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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number 001-41746

ATLANTA BRAVES HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Nevada

92-1284827

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12300 Liberty Boulevard
Englewood, Colorado

80112

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (720875-5500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Series A common stock

BATRA

The Nasdaq Stock Market LLC

Series C common stock

BATRK

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes     No 

The number of outstanding shares of Atlanta Braves Holdings, Inc. common stock as of July 31, 2023 was:

Series A

Series B

Series C

Atlanta Braves Holdings, Inc. common stock

10,318,202

977,795

50,423,293

Table of Contents

Table of Contents

Part I – Financial Information

Item 1. Financial Statements

ATLANTA BRAVES HOLDINGS, INC. Condensed Combined Balance Sheets (unaudited)

I-3

ATLANTA BRAVES HOLDINGS, INC. Condensed Combined Statements of Operations (unaudited)

I-4

ATLANTA BRAVES HOLDINGS, INC. Condensed Combined Statements of Comprehensive Earnings (Loss) (unaudited)

I-5

ATLANTA BRAVES HOLDINGS, INC. Condensed Combined Statements of Cash Flows (unaudited)

I-6

ATLANTA BRAVES HOLDINGS, INC. Condensed Combined Statements of Equity (unaudited)

I-7

ATLANTA BRAVES HOLDINGS, INC. Notes to Condensed Combined Financial Statements (unaudited)

I-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-23

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-30

Item 4. Controls and Procedures

I-30

Part II — Other Information

Item 1. Legal Proceedings

II-1

Item 1A. Risk Factors

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-1

Item 5. Other Information

II-1

Item 6. Exhibits

II-1

SIGNATURES

II-3

I-2

Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Balance Sheets

(unaudited)

    

June 30, 

    

December 31, 

    

2023

    

2022

amounts in thousands

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

130,537

 

150,664

Restricted cash

 

52,033

 

22,149

Accounts receivable and contract assets, net of allowance for credit losses

 

54,491

 

70,234

Other current assets

 

27,068

 

24,331

Total current assets

 

264,129

 

267,378

Property and equipment, at cost (note 3)

 

1,037,399

 

1,007,776

Accumulated depreciation

 

(298,542)

 

(277,979)

 

738,857

 

729,797

Investments in affiliates, accounted for using the equity method (note 4)

 

98,890

 

94,564

Intangible assets not subject to amortization:

 

  

 

  

Goodwill

 

175,764

 

175,764

Franchise rights

 

123,703

 

123,703

 

299,467

 

299,467

Other assets, net

 

107,759

 

99,455

Total assets

$

1,509,102

 

1,490,661

Liabilities and Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued liabilities

$

65,426

 

54,748

Deferred revenue and refundable tickets

 

142,010

 

104,996

Current portion of debt (note 5)

 

7,205

 

74,806

Other current liabilities

 

5,524

 

6,361

Total current liabilities

 

220,165

 

240,911

Long-term debt (note 5)

 

531,490

 

467,160

Redeemable intergroup interests

340,889

278,103

Finance lease liabilities

 

106,014

 

107,220

Deferred income tax liabilities

 

46,965

 

54,099

Pension liability

 

10,450

 

15,405

Other noncurrent liabilities

 

31,247

 

28,253

Total liabilities

 

1,287,220

 

1,191,151

Equity:

 

  

 

  

Parent’s investment

 

730,620

 

732,350

Retained earnings (deficit)

 

(515,971)

 

(429,082)

Accumulated other comprehensive earnings (loss), net of taxes

 

(4,056)

 

(3,758)

Total parent's investment

 

210,593

 

299,510

Noncontrolling interests in equity of subsidiaries

11,289

Total equity

221,882

299,510

Commitments and contingencies (note 7)

 

 

Total liabilities and equity

$

1,509,102

 

1,490,661

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Statements of Operations

(unaudited)

Three months ended June 30, 

Six months ended June 30, 

    

2023

    

2022

    

2023

    

2022

amounts in thousands, except per share amounts

Revenue:

 

  

 

  

  

 

  

Baseball revenue

$

254,935

 

236,918

$

272,496

 

246,758

Mixed-Use Development revenue

 

15,188

 

13,407

 

28,599

 

25,097

Total revenue

 

270,123

 

250,325

 

301,095

 

271,855

Operating costs and expenses:

 

  

 

  

 

  

 

  

Baseball operating costs

 

195,458

 

169,585

 

232,229

 

195,811

Mixed-Use Development costs

 

2,273

 

2,567

 

4,204

 

4,310

Selling, general and administrative, including stock-based compensation

33,443

32,995

59,993

55,019

Impairment of long-lived assets and other related costs

232

530

Depreciation and amortization

 

19,250

 

17,617

 

33,929

 

35,394

 

250,656

 

222,764

 

330,885

 

290,534

Operating income (loss)

 

19,467

 

27,561

 

(29,790)

 

(18,679)

Other income (expense):

 

  

 

  

 

  

 

  

Interest expense

 

(9,448)

 

(6,402)

 

(18,360)

 

(12,529)

Share of earnings (losses) of affiliates, net (note 4)

 

11,462

 

15,022

 

10,659

 

12,143

Unrealized gains (losses) on intergroup interests

(49,409)

34,881

(62,786)

36,103

Realized and unrealized gains (losses) on financial instruments, net

 

3,840

 

1,659

 

3,079

 

6,460

Gains (losses) on dispositions, net (note 1)

2,503

28

2,503

20,215

Other, net

 

813

 

143

 

1,654

 

168

Earnings (loss) before income taxes

 

(20,772)

 

72,892

 

(93,041)

 

43,881

Income tax benefit (expense)

 

(8,141)

 

(9,193)

 

6,152

 

(3,217)

Net earnings (loss)

$

(28,913)

 

63,699

$

(86,889)

 

40,664

Unaudited Pro Forma basic net earnings (loss) attributable to Series A, Series B and Series C Atlanta Braves Holdings, Inc. shareholders per common share (note 2)

$

0.33

 

  

$

(0.39)

 

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Statements of Comprehensive Earnings (Loss)

(unaudited)

    

Three months ended June 30, 

Six months ended June 30, 

    

2023

    

2022

    

2023

    

2022

amounts in thousands

Net earnings (loss)

$

(28,913)

 

63,699

$

(86,889)

 

40,664

Other comprehensive earnings (loss), net of tax:

 

  

 

  

 

  

 

  

Unrealized holdings gains (losses) arising during the period

(190)

(2)

(190)

(2)

Share of other comprehensive earnings (loss) of affiliates

 

(108)

 

 

(108)

 

Other comprehensive earnings (loss), net of tax

 

(298)

 

(2)

 

(298)

 

(2)

Comprehensive earnings (loss)

$

(29,211)

 

63,697

$

(87,187)

 

40,662

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Statements of Cash Flows

(unaudited)

    

Six months ended June 30, 

    

2023

    

2022

amounts in thousands

Cash flows from operating activities:

 

  

 

  

Net earnings (loss)

$

(86,889)

 

40,664

Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:

 

  

 

  

Depreciation and amortization

 

33,929

 

35,394

Stock-based compensation

 

6,344

 

6,126

Share of (earnings) losses of affiliates, net

 

(10,659)

 

(12,143)

Unrealized (gains) losses on intergroup interests, net

62,786

(36,103)

Realized and unrealized (gains) losses on financial instruments, net

 

(3,079)

 

(6,460)

(Gains) losses on dispositions, net

(2,503)

(20,215)

Deferred income tax expense (benefit)

 

(7,014)

 

(9,454)

Cash receipts from returns on equity method investments

6,225

7,550

Other charges (credits), net

 

949

 

1,687

Net change in operating assets and liabilities:

 

  

 

  

Current and other assets

 

(14,338)

 

21,184

Payables and other liabilities

 

50,141

 

69,798

Net cash provided by (used in) operating activities

 

35,892

 

98,028

Cash flows from investing activities:

 

  

 

  

Capital expended for property and equipment

 

(29,700)

 

(7,638)

Cash proceeds from dispositions

47,175

Investments in equity method affiliates and equity securities

(5,273)

Other investing activities, net

110

Net cash provided by (used in) investing activities

 

(29,590)

 

34,264

Cash flows from financing activities:

 

  

 

  

Borrowings of debt

 

15,815

 

39,753

Repayments of debt

 

(18,893)

 

(138,113)

Contribution from noncontrolling interest

11,289

Other financing activities, net

 

(4,756)

 

(6,074)

Net cash provided by (used in) financing activities

 

3,455

 

(104,434)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

9,757

 

27,858

Cash, cash equivalents and restricted cash at beginning of period

 

172,813

 

244,113

Cash, cash equivalents and restricted cash at end of period

$

182,570

 

271,971

Supplemental disclosure to the condensed combined statements of cash flows:

 

  

 

  

Property and equipment expenditures incurred but not yet paid

$

15,300

 

9,972

The following table reconciles cash and cash equivalents and restricted cash reported in our condensed combined balance sheets to the total amount presented in our condensed combined statements of cash flows:

June 30, 

December 31, 

2023

2022

Cash and cash equivalents

    

$

130,537

    

150,664

Restricted cash

 

52,033

 

22,149

Total cash, cash equivalents and restricted cash at end of period

$

182,570

 

172,813

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Statements of Equity

(unaudited)

    

    

    

    

Accumulated

    

    

other

Noncontrolling

Retained

comprehensive

interests

Parent's

earnings

earnings

in equity of

Total

    

investment

    

(deficit)

    

(loss)

    

subsidiaries

equity

amounts in thousands

Balance at January 1, 2023

$

732,350

 

(429,082)

 

(3,758)

 

299,510

Net earnings (loss)

 

 

(86,889)

 

 

(86,889)

Other comprehensive earnings (loss)

 

 

(298)

 

(298)

Stock-based compensation

 

6,294

 

 

 

6,294

Tax sharing adjustment with Parent

(7,354)

(7,354)

Contribution from noncontrolling interest

11,289

11,289

Other

(670)

 

(670)

Balance at June 30, 2023

$

730,620

 

(515,971)

 

(4,056)

 

11,289

221,882

Accumulated

other

Noncontrolling

Retained

comprehensive

interests

Parent's

earnings

earnings

in equity of

Total

    

investment

    

(deficit)

    

(loss)

    

subsidiaries

equity

amounts in thousands

Balance at March 31, 2023

$

727,287

 

(487,058)

 

(3,758)

 

6,645

243,116

Net earnings (loss)

 

(28,913)

 

 

(28,913)

Other comprehensive earnings (loss)

 

 

(298)

 

(298)

Stock-based compensation

 

3,153

 

 

 

3,153

Contribution from noncontrolling interest

4,644

4,644

Other

180

180

Balance at June 30, 2023

$

730,620

 

(515,971)

 

(4,056)

