Bob Cramer's Blog

Pity the poor sports team owners in Atlanta.  Something is clearly wrong because every major sports team here is for sale in one form or fashion, and labor unrest threatens next year’s football and basketball seasons and a move out of town threatens the Thrashers.  The happiest current Atlanta sports franchise owner in town may be the nameless corporation that owns the Braves solely for tax purposes or the lucky owner-to-be, David McDavid, who never got to be an owner but received a huge settlement instead and laughed all the way to the bank. 

Let’s look individually at each major ATL team and its ownership starting with Mr. Blank’s Falcons. A remarkably successful 2010 regular season ended with a sudden thud, but clearly, Mr. Blank, with his signature fourth quarter sideline appearance and smart free agency acquisitions, is content.  Well, maybe yes and maybe no.  Last year, according to reports, Mr. Blank sold about 10 percent of his ownership to a group of  Atlanta businessmen, most likely at an appreciated price to the $545 million he paid to buy the team from the Smith family back in 2002.  Rumors also circulated just weeks ago that popular rocker, Bon Jovi, was negotiating to buy down Mr. Blank’s stake even further. 

With his quiet diversification strategy in play, is it a surprise that Mr. Blank is trying to find a way to boost the value of his franchise, which, according to Forbes, was ranked 26^th most valuable of the 32 NFL teams?   The fastest way to do that is to build a new stadium as it changes the revenue sharing agreement, providing, as the AJC points out, more lucrative luxury boxes, club and preferred seats, perