Jonathan Boyar, Principal, Boyar Value Group and Principal Advisor to the MAPFRE AM US Forgotten Value Fund
The chance to buy a piece of the Atlanta Braves or New York Knicks through the US stock market is highlighted in these interviews with professional money managers Jonathan Boyar and Sam Coquillard.
Jonathan Boyar is a principal at the Boyar Value Group and Principal Advisor to the MAPFRE AM US Forgotten Value Fund.
He is President of Boyar’s Intrinsic Value Research LLC., an independent research boutique established in 1975 that counts some of the world’s largest sovereign wealth funds, hedge funds, mutual funds and family offices as subscribers.
He is also a Principal of Boyar Asset Management, which has been managing money utilizing a value-oriented strategy since 1983. Mr. Boyar has been interviewed by Barron’s, Welling on Wall Street and GuruFocus and is a frequent guest on both CNBC and Yahoo Finance.
“…One of our favorite names there is a company called Madison Square Garden Sports (NYSE:MSGS), which is in a decent position in the fund. So currently, the weighting is a little less than 3% of the fund. And this kind of typifies the type of investment we do.
Madison Square Garden Sports is controlled by the Dolan family and sells for the “Dolan discount.” And the Dolans are a family that everyone loves to hate. But over time we have made a lot of money investing alongside of them.
The company has an enterprise value of $4.5 billion. And primarily what it owns are the New York Knicks and the Rangers.
The New York Knicks are valued by Forbes at $6.1 billion.
And they’ve generally been conservative in their valuations.
And the Rangers are valued at $2 billion.
So with an enterprise value of $4.5 billion, you’re getting part of the Knicks for free and getting paid to own the Rangers. So it makes absolutely no sense, but people don’t think value will ever be unlocked, and we disagree with that sentiment.
And we’ve been investing alongside the Dolan family for a long period of time. And we made a lot of money when they sold Cablevision to Altice (NYSE:ATUS) for a price that we never thought that we would receive.
And right now the value of sports teams is going up and up. And the best move that the Dolans could have taken or made has been not to sell the teams as they’ve just gone up in value.
The CAGR has been tremendous, but right now private equity is getting very involved in this space. And it wouldn’t surprise us — because the NBA and the NHL now allow private equity firms to take stakes in teams — if a private equity firm or a family office took a 10%, 15%, 20% stake in the Knicks and/or the Rangers to give the Street a value of what it would be worth to an acquirer.
So that’s a name that we like a lot.
We think it’s almost a double from here based on the asset value of the company.
They’re assets that don’t go on sale very often. They are trophy properties. The last time the Knicks and the Rangers went up for sale was in the mid-1990s.
So that’s something we’re excited about.
And it fits another theme of ours which is that rights to live sports are getting more valuable each year. And this is a way to participate in that value creation. And then sports gambling is another way that these teams will make money…
On the theme of sports teams, there’s Liberty Braves (NASDAQ:BATRK), which owns the Atlanta Braves baseball team.
It’s controlled by John Malone, who is a very successful media investor. And we think over the next couple of years, he’s going to sell the team for a lot of money.
And publicly traded sports teams don’t generally stay public for very long if you look at their history. The Atlanta Braves is now trading for around $30.
We think intrinsic value is probably close to $45 or so. And it also owns some valuable real estate. It has a very savvy owner who will sell it at the right price.”
Samuel C. Coquillard, Managing Director, Pacific Global Investment Management Company
Another professional money manager picking the owner of the Atlanta Braves as an investment oppportunity for 2023 and beyond is Sam Coquillard.
Samuel C. Coquillard is Managing Director at Pacific Global Investment Management Company.
Immediately prior to joining Pacific Global in 2006, Mr. Coquillard was a Senior Vice President of Chelsea Management Company, an investment advisory firm.
Previously, he was a First Vice President of Merrill Lynch; Senior Vice President at Chase H&Q; and Vice President, Institutional Sales, at Wertheim Schroder & Co. He received a B.A. degree from the University of Southern California.
“A name that we’ve been involved with for a long time is Liberty Braves (NASDAQ:BATRK).
Liberty Braves is a tracking stock, but that’s changing.
Liberty Braves represents Liberty Media’s interest in the Atlanta Braves baseball team and the surrounding real estate development, which is referred to as The Battery Atlanta.
And in November of this year, Liberty Media announced that it would split off Atlanta Braves and The Battery Atlanta into a separately traded public company via a redemptive split. The transaction will be completed by the end of the first half of 2023.
So basically, what’s happening here is Liberty Media, which has had this tracking stock Liberty Braves, will redeem its existing Braves common share stock in exchange for shares of the newly formed company, which will be called Atlanta Braves Holdings Inc.
We think it adds to the likelihood that the Atlanta Braves baseball franchise will be sold.
We think the decision to isolate the value of the baseball franchise, by converting the shares from a tracking stock into its own stock via the redemptive split, is very positive.
Chairman John C. Malone and Liberty Media have a very successful history of unlocking shareholder value by way of financial engineering; we think it’s going to be another example of that going forward.
This one is interesting. There are very few publicly traded major league teams in the United States.
There’s the Knicks and the Rangers, which are part of Madison Square Sports (NYSE:MSGS). And right now, we have the Atlanta Braves.
And so, you have these companies that are very precious; there aren’t many of them around, as everyone knows. And when there is a transaction, I think people are usually surprised by the price that buyers are willing to pay for these assets.
When we look at the Atlanta Braves, the trailing 12-month revenues for the Atlanta Braves Group was $637 million.
And on an enterprise value basis, if you strip out the debt and the equity that’s associated with The Battery Atlanta, the adjusted enterprise value for the Atlanta Braves is about $1.7 billion, which is roughly the same as the current market capitalization.
So, right now, the Atlanta Braves trades at under three times enterprise value to revenue.
The most recent transaction in professional sports was at nine times revenue for the Denver Broncos, quite a difference there.
And the last major league baseball team that sold was the New York Mets. That was about two years ago in a transaction that was about seven times revenue, significantly more than what we understand the Braves are valued at right now.
We believe that a potential transaction for the Braves might prove to be superior compared to the Mets. So if we look at the $2.4 billion purchase of the New York Mets, based on a 2019 report in Forbes, the New York Mets generated about $302 million in revenue. That’s net of stadium revenues used to pay down debt.
Based on the 162-game season, the New York Mets were generating $1.864 million per game translating into an acquiring multiple of seven times revenue. According to Forbes, in the 2021 Major League baseball season, the Atlanta Braves Group generated $443 million of revenues net of debt service. And based on a 162-game season, the Atlanta Braves generated $2.734 million per game.
So, even though the Braves are generating 47% more revenue than in the Mets’ 2019 season, prior to the acquisition, the Braves trade for under three times enterprise value to sales, whereas the New York Mets were acquired for roughly seven times sales.
Obviously, we believe that’s a significant gap.
And the fact that it becomes a pure play on the Atlanta Braves means that that gap in valuation will likely be rectified by a sale.
So the bottom line is we get very interested when we see things like this. The redemptive split and the spinoff of the Braves into an asset-backed stock is something we’d hoped might happen.
We’re not particularly surprised, however, as Liberty and John Malone are incredibly good at this sort of thing.
We think, within a reasonable amount of time, notwithstanding tax considerations, MLB approval and things of that nature, that the company could very well be sold — and then the shareholders of Atlanta Braves could do very well.”
Get the complete details in the complete interviews from these two professional money managers, and many more, exclusively in the Wall Street Transcript.
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