 

11,289

221,882

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Condensed Combined Statements of Equity

(unaudited)

    

    

    

    

Accumulated

    

other

Retained

comprehensive

Parent's

earnings

earnings

Total

    

investment

    

(deficit)

    

(loss)

    

equity

amounts in thousands

Balance at January 1, 2022

$

720,023

 

(394,891)

 

(18,909)

 

306,223

Net earnings (loss)

 

40,664

 

 

40,664

Other comprehensive earnings (loss)

(2)

(2)

Stock-based compensation

 

6,126

 

 

 

6,126

Other

151

(18)

133

Balance at June 30, 2022

$

726,300

 

(354,245)

 

(18,911)

 

353,144

    

    

    

    

Accumulated

    

other

Retained

comprehensive

Parent's

earnings

earnings

Total

    

investment

    

(deficit)

    

(loss)

    

equity

amounts in thousands

Balance at March 31, 2022

$

723,157

 

(417,944)

 

(18,909)

 

286,304

Net earnings (loss)

 

63,699

 

 

63,699

Other comprehensive earnings (loss)

 

 

(2)

(2)

Stock-based compensation

 

3,063

 

 

 

3,063

Other

80

 

 

 

80

Balance at June 30, 2022

$

726,300

 

(354,245)

 

(18,911)

 

353,144

See accompanying notes to condensed combined financial statements.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements

(unaudited)

(1)Basis of Presentation

During November 2022, the board of directors of Liberty Media Corporation (“Liberty” or “Parent”) authorized Liberty management to pursue a plan to redeem each outstanding share of its Liberty Braves common stock in exchange for one share of the corresponding series of common stock of a newly formed entity, Atlanta Braves Holdings, Inc. (the “Split-Off”). Atlanta Braves Holdings, Inc. (“Atlanta Braves Holdings”) is comprised of the businesses, assets and liabilities attributed to the Liberty Braves Group (“Braves Group”), which, as of June 30, 2023, included Liberty’s wholly-owned subsidiary Braves Holdings, LLC (“Braves Holdings”), corporate cash and intergroup interests in the Braves Group held by the Liberty Formula One Group (the “Formula One Group”) and the Liberty SiriusXM Group.

The Split-Off was completed on July 18, 2023 and was intended to be tax-free to holders of Liberty Braves common stock. The intergroup interests in the Braves Group remaining immediately prior to the Split-Off were settled and extinguished in connection with the Split-Off through the attribution, to the respective tracking stock group, of Atlanta Braves Holdings Series C common stock on a one-for-one basis equal to the number of notional shares representing the intergroup interest.

The intergroup interests represented quasi-equity interests which were not represented by outstanding shares of common stock; rather, the Formula One Group and Liberty SiriusXM Group had attributed interests in the Braves Group, which were generally stated in terms of a number of shares of Liberty Braves common stock. Historically, Liberty assumed that the notional shares (if and when issued) related to the Formula One Group interest in the Braves Group would be comprised of Series C Liberty Braves common stock and that the notional shares (if and when issued) related to the Liberty SiriusXM Group interest in the Braves Group would be comprised of Series A Liberty Braves common stock. Therefore, the market prices of Series C Liberty Braves and Series A Liberty Braves common stock were used for the mark-to-market adjustment for the intergroup interests held by the Formula One Group and the Liberty SiriusXM Group, respectively, through the condensed combined statements of operations. During the second quarter of 2023, Liberty determined that, in connection with the Split-Off, shares of Atlanta Braves Holdings Series C common stock would be used to settle and extinguish the intergroup interest in the Braves Group attributed to the Liberty SiriusXM Group. Accordingly, as of June 30, 2023, the market price of Series C Liberty Braves common stock was used for the mark-to market adjustment for the intergroup interest held by the Liberty SiriusXM Group. As of June 30, 2023, 6,792,903 notional shares represented an 11.0% intergroup interest in the Braves Group held by the Formula One Group and 1,811,066 notional shares represented a 2.9% intergroup interest in the Braves Group held by the Liberty SiriusXM Group.

The accompanying condensed combined financial statements represent a combination of the historical financial information of the Braves Group. These financial statements refer to the combination of Braves Holdings, the aforementioned intergroup interests in the Braves Group and cash as "Atlanta Braves Holdings," "the Company," "us," "we" and "our" in the notes to the condensed combined financial statements. The Split-Off will be accounted for at historical cost due to the pro rata nature of the distribution to holders of Liberty Braves common stock. All significant intercompany accounts and transactions have been eliminated in the condensed combined financial statements.

The accompanying (a) condensed combined balance sheet as of December 31, 2022, which has been derived from audited combined financial statements, and (b) the interim unaudited condensed combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed combined financial statements should be read in conjunction with the

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

combined financial statements and notes thereto for the year ended December 31, 2022 as presented in Amendment No. 5 to the Registration Statement on Form S-4 (File No. 333-268922) filed on June 8, 2023.

The preparation of condensed combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) fair value measurements of non-financial instruments and (ii) accounting for income taxes to be its most significant estimates.

Description of Business

Braves Holdings indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC,” the “Atlanta Braves,” the “Braves,” the “club,” or the “team”). In addition, Braves Holdings indirectly owned and operated three Professional Development League clubs (the Gwinnett Stripers, Mississippi Braves and Rome Braves) until they were sold in January 2022. ANLBC’s ballpark (“Truist Park” or the “Stadium”), is located in Cobb County, a suburb of Atlanta, and is leased from Cobb County, Cobb-Marietta Coliseum and Exhibit Hall Authority. Braves Holdings, through affiliated entities and third party development partners, has developed a significant portion of the land around Truist Park for a mixed-use development that features retail, office, hotel and entertainment opportunities (the “Mixed-Use Development”).

