts for more than 13% of the $732 million in total revenue.
Circling back to the Padres is where it gets really interesting.
We don’t actually know how much revenue the Padres are bringing in.
It’s a private company, so it doesn’t have any reporting requirements.
However, the Padres had about $530 million in revenue last year, according to multiple people who reviewed its sale documents.
Remember, the Braves brought in over $700 million, which means the Braves should be worth more than the Padres.
But it’s not even close.
The combined market cap of both share classes is only $3.1 billion, much less than the Padres’ $3.9 billion sale price.
And the Braves are significantly more popular than the Padres.
The Padres need to compete with the extremely popular Los Angeles Dodgers as well as the Los Angeles Angels in its own backyard.
The Braves have no competition across the majority of the Southeast.
All of the dark blue in the Southeast are counties with majority Braves fans.
The three yellow counties in the Southwest are all the Padres have.
So why are the Padres selling for so much?
Honestly, I have no idea.
Maybe the new owners are overpaying for the franchise.
But these guys are billionaires for a reason, and I think the issue is more about the Braves being undervalued than billionaires overpaying for the Padres.
We can’t really compare the Atlanta Braves to its peers since it’s the only baseball team on the stock market.
But we can compare it to itself.
The Braves’ gross margin, which measures its revenue relative to its costs to operate a baseball team, hit 30% last year.
It’s the highest gross margin in the company’s history.
And the Braves’ equity-to-asset ratio, which measures how much of the company is owned by investors rather than through debt, was 0.33x, and near an all-time high.
Let’s get back to the share classes.
BATRA are the A shares of the company and give investors voting rights for members of the board of directors.
BATRK are the C shares of the company and have no voting rights.
Both share classes have equal ownership in the company, so 1 share of BATRA equals 1 share of BATRK.
However, since BATRA has voting rights, its share price is about 8% higher ($53 vs. $49).
Which one should you buy?
It’s up to you, but voting rights are overrated, especially for small investors like us.
It’s not like we’re going to dump millions of dollars into the stock to make a difference in a board election.
Plus, BATRK has more trading volume, which means we’ll get better prices when buying and selling the stock.
If you’re looking to purchase some shares, go with the cheaper option, and buy BATRK.
When was the last time you attended a baseball game?
Coach Parker
Category: Stocks
