Braves chairman Terry McGuirk opened a quarterly conference call with investment analysts Wednesday by expressing appreciation to John Malone, Liberty Media’s billionaire chairman and the Braves’ top stockholder, for changes to the team’s corporate “voting and governance arrangements.”
“These updates, which have been approved by Major League Baseball, further empower our Atlanta-based management team to lead this organization and make decisions that we believe will create value for our shareholders,” McGuirk said. “We’re excited about the future of the organization, and I speak for the entire Braves management team when I say that we are grateful for the continued support of John Malone and Liberty Media.”
The changes McGuirk referenced stem from an August agreement with Malone that gave McGuirk new voting power on certain stockholder matters and a right of first refusal on any future sales of the considerable Braves stock owned by Malone.
The arrangements were described in detail in regulatory filings made with the Securities and Exchange Commission by Malone, McGuirk and Atlanta Braves Holdings Inc., the publicly traded company that includes the baseball team and mixed-use development The Battery Atlanta.
The Braves’ corporate separation from Colorado-based Liberty Media, which acquired the team in 2007 and split it off as a stand-alone public company last year, became more pronounced under the new arrangement as “almost all” of the Liberty executives who had doubled as officers of Atlanta Braves Holdings, including Liberty CEO Greg Maffei, stepped down from their Braves roles at the end of August. Those executives yielded to members of the Braves’ operating team, with McGuirk replacing Maffei as president and CEO of Atlanta Braves Holdings.
In a “proxy and voting agreement” dated Aug. 21, Malone granted McGuirk “sole and exclusive” voting rights in certain matters for 887,079 “Series B” shares of Braves Holdings common stock owned by Malone, representing 44% of the company’s outstanding stockholder voting power. The proxy appointment applies to elections of members of the Braves Holdings board of directors, “approval or authorization” of executive compensation and “other routine matters.”
Malone also gave McGuirk first-refusal rights on future transfers of Braves shares owned by Malone. If Malone, 83, decides to sell some or all of his Braves stock to another party, McGuirk (along with potential partners) would have an opportunity to acquire it instead under the same terms.
In addition, Malone granted McGuirk certain future “appreciation rights” on the value of Malone’s Series B shares in Braves Holdings. The terms of this provision “generally entitle Mr. McGuirk to the right to receive the portion of the proceeds of any transfer by the Malone LLC of 887,079 shares of Series B Common Stock held by the Malone LLC that exceeds $50 per share,” according to an SEC filing.
“Terry has done a phenomenal job running the Braves organization, and I have tremendous faith in the work he and the rest of the Braves management team are doing,” Malone said in an August statement. “… These arrangements will better align the routine voting and operational control of Atlanta Braves Holdings with the management of the baseball franchise and give Terry the opportunity to share in the value that he and the management team continue to create for shareholders, fans and the local community.”
On Wednesday’s conference call, McGuirk said: “As a management group, we so appreciate the confidence that John Malone has in us and the vote of approval he has given us going forward. Our goal every year is to win a World Series. … We strive each year to give (general manager Alex Anthopoulos) adequate payroll to actually put a team on the field that has the capability of winning the World Series.
“The greatest way we can drive value is by winning,” McGuirk said, “and the playoffs are the goal (each year), both financially and statistically. It’s just part of our DNA. We have something very special that we have built here.”
As of July 31, according to the company, Malone beneficially owned approximately 96,000 Series A shares, 946,000 Series B shares and 3 million Series C shares, collectively representing about 47.5% of Atlanta Braves Holdings’ total voting power. The three series of stock carry different amounts of votes: Series A one vote per share, Series B 10 votes per share and Series C no votes.
This, based on the SEC filings, is a condensed version of how the right-of-first-refusal process would work if Malone decides to sell shares: The Malone Group “shall deliver written notice” to McGuirk specifying the person to whom Malone proposes to transfer shares, the number of shares to be transferred, the offer price and all other material terms. McGuirk then would have 20 business days to elect to acquire the shares under the same terms “or otherwise discuss or enter into a transaction to acquire such shares.” If McGuirk elects not to purchase the shares, Malone would be free to complete the proposed transfer to the buyer cited in the offer notice.
The agreement makes clear that McGuirk could partner with others: “The parties agree that (McGuirk) may, at his sole election, determine to acquire the applicable (right-of-first-refusal) shares of the corporation in partnership with one or more partners, co-purchasers and/or financing sources.”
The first-refusal right applies to all transfers of Malone shares “except for a transfer to an affiliate of (Malone) that … becomes a party to and bound by all of the (same right of first refusal) provisions.”
The documents don’t shed light on when or if Malone might sell Braves stock. An SEC filing in August said he “does not have any present plans or proposals” for “any disposition of securities,” but adds that he “may determine to change his intentions … at any time in the future.”
When the Braves disclosed their quarterly financial results Wednesday, McGuirk led the earnings call with analysts, and Braves CEO Derek Schiller and Braves chief financial officer Jill Robinson joined him. No Liberty Media executives spoke on the call; in the past, Maffei and Liberty’s chief financial officer had spoken about the Braves as part of Liberty’s quarterly calls.
But the Braves, although now an independent company owned by its shareholders, are still intertwined with Liberty in some ways, foremost being Malone’s stake. Another example of the continuing connection is that Braves executives will participate in a Liberty Media-sponsored investors event in New York next week.
McGuirk, 73, has been associated with the Braves for almost a half-century, dating to former owner Ted Turner’s purchase of the team in 1976. A former long-time executive at Turner Broadcasting, McGuirk continued his involvement with the Braves after stepping down as chairman and CEO of Turner Broadcasting in 2001.
When Liberty Media acquired the Braves in 2007, McGuirk stayed as the team’s chairman, top executive and MLB-designated “control person,” representing the franchise at MLB owners’ meetings. The new voting and governance arrangement is the latest evolution of the Braves’ corporate structure since then.
“As we begin this new chapter in the history of the Atlanta Braves,” McGuirk told investors Wednesday, “I want to reaffirm that we understand the unique responsibility we have, being the only publicly traded Major League Baseball team. It’s one that we have prepared for and that we do not take lightly.”
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