The Braves and 29 other Major League baseball clubs are collectively referred to as the Clubs. The Office of the Commissioner of Baseball (the “BOC”) is an unincorporated association also doing business as Major League Baseball (“MLB”) and has as its members the Clubs. The Clubs are bound by the terms and provisions of the Major League Constitution and all rules and regulations promulgated thereunder as well as a series of other agreements and arrangements that govern the operation and management of a Club, which among other things, require each Club to comply with limitations on the amount of debt a Club can incur, revenue sharing arrangements with the other Clubs, commercial arrangements with regard to the national broadcasting of its games and other programming and commercial arrangements relating to the use of its intellectual property.

In January 2022, Braves Holdings sold the three Professional Development League clubs to a third party and recognized a gain of approximately $20.2 million, which was allocated entirely to the baseball reportable segment. Each of the three clubs will remain affiliated with Braves Holdings via player development license agreements with MLB Professional Development Leagues, LLC. Additionally, Braves Holdings granted an exclusive, royalty free, sub-licensable, and irrevocable license to use various tradenames and logos. The license fee is included within the total purchase price of approximately $49.4 million.

Split-Off of Atlanta Braves Holdings from Liberty

A portion of Liberty’s general and administrative expenses, including legal, tax, accounting, treasury and investor relations support was allocated to the Braves Group each reporting period based on an estimate of time spent. The Braves Group paid $2.6 million and $1.4 million during the three months ended June 30, 2023 and 2022, respectively, and $4.5 million and $2.5 million during the six months ended June 30, 2023 and 2022, respectively, for such expenses.

Following the Split-Off, Liberty and Atlanta Braves Holdings operate as separate, publicly traded companies and Liberty owns 1,811,066 shares of Atlanta Braves Holdings Series C common stock. Within one year following the Split-Off, Liberty intends to either exchange the shares of Atlanta Braves Holdings Series C common stock with one or more third party lenders to satisfy certain of Liberty’s debt obligations or dispose of such shares in one or more public or private sale transactions. Following the exchange or disposal of such shares, neither Liberty or Atlanta Braves Holdings is expected to have any continuing stock ownership, beneficial or otherwise, in the other.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

In connection with the Split-Off, Liberty and Atlanta Braves Holdings entered into certain agreements in order to govern certain of the ongoing relationships between the two companies after the Split-Off and to provide for an orderly transition. These agreements include a reorganization agreement, a services agreement, aircraft time sharing agreements, a facilities sharing agreement, a tax sharing agreement and a registration rights agreement.

The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Split-Off, certain conditions to the Split-Off and provisions governing the relationship between Atlanta Braves Holdings and Liberty with respect to and resulting from the Split-Off. The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty and Atlanta Braves Holdings and other agreements related to tax matters. Pursuant to the services agreement, Liberty provides Atlanta Braves Holdings with general and administrative services including legal, tax, accounting, treasury and investor relations support. Atlanta Braves Holdings will reimburse Liberty for direct, out-of-pocket expenses and will pay a services fee to Liberty under the services agreement that is subject to adjustment quarterly, as necessary. Under the facilities sharing agreement, Atlanta Braves Holdings shares office space with Liberty and related amenities at Liberty’s corporate headquarters. The aircraft time sharing agreements provide for Liberty to lease certain aircraft that it or its subsidiaries own to Atlanta Braves Holdings for use on a periodic, non-exclusive time sharing basis. Pursuant to the registration rights agreement with Liberty, upon request of Liberty, Atlanta Braves Holdings will use reasonable best efforts to effect the registration of shares of Atlanta Braves Holdings' Series C common stock that were issued to Liberty in settlement and extinguishment of the intergroup interest in the Braves Group attributed to the Liberty SiriusXM Group.

Seasonality

Braves Holdings revenue is seasonal, with the majority of revenue recognized during the second and third quarters which aligns with the baseball season.

(2)Pro Forma Earnings (Loss) per share

Unaudited pro forma earnings (loss) per common share is computed by dividing net earnings (loss), excluding any unrealized gains (losses) on intergroup interests, as detailed in the table below, by 61.7 million common shares, which is the aggregate number of shares of Series A, Series B and Series C common stock that were issued on July 18, 2023 in connection with the Split-Off.

Three months ended

Six months ended

June 30, 2023

    

June 30, 2023

amounts in thousands

Net earnings (loss)

$

(28,913)

 

(86,889)

Less: Unrealized gains (losses) on intergroup interests

 

(49,409)

 

(62,786)

Unaudited pro forma net earnings (loss)

$

20,496

 

(24,103)

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

(3) Property and Equipment

Property and equipment consisted of the following:

    

    

June 30, 2023

    

December 31, 2022

Owned 

Owned 

Estimated 

assets 

assets 

Useful 

Owned 

available to

Owned 

available to

    

Life

    

assets

    

be leased

    

Total

    

assets

    

be leased

    

Total

in years

amounts in thousands

Land

 

NA

$

19,643

21,831

 

41,474

 

19,643

21,831

 

41,474

Buildings and improvements

 

15-39

 

281,450

355,244

 

636,694

 

282,314

354,959

 

637,273

Leasehold improvements

 

15-39

 

75,860

62,062

 

137,922

 

72,455

61,876

 

134,331

Furniture and equipment

 

5-7

 

178,063

8,243

 

186,306

 

176,227

8,061

 

184,288

Construction in progress

 

NA

 

292

34,711

 

35,003

 

886

9,524

 

10,410

Property and equipment, at cost

$

555,308

 

482,091

 

1,037,399

 

551,525

 

456,251

 

1,007,776

Depreciation expense was $13.3 million and $13.8 million for the three months ended June 30, 2023 and 2022, respectively, and $26.8 million and $28.7 million for the six months ended June 30, 2023 and 2022, respectively.

