Photo by Sol Tucker for TalkNats
Today marks the 10th month since the Lerner ownership group announced that they would be exploring a sale of the Washington Nationals. It also marks 10 full months that the Lerner ownership group has spoken publicly on their future plans. Over a month ago on January 10, TalkNats broke the news that the sale of the team was in a “no-sale” situation and as such, putting the future ownership of the team in question.
It had been suggested before that the Lerners could also look into a partial sale of the team where they would maintain majority control. Even the Lerners named a partial sale as one of the options back on April 11, 2022. When you consider everything back on that day, there were really three options 1) Full sale of the majority of the team 2) Partial sale to bring in a minority partner 3) No sale.
As of today, we do not know which direction the Lerners will go, and it is very possible that we hear from principal owner Mark Lerner during Spring Training.
A Point-CounterPoint on the idea of the Lerners selling shares to individuals for the Washington Nationals was a suggestion from Don H. Along the lines of the Green Bay Packers model, and what the Atlanta Braves have been rumored to be heading towards, this might be a model for the future of sports teams in publicly traded stock.
Don: Just a thought that popped into my head. It seems to me that this would be a good conversation between you and AllStars.
Steve: The Braves are exploring that model but I have to believe MLB does not want it. It looks like the spinoff is inevitable if the Braves get their way. I guess technically an individual shareholder could buy into Liberty Media and own part of the Braves but it was convoluted with all of Liberty’s holdings. Their chairman, John Malone, wants to spinoff the Braves into a stand-alone corporation owned by shareholders.
It supports the theory the Nats might sell a minority share and what I have heard from a source that it would be roughly one-third of the team. That could raise nearly one billion dollars in new cash.
If the Braves pull this off, I’m fairly certain it would be treated as a sale of the team if more than 50 percent is up for grabs, and MLB would have to agree to it but who knows if there is some work-around.
This could be the new model for the future if it works. Think of the type of money it would generate and could be debt free.
Don: Perhaps they could do some sort of tie in with PSLs
Steve: So you’re saying buy a share comes with a PSL for one seat?
Don: Have not given it that much thought to decide if it is 1-1. That is where someone like Andrew (with his background) could help. I will bow out of this discussion now since Andrew is much more qualified than I am to comment.
Andrew: These are creative ideas to tie ownership to seat purchase licenses. However this gets complicated with this process even more. Not all potential buyers would live in the D.C. area you would think which is different from how Green Bay does it. For the Nats to go this route of selling ownership to individuals, this would take a long time to pull this off to get through the MLB red tape but also the SEC. I think the Braves could be the trailblazers here and this could be an option for the future, dependent on the success of this.
My guess if the Lerners wanted to move with expediency they would find their partner the old-fashioned way.
Steve: One distinct downside of being publicly traded is the summary disclosure. Your financial statements become public information, and it could expose some of what MLB is doing. As you will see with the Braves, the detail to the P&L is limited, and they have one more layer with their ownership of the real estate around the stadium known as The Battery. The Braves situation isn’t indicative of what the other 29 franchises are doing because each team is so unique except for the trickle from MLB of media revenues. 
Andrew: Thanks for posting the Braves financials. Not a lot to discern from lumped in line items. I wish we knew what was behind each number. Of course the Braves footnoted that the World Series win contributed extra revenue and profits. Also, comparing the COVID seasons doesn’t make it easy to fairly analyze what is going on there.
In those notes below they tell you what “baseball revenue” is made up from. The Braves don’t own their stadium. How do they have $72 million in depreciation and amortization expense? Their EBITDA was $111 million in 2021. I wonder if they depreciate long-term player contracts which I believe you can do with players on long-term deals treated as depreciable assets. All of this is fascinating. I think 2022 they break the bank with the glow of their World Series win.
Steve: Braves had a bottom line loss in 2019 (pre-COVID). From to 2019 to 2021 they raised revenues over $90 million and their operating expenses increased only $35 million. Getting back on the main subject here, I just look forward to the Nats finalizing a plan with ownership. I think that is a key to move forward in this rebuild.
Getting back to the Nats ownership situation, source told me that the Nats had interest at over $2 billion from at least one prospective buyer, but there were many holdbacks for reserves and contingent liabilities that they were too far apart with the unknowns with the future of MASN annual TV payments to the Nats. You can read into that however you want, and some of that goes against what others had published that bids were close to $3 billion. Of course in September, we reported on the MASN debacle being the Rubik’s Cube that needed to be solved for a sale to move forward, and that never got solved even with reported intervention from MLB. So of course it’s basically a convoluted mess.
And yes, we need to hear from Mark Lerner soon as to the direction and future spending from ownership and their commitment to the team. Ten months and counting is much too long to have this level of radio silence.
