The first-year results are in for Cobb County’s publicly subsidized professional baseball team.
And the outcome is “astounding,” according to Liberty Media, the Colorado company that owns the Atlanta Braves.
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Revenue is up 47 percent, from $262 million in 2016, the last year at Turner Field in Atlanta, to $386 million, the first year at SunTrust Park in Cobb. The new arrangement includes Battery Atlanta, the mixed-use development next door to the park with bars, offices, residences and a hotel.
It is proof, once again, that companies can turn a profit when taxpayers help foot the bill. The Braves get more than $18 million a year from Cobb and other public entities.
Cash from ticket sales increased a whopping 76 percent in 2017, which was not bad for a team that went 72-90 and offered little else but promises of better times ahead. (Incidentally, the Braves have peddled this potion since 2013 — the year the Cobb deal was inked and the last season they had a winning record.)
You might think the Braves are rolling in dough, with proceeds rising $124 million. But, like the old axiom says, "Ya gotta spend money to make money," and the Braves spent lots to kick off the new park in 2017, although it is not translating to spending more on things such as salaries for baseball players.
That should be no surprise. A couple of years ago, John Malone, Liberty Media’s chairman, spilled the beans on his philosophy, which didn’t necessarily focus on what happens on the field.
"Keep in mind," he told shareholders, "the Braves now are a fairly major real estate business as opposed to just a baseball club."
The Braves came out of 2017 with an operating profit of $7 million, which was better than losing $16 million the year before.
Liberty Media’s ledger says the team actually lost $113 million last year when one accounts for stock-based compensation, amortization and depreciation — that is, for a ballpark not officially a year old.
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On Monday, I visited SunTrust Park and wandered the adjoining streets of The Battery. But there wasn’t much going on because it was a weekday afternoon and the Braves are in Florida, trying to learn how not to lose.
So, I drove a few miles northeast to the East Cobb Library, a facility that buzzed with activity, from dozens of schoolkids reading and performing after-school activities to senior citizens plunking away at computers.
I visited the facility because it is Cobb's second-busiest library and might get shut down. It looks like Cobb's government will be at least $30 million in the hole next year and is looking for ways to save money. Closing eight libraries will chip away $2.6 million of the projected shortfall.
Now, a lot has been made about the irony of closing libraries and making other cuts while that same government is shovelling millions of dollars to Liberty Media, which had $1.9 billion in net earnings last year.
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But companies such as Liberty didn’t get that way by worrying about irony.
Patrons at the East Cobb branch, naturally, weren’t happy with the idea of closing libraries.
“The people working here are like family,” said Michael Hodgson, a banker. “You can afford to finance a stadium, but can’t afford to keep this open?”
Let’s help answer.
The new ballpark cost $722 million, according to Liberty Media's filings, and $392 million of that came from Cobb and local public sources.
Each year, Cobb taxpayers’ pay $6.4 million from the county’s general fund and another $10 million comes from hotel and car rental taxes and from property taxes from businesses near the stadium. Also, Cobb pays another $1.2 million for stadium maintenance and nearly a million more for cops to manage traffic.
Tom Cheek, a resident who challenged county officials when the Braves deal was hatched, said the payments to the team were “a piece of the problem but not the most dominant piece of the budget gap.” But, he added, “it’s the one thing at the top of the hill waving a flag.”
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Cheek, who is running for county commissioner, says Cobb is “playing a game of chicken” by threatening voters with cuts to services to soften them up for a property tax increase. He said Cobb must get voters to defund planned projects from an existing sales tax initiative and use that money to close the budget gap.
Commissioner Bob Ott, who questioned the Braves deal when it came up but ultimately voted for it, recently gave a presentation that said the Braves deal may one day be revenue-neutral for the county.
He said the county schools got $2.7 million in sales and property taxes last year and the county got $3 million in new property, sales and other tax revenue. Property taxes there will continue to increase and the surrounding area will have a “halo effect” of new construction and revenues.
I needed a numbers guy to make sense of it all and came across Paul Dopp, a forensic accountant for the Atlanta firm GlassRatner.
The $113 million loss, Dopp said, “is what I’d call a paper loss.”
He said the increased expenditures last year from opening the park should drop.
The Braves operation “will be like an annuity. This allows them to smooth out their earnings. Even if you’re profit-neutral, you know the value of the franchise is going up.”
A decade ago, Liberty Media, which was founded by the famously tax-avoidant Malone, got the Braves in an arcane stock swap with AOL-Time Warner. In that deal, Liberty shed $1.8 billion of Time Warner stock and got the Braves, then worth $460 million, and $1.4 billion in cash. It saved a reported $600 million in taxes.
In essence, Malone got a free Major League Baseball team, plus a ton of cash. Last year, Forbes valued the team at $1.5 billion.
I asked Dopp if Liberty might feel a bit guilty and consider rebating some money to help Cobb out of its jam.
He chuckled. Nah, he said.
“Liberty has smart guys; they don’t make mistakes,” Dopp said. “They’re in this to make money. That’s what they do.”
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