It's been almost a year since Time Warner put the Atlanta Braves up for sale. If this was a house still unsold after all this time, you'd think it was haunted. But instead, a complicated tax swap is what has the Atlanta Braves currently in a purgatory - waiting patiently to get out.
From all accounts Time Warner has a tentative deal in place with Liberty Media, a huge media company that owns percentages in numerous cable networks and other holdings. The deal is strictly for tax relief for both companies, with the Braves simply being the go-between.
Most Braves fans are not happy with their team being the pawn that allows these two companies to avoid paying huge amounts of money to the government. The preference would have been for one person to buy the team, so that for the first time in years there would be a face associated with the club instead of some corporate board.
The "value" of the deal for Time Warner will be $400 million, and there's no way an individual would pay that amount for the Braves. But in this tax deal, they will receive a value of $400 million for the team, which will make its shareholders very happy.
The delay in the deal going through probably pertains to the complexity of the arrangement. This is not a straight "write the check" type deal. There are many tax loopholes in place here that have to be ironed out and deemed legal by numerous overpaid suits that probably would prefer to watch the Braves in person than deal them around like its Boardwalk in a game of Monopoly.
Major League Baseball has reportedly told Time Warner that it wants a local influence in any deal with Liberty Media. So Terry McGuirk, who has been the Braves' President for three years now and on its board for more than fifteen years, has been working on the deal and is believed to be the person that will remain in charge. He has also said that Liberty wants the management structure (GM John Schuerholz and Manager Bobby Cox) to remain in place.
The preference of the fans is Arthur Blank, the owner of the Falcons and former Chairman of The Home Depot. But Blank could not compete with the chance for Time Warner to get the full value of the team with the deal with Liberty Media. There were rumors Blank may be inserted into the deal as a minority owner, and in turn become the face of the team and in two years buy the majority stake in the club. But the latest talk is that Blank wants all or nothing. He's not interested in a backseat role with the club, so it looks like he is not an option.
The tax situation would allow Liberty to spin the team to another owner in two years after the completion of the deal. So there's still a chance Blank could purchase the club at that time. But for now, it does not look like he will be involved with the Liberty situation once the sale goes through.
Of course, a main question the fans have is, "Will Liberty Media decrease or even increase the $80 million dollar payroll once it takes over?" General Manager John Schuerholz has said all summer he's operating under the assumption that the payroll will not change. And on Monday, McGuirk told the Atlanta Constitution that "there's not going to be any cutbacks," and "there's always a chance we could squeeze out a few more dollars (to increase payroll), but it's not going down."
That's good news for a team that has obviously suffered a bit since the payroll was cut 20% by Time Warner after the 2003 season. While the Braves have still been competitive, the cuts limited Schuerholz's flexibility to improve the club.
The Braves will lose the salaries of John Thomson ($4.75 million) and Todd Pratt ($0.85) this winter, but with Mike Hampton returning his $8.1 (budgeted) salary will make up that difference and then some. Even with the possibility of adding a few more million to the budget if the sale goes through, Schuerholz will have to shed a few salaries to have more flexibility.
Right now, there is $61.6 million dollars committed to seven players in guaranteed salaries for 2007, so that's why there are rumors that Marcus Giles (possibly $5 million salary next year) and Horacio Ramirez (maybe $2.5 million) might be traded and Chris Reitsma (possibly $3 million in arbitration) might be non-tendered.
If those three players are gone, the club could have close to $10 million to add upgrades to the roster, possibly to the rotation, bullpen, and left field.
One problem with the holdup in the sale of the team is Schuerholz's limitations in handing out long-term contracts. With Andruw Jones' contract up after 2007, Schuerholz would certainly prefer to deal with that ordeal this winter instead of next year. But can he? With no concrete sale in place, or even a timetable, can Schuerholz commit to a top tier player like Jones for the long-term? He says that will not be a problem, but if the Liberty deal drags on, will Time Warner worry about getting stuck with a deal for Jones that they may not approve?
The timetable for the sale of the team is the biggest issue. No one, even McGuirk, knows when the sale will be completed. For any changes to be in place before the Winter Meetings, which take place the first week of December, you would think the sale would have to be completed before the end of this month, so the owners would have time to vote on the deal. That vote might be a bit more complicated, since this deal with Liberty would be a bit unusual. It might take more time for Major League Baseball to go over the deal so it can be approved by its owners.
Of course, Schuerholz could just take the attitude that the Liberty deal will go down, and that the payroll could increase to maybe $85 million. Then if there are any changes later, he can deal with it then. Let's just hope he doesn't go into the Winter Meetings not knowing for certain what his budget will be. You do not want any excuse to be given to not improve this club, which for the first time in fifteen years missed the playoffs.
Most people are worried the deal with Liberty will be a bad thing, but can it be any worse than what we've lived through with Time Warner the last six years? And if Liberty plans to spin the Braves in two years, once the law allows them to sell the team, wouldn't it be in its best interest to keep the Braves as competitive as possible so the value of the team will not decrease? They may not be able to get full value if they sell the team in a few years, but the better the Braves' organization is, the more valuable it will be if they do sell it.
So there's no reason to panic. Compared to Time Warner, Liberty Media might be a drastic improvement. We might not have the solo, individual owner we all prefer, but there's no reason to believe Liberty will tear down a productive company. It's just not in their best interest. This is a bit different situation compared to Time Warner, who knew they were going to sell the team and have it tied to other interests. Liberty's best plan would be to keep the Braves as one of the top teams in the game, and it definitely has the money to make that happen.
It's just a question of when it will happen.
Thursday's question: 4. Can John Smoltz be the Braves' ace in 2007?
Bill Shanks is the author of Scout's Honor: The Bravest Way To Build A Winning Team, a look inside the Braves‘ traditional scouting and player development philosophies. He can also be heard regularly on the Braves Radio Network. Email Bill at firstname.lastname@example.org.
3. What's happening with the pending sale?
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