Atlanta Braves Holdings, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative period is Q1 2023. Unaudited results cover the Braves baseball and Truist Park business, The Battery Atlanta mixed-use development, and corporate activities. Revenue is seasonal, with most recognized in the second and third quarters. Amounts below are in millions unless stated otherwise.
Key financial results
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $37.1 | $31.0 | Up $6.1 (about 19.7%) |
| Operating loss | $(52.4) | $(49.3) | Loss increased $3.1 |
| Adjusted OIBDA loss (non-GAAP) | $(33.8) | $(31.4) | Loss increased $2.4 |
| Net loss | $(51.3) | $(58.0) | Loss narrowed $6.7 |
| Basic and diluted loss per share | $(0.83) | $(0.94) | Improved $0.11 |
| Cash provided by operating activities | $91.1 | $84.6 | Up $6.5 |
| Capital expenditures | $27.6 | $13.6 | Up $14.0 |
| Interest expense | $9.4 | $8.9 | Up $0.5 |
Margins: Operating loss was about 141% of revenue versus 159% in Q1 2023; Adjusted OIBDA loss was about 91% versus 101%. These negative margins reflect the early-season period and should be read with the company’s seasonality disclosure.
Revenue and operating performance
- Baseball revenue rose 25.1% to $22.0 million. Broadcasting revenue increased $1.2 million, retail and licensing rose $1.3 million, and other baseball revenue increased $1.9 million, primarily from spring training demand and attendance. No regular-season home games were played in either first quarter.
- Mixed-Use Development revenue rose 12.7% to $15.1 million, primarily from higher rents, tenant recoveries, new leases, and parking revenue.
- Baseball operating costs increased $8.4 million, including higher major- and minor-league expenses, spring training costs, and MLB revenue-sharing and other shared expenses.
- Mixed-Use Development Adjusted OIBDA increased to $9.9 million from $9.2 million. Baseball Adjusted OIBDA loss widened to $41.7 million from $35.8 million; corporate and other loss narrowed to $2.0 million from $4.7 million, partly reflecting lower Split-Off costs.
- Net loss narrowed despite a larger operating loss, helped by the absence of the $13.4 million intergroup-interest loss recorded in Q1 2023, higher affiliate earnings, and gains on financial instruments. The income tax benefit was $4.2 million, versus $14.3 million in Q1 2023.
Cash, liquidity and debt
- At March 31, 2024, cash and cash equivalents were $181.5 million and restricted cash was $27.6 million, for $209.0 million combined. Cash and cash equivalents increased from $125.1 million at year-end 2023.
- Operating cash flow of $91.1 million included a $108.7 million net cash inflow from payables and other liabilities. The filing does not provide a seasonally adjusted operating cash flow measure; the substantial working-capital contribution merits attention.
- Total debt was $579.9 million, including $42.5 million current and $537.4 million long-term. Finance lease liabilities were an additional $105.8 million. Debt increased from $569.3 million at December 31, 2023.
- Floating-rate debt totaled $97.8 million at a 7.1% weighted-average rate; fixed-rate debt totaled $485.6 million at a 4.4% weighted-average rate. The company reported compliance with all financial debt covenants as of March 31.
- Available revolver capacity included $150.0 million under the TeamCo Revolver, $125.0 million under the League Wide Credit Facility, and $40.8 million under the MLB Facility Fund revolver, subject to facility terms and restrictions.
- Management expects to fund projected cash needs with cash on hand, operating cash flow, construction-loan and revolver borrowings, and other sources, and believes available liquidity is sufficient. Expected uses include player, coach and executive compensation, capital expenditures, real estate investments, and debt service.
Outlook, risks and contingencies
- The filing gives no numerical revenue, earnings, or cash-flow guidance. Management emphasizes seasonality and notes that interim results are not necessarily indicative of full-year results.
- Diamond Sports Group, parent of the Braves’ regional broadcaster, is in Chapter 11. The Braves had received scheduled payments through the filing, and a February 2024 court order protects the broadcast agreement through the end of the 2024 MLB season, subject to stated conditions. The company cannot predict the bankruptcy’s future effect on revenue or liquidity.
- If the broadcaster’s bankruptcy case converts to Chapter 7, the Braves could be required to repay up to $34.2 million received during the 90-day preference period. If the broadcast agreement is rejected, the Braves could lose remaining contract revenue and write down approximately $12.7 million of recorded receivables and contract assets.
- Long-term employment contracts called for annual payments of $267.4 million in 2024, $204.9 million in 2025, and further amounts in later years, including incentives that may also be payable.
- Other disclosed risks include variable interest rates, refinancing and financing access, consumer demand and inflation, on-field performance, player availability and labor matters, real estate development execution, litigation, regulation, cybersecurity, and weather or other events that could disrupt games or operations. Management said ordinary-course litigation losses could not be estimated and did not expect any to be material.
- The company reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Progress and payment terms in Diamond Sports Group’s bankruptcy, including whether the Braves’ broadcast agreement is assumed and any preference-repayment exposure.
- Whether operating cash flow remains supported by working-capital movements as the season progresses, alongside higher capital spending.
- Debt balances, variable-rate exposure, construction-loan availability and maturities, covenant compliance, and the cost of future borrowing.
- Full-season baseball revenue and costs after regular-season games begin, and the trajectory of Mixed-Use Development leasing, rent, and operating performance.
- Cash requirements under player and other employment contracts, and execution of planned real estate and ballpark capital expenditures.