(4)Investments in Affiliates Accounted for Using the Equity Method

The following table includes the Company’s carrying amount and percentage ownership of its investments in affiliates:

June 30, 2023

December 31, 2022

Percentage

Carrying

Carrying

    

Ownership

    

amount

    

amount

amounts in thousands

MLBAM

3.3

%  

$

50,453

45,102

BELP

3.3

%  

 

33,935

33,224

Other

50.0

%  

 

14,502

16,238

Total

$

98,890

94,564

The following table presents the Company’s share of earnings (losses) of affiliates:

    

Three months ended

Six months ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

amounts in thousands

MLBAM

$

10,577

 

13,103

$

9,334

10,585

BELP

 

514

 

865

 

711

(461)

Other

 

371

 

1,054

 

614

2,019

Total

$

11,462

 

15,022

$

10,659

 

12,143

MLBAM

MLB Advanced Media, L.P. (“MLBAM”) was formed in January 2000 pursuant to a vote of the 30 owners of the Clubs, whereby each Club agreed to cede substantially all of its individual Club internet and interactive media rights

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

to MLBAM for an indirect 3.33% interest in MLBAM. The Company’s investment in MLBAM is considered an equity method investment as the investment is in a limited partnership where significant influence is generally presumed to exist.  

At the time of the acquisition of ANLBC by a predecessor of Liberty in 2007, the fair value of the MLBAM investment exceeded ANLBC’s proportionate share of MLBAM’s net assets, resulting in excess basis in the investment in MLBAM. The excess basis as of June 30, 2023 and December 31, 2022 was indefinite lived and aggregated approximately $10.3 million.

BELP

Baseball Endowment L.P. (“BELP”) is an investment fund formed by the Clubs principally for the purpose of investing, on a long-term basis, assets on their behalf intended to provide a competitive market rate investment return while minimizing investment volatility. The Company’s investment in BELP is considered an equity method investment as the investment is in a limited partnership where significant influence is generally presumed to exist. The Company records its share of BELP’s earnings (losses) on a one month lag.

Other Affiliates

Braves Holdings has 50% interests in two joint ventures that were formed to develop, own and operate hotels in the Mixed-Use Development. The equity method of accounting is applied to these investments as Braves Holdings does not have the ability to direct the most significant activities that impact their economic performance. In addition, Braves Holdings records its share of the earnings (losses) of these investments on a three month lag.

(5)Debt

Debt is summarized as follows:

    

June 30, 

December 31, 

    

2023

    

2022

amounts in thousands

Baseball

League wide credit facility

$

 

MLB facility fund - term

 

30,000

 

30,000

MLB facility fund - revolver

 

43,125

 

43,700

TeamCo revolver

 

 

Term debt

168,561

171,694

Mixed-Use Development

Credit facilities

 

35,058

 

103,163

Term debt

 

266,069

 

197,334

Deferred financing costs

 

(4,118)

 

(3,925)

Total debt

 

538,695

 

541,966

Debt classified as current

 

(7,205)

 

(74,806)

Total long-term debt

$

531,490

 

467,160

League Wide Credit Facility

In December 2013, a subsidiary of Braves Holdings executed various agreements to enter into MLB’s League Wide Credit Facility (the “LWCF”). Braves Holdings also established a special purpose Delaware statutory trust, the Braves Club Trust (the “Club Trust”), and transferred, among other things, to the Club Trust its rights to receive

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

distributions of revenue from the National Broadcasting Contracts, which secure borrowings under the LWCF. Pursuant to the terms of a revolving credit agreement, Major League Baseball Trust may borrow from certain lenders, with Bank of America, N.A. acting as the administrative agent. Major League Baseball Trust then uses the proceeds of such borrowings to provide loans to the club trusts of the participating Clubs. Major League Baseball Trust has granted Wells Fargo Bank, National Association, the collateral agent in respect of the LWCF, a first priority lien to secure the borrowings under the LWCF. The maximum amount available to the Club Trust under the LWCF was $125 million as of June 30, 2023. The commitment termination date of the revolving credit facility under the LWCF, which is the repayment date for all amounts borrowed under such revolving credit facility, is July 10, 2026.

Under the LWCF, the Club Trust can request a revolving credit advance in the form of a Eurodollar or Base Rate loan. Each loan bears interest on the unpaid principal amount from the date made through maturity at a rate determined by the Eurodollar or Base Rate, plus an applicable margin. The interest rate of a Eurodollar loan was one-month LIBOR plus a margin of 1.20% to 1.325%, based on the credit rating of Major League Baseball Trust. The interest rate of a Base Rate loan was the greater of (x) the Federal Funds rate plus 0.50%, (y) the prevailing Prime, and (z) LIBOR plus 1.00%, plus a margin of 0.200% to 0.325%, based on the credit rating of Major League Baseball Trust. Beginning in May 2022, interest based on LIBOR under the LWCF was replaced with interest based on the Secured Overnight Financing Rate (“SOFR”) plus 0.1%.

MLB Facility Fund

In December 2017, a subsidiary of Braves Holdings executed various agreements to enter into the MLB Facility Fund (the “MLBFF”). Braves Holdings also established a special purpose Delaware limited liability company, Braves Facility Fund LLC (“Braves Facility Fund”), and transferred to Braves Facility Fund its rights to receive distributions from the Club Trust, which secure borrowings under the MLBFF. Pursuant to the terms of an indenture, a credit agreement and certain note purchase agreements, Major League Baseball Facility Fund, LLC may borrow from certain lenders. Major League Baseball Facility Fund, LLC then uses the proceeds of such borrowings to provide loans to each of the participating Clubs. Amounts advanced pursuant to the MLBFF are available to fund ballpark and other baseball-related real property improvements, renovations and/or new construction.

Term

In June 2020, Braves Facility Fund converted previous borrowings under a revolving credit advance to a $30 million term note with Major League Baseball Facility Fund, LLC (the “MLB facility fund – term”). Interest is payable on June 10 and December 10 of each year at an annual rate of 3.65%. In each of December 2029 and 2030, $15 million of the term note matures.

Revolver

In May 2021, Braves Facility Fund established a revolving credit commitment with Major League Baseball Facility Fund, LLC (the “MLB facility fund – revolver”). The maximum amount available to Braves Facility Fund under the MLB facility fund – revolver was $43.1 million as of June 30, 2023. The commitment termination date, which is the repayment date for all amounts borrowed under the revolving credit facility of the MLBFF, is July 10, 2026.

Under a credit agreement, Braves Facility Fund can request a revolving credit advance in the form of a Eurodollar or Base Rate loan. Each loan bears interest on the unpaid principal amount from the date made through maturity at a rate determined by a Eurodollar or Base Rate, plus an applicable margin. The interest rate of a Eurodollar loan was one-month LIBOR plus a margin of 1.275% to 1.400%, based on the credit rating of Major League Baseball Facility Fund, LLC. The interest rate of a Base Rate loan was the greater of (x) the Federal Funds rate plus 0.50%, (y) the prevailing Prime rate,

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

and (z) LIBOR plus 1.00%, plus a margin of 0.275% to 0.400%, based on the credit rating of Major League Baseball Facility Fund, LLC. Beginning in May 2022, interest based on LIBOR under the MLB facility fund – revolver was replaced with interest based on the SOFR plus 0.1%. Borrowings outstanding under the MLB facility fund – revolver bore interest at a rate of 6.52% per annum as of June 30, 2023.

TeamCo Revolver

In September 2016, a subsidiary of Braves Holdings amended a Revolving Credit Agreement (the “TeamCo Revolver”) that provided for revolving commitments of $85 million. Under the agreement, Braves Holdings can request a revolving credit loan in the form of a Eurodollar or Base Rate loan. Each loan bears interest on the unpaid principal amount from the date made through maturity at a rate determined by a Eurodollar or Base Rate, plus an applicable margin. The interest rate of a Base Rate loan was the greater of (x) the prevailing Prime rate, (y) the prevailing Federal Funds rate plus 0.50%, and (z) LIBOR plus 1.00%, plus a margin of 0.25%. In August 2022, the TeamCo Revolver was amended, increasing the borrowing capacity to $150 million, extending the maturity to August 2029 and replacing the Eurodollar interest rate with SOFR. Under the TeamCo Revolver, Braves Holdings must maintain certain financial covenants, including a fixed-charge coverage ratio and total enterprise indebtedness.

Baseball Term Debt

In August 2016, a subsidiary of Braves Holdings entered into a senior secured permanent placement Note Purchase Agreement for $200 million. The notes bear interest at 3.77% per annum and are scheduled to mature in September 2041. Braves Holdings makes principal and interest payments of $6.4 million each March 30 and September 30. At June 30, 2023, Braves Holdings had borrowings of $167.1 million under the Note Purchase Agreement, net of unamortized debt issuance costs of $1.5 million. Additionally, Braves Holdings must maintain certain financial covenants including debt service coverage ratios.

Mixed-Use Development Credit Facilities

In August 2016, a subsidiary of Braves Holdings entered into a $37.5 million construction loan agreement that matures in November 2024. The proceeds were primarily used to pay the construction costs of an entertainment building adjacent to the Stadium, as well as assist with phase II construction of the Mixed-Use Development. Interest accrues monthly at 4% per annum. Beginning December 15, 2020 and on each month thereafter, Braves Holdings makes principal and interest payments of $179 thousand. At June 30, 2023, Braves Holdings had borrowings outstanding of $35.0 million. Under the construction loan, Braves Holdings must maintain certain financial covenants, including a debt yield ratio.

In December 2022, a subsidiary of Braves Holdings entered into a $112 million construction loan agreement that has an initial maturity date of December 2026. The proceeds of the construction loan agreement will be used to pay the construction costs of an office building adjacent to the Stadium.  Loans under the construction loan bear interest at SOFR plus 2.00% per annum (subject to a reduction to 1.80% per annum if certain conditions are met). As of June 30, 2023, there were no borrowings outstanding under the construction loan.

Mixed-Use Development Term Debt

In May 2018, a subsidiary of Braves Holdings refinanced a construction loan with a $95 million Term Loan Agreement. The Term Loan Agreement bears interest at one-month LIBOR plus 1.35% per annum and is scheduled to mature on May 18, 2025. The full principal amount will be due at maturity. At June 30, 2023, Braves Holdings had

I-15

Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

borrowings of $94.9 million under the Term Loan Agreement, net of unamortized debt issuance costs of $0.1 million. In April 2023, the Term Loan Agreement was amended to change the reference rate on borrowings to the SOFR.

In June 2022, subsidiaries of Braves Holdings refinanced a construction loan agreement that was used to construct an office building within the Mixed-Use Development with a new term loan facility with $125 million in commitments, approximately $22.7 million of which is not available for borrowing as of June 30, 2023, but is expected to be available once certain conditions are met. The term loan agreement bears interest at one-month SOFR plus 2.10% per annum and is scheduled to mature on June 13, 2027. Borrowings outstanding under the term loan bore interest at a rate of 7.24% as of June 30, 2023. Approximately $2 million of annual principal payments commence in July 2024. At June 30, 2023, Braves Holdings had borrowings outstanding of $101.4 million under the term loan facility, net of unamortized debt issuance costs of $0.9 million.

In May 2023, a subsidiary of Braves Holdings refinanced an $80 million construction loan agreement that was used to construct the retail portion of the Mixed-Use Development with a new term loan with $80 million in commitments, approximately $11.3 million of which is not available for borrowing as of June 30, 2023, but is expected to be available once certain conditions are met. The term loan agreement bears interest at daily simple SOFR plus 2.50% per annum and is scheduled to mature on May 18, 2028. Monthly principal payments commence in June 2026. At June 30, 2023, Braves Holdings had borrowings outstanding of $68.1 million, net of unamortized debt issuance costs of $0.6 million.

Fair Value of Debt

Due to the variable rate nature of the LWCF, MLB facility fund – revolver, TeamCo Revolver and the Mixed-Use Development term debt, the Company believes that the carrying amount of such debt approximates fair value at June 30, 2023.  The estimated fair value of the senior secured permanent placement notes was $145.4 million as of June 30, 2023, based on current U.S. treasury rates for similar financial instruments.  

Debt Covenants

As of June 30, 2023, Braves Holdings was in compliance with all financial debt covenants.

Interest Rate Swaps (Level 2)

In May 2018, a subsidiary of Braves Holdings entered into an interest rate swap agreement with Truist Bank for a notional amount of $95 million, maturing on May 5, 2025. As of June 30, 2023 and December 31, 2022, the fair value of the interest rate swap was $3.6 million and $3.4 million, respectively.

In August 2019, a subsidiary of Braves Holdings entered into an interest rate swap agreement with Truist Bank for a notional amount of $100 million, maturing on March 8, 2023. Effective April 1, 2020, the notional amount began at $25 million and increased over time to $100 million as of August 1, 2020. As of December 31, 2022, the fair value of the interest rate swap was $855 thousand.

In May 2022, a subsidiary of Braves Holdings entered into an interest rate swap agreement with Truist Bank for a notional amount of $100 million maturing on June 1, 2025. The interest rate swap became effective in March 2023. As of June 30, 2023 and December 31, 2022, the fair value of the interest rate swap was $3.8 million and $2.9 million, respectively.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

In June 2023, a subsidiary of Braves Holdings entered into an interest rate swap agreement with Truist Bank for a notional amount of $64 million maturing on May 18, 2028. The interest rate swap became effective in June 2023. As of June 30, 2023, the fair value of the interest rate swap was $0.6 million.

Interest rate swaps are included within other assets as of June 30, 2023 and other current assets and other assets as of December 31, 2022 in the condensed combined balance sheets and changes in the fair value of the interest rate swaps are recorded to realized and unrealized gains (losses) on financial instruments, net in the condensed combined statements of operations.

(6)Stock-Based Compensation

The Company recorded stock-based compensation expense of $3.2 million and $3.1 million during the three months ended June 30, 2023 and 2022, respectively, and $6.3 million and $6.1 million during the six months ended June 30, 2023 and 2022, respectively. These amounts are included in selling, general and administrative expense in the condensed combined statements of operations.

Liberty—Incentive Plans

Liberty grants, to certain of its directors, employees and employees of Braves Holdings, restricted stock (“RSAs”), restricted stock units (“RSUs”) and stock options to purchase shares of Liberty Braves common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options, RSAs and RSUs) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Pursuant to the Liberty Media Corporation 2022 Omnibus Incentive Plan (the “2022 Plan”), Liberty may grant Awards in respect of a maximum of 20.0 million shares of Series A, Series B and Series C Liberty Media Corporation common stock plus the shares remaining available for Awards under the prior Liberty Media Corporation 2017 Omnibus Incentive Plan (the “2017 Plan”), as of close of business on May 24, 2022, the effective date of the 2022 Plan. Any forfeited shares from the 2017 Plan shall also be available again under the 2022 Plan. Awards generally vest over 1-5 years and have a term of 7-10 years. Liberty issues new shares upon exercise of equity awards.

At the time of the Split-Off, the Awards were exchanged into RSAs, RSUs and stock options to purchase shares of Atlanta Braves Holdings common stock.

Liberty Braves—Grants of Awards

Liberty did not grant any options to purchase shares of Series A or Series B Liberty Braves common stock during the six months ended June 30, 2023.

In connection with his employment agreement, during the six months ended June 30, 2023, Liberty granted 31 thousand performance-based RSUs of Series C Liberty Braves common stock to its CEO.  Such RSUs had a GDFV of $34.44 per share and cliff vest one year from the month of grant, subject to the satisfaction of certain performance objectives and based on an amount determined by Liberty’s compensation committee. Performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. The Company assesses the probability of achieving the performance objectives each reporting period and as satisfaction of the performance objectives is deemed probable, the Company records the associated compensation expense.

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ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

The Company has calculated the GDFV for all of its equity classified awards using the Black-Scholes valuation model. The Company estimates the expected term of the options based on historical exercise and forfeiture data. The volatility used in the calculation for options is based on the historical volatility of Liberty Braves common stock and the implied volatility of publicly traded Liberty Braves options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

Liberty Braves—Outstanding Awards

The following table presents the number and weighted average exercise price (“WAEP”) of options to purchase Liberty Braves common stock granted to certain officers, employees and directors, as well as the weighted average remaining life and aggregate intrinsic value of the options.

Series C

    

    

    

    

Weighted

    

Aggregate

average

intrinsic

Liberty Braves

remaining

value

 

options (000's)

 

WAEP

 

life

 

(in millions)

Outstanding at January 1, 2023

 

3,108

 

$

26.17

Granted

 

3

 

$

37.50

Exercised

 

(151)

 

$

18.42

Forfeited/Cancelled

 

(4)

 

$

22.75

Outstanding at June 30, 2023

 

2,956

 

$

26.59

 

4.1

years

 

$

39

Exercisable at June 30, 2023

 

1,356

 

$

25.69

 

3.9

years

 

$

19

As of June 30, 2023, there were no outstanding Series A or Series B options to purchase shares of Series A or Series B Liberty Braves common stock.

As of June 30, 2023, the total unrecognized compensation cost related to unvested Liberty Braves Awards was approximately $6.0 million. Such amount will be recognized in the Company’s condensed combined statements of operations over a weighted average period of approximately 1.2 years.

As of June 30, 2023, 3.0 million shares of Series C Liberty Braves common stock were reserved by Liberty for issuance under exercise privileges of outstanding stock options.

Liberty Braves—Exercises

The aggregate intrinsic value of all Series C Liberty Braves options exercised during the six months ended June 30, 2023 and 2022 was $2.3 million and $415 thousand, respectively.

Liberty Braves—RSAs and RSUs

Liberty had approximately 203 thousand unvested RSAs and RSUs of Liberty Braves common stock held by certain directors, officers and employees of Liberty as of June 30, 2023.  These Series A and Series C unvested RSAs and RSUs of Liberty Braves common stock had a weighted average GDFV of $32.94 per share.

The aggregate fair value of all RSAs and RSUs of Liberty Braves common stock that vested during the six months ended June 30, 2023 and 2022 was $753 thousand and $1.3 million, respectively.

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Table of Contents

ATLANTA BRAVES HOLDINGS, INC.

Notes to Condensed Combined Financial Statements (Continued)

(unaudited)

(7)Commitments and Contingencies

Collective Bargaining Agreement

In March 2022, the Major League Baseball Players Association (“MLBPA”) and the Clubs entered into a new collective bargaining agreement that covers the 2022-2026 MLB seasons (“CBA”). The start of the 2022 regular season was delayed as a result of the related negotiations, but a full season was completed. The CBA contains provisions surrounding revenue sharing among the Clubs, a competitive balance tax on Club payrolls that exceed specified thresholds, minimum player salary levels, an expanded postseason schedule and other provisions impacting Braves Holdings’ operations and its relationships with members of the MLBPA. Braves Holdings’ minor league players are also parties to a collective bargaining agreement. Less than 10% of the Company’s labor force is covered by collective bargaining agreements.

There are two components of the revenue sharing plan that each Club is subject to under the CBA: a straight base revenue pool (the “Pool”) and the Commissioner Discretionary Fund. The size of the Pool is equal to the total amount transferred if each Club contributed 48% of its prior years’ net defined local revenue (“NDLR”). The contributions per Club are based on a composite of the prior three years’ NDLR and funds are distributed equally to all Clubs. Certain Clubs are disqualified from revenue sharing from the Pool based on market size. Also, each season, the Clubs are required to equally fund a Commissioner’s Discretionary Fund up to $15 million. Club submissions of NDLR are subject to audit by the MLB Revenue Sharing Administrator and are subject to rules issued by the MLB Revenue Sharing Definitions Committee.

During the six months ended June 30, 2023 and 2022, Braves Holdings incurred $16.4 million and $9.5 million, respectively, in revenue sharing, which is included as an expense within baseball operating costs in the condensed combined statements of operations.

Employment Contracts

Long-term employment contracts provide for, among other items, annual compensation for certain players (current and former) and other employees. Amounts due under such contracts as of June 30, 2023 aggregated $1,017.6 million, which is payable annually as follows: $225.8 million in 2023, $149.8 million in 2024, $143.4 million in 2025, $136.3 million in 2026, $111.2 million in 2027 and $251.1 million thereafter. Additionally, these contracts may include incentive compensation (although certain incentive compensation awards cannot be earned by more than one player per season).

Subsequent to June 30, 2023, Braves Holdings entered into long-term employment contracts with certain players, pursuant to which approximately $12.4 million is anticipated to be paid through 2024 according to the terms of such contracts, excluding any incentive compensation.

Certain employment contracts with players include salary and bonus payments earned but not yet paid and, in certain situations, related accrued interest specified contractually that is due in varying installments through the year 2023. The present value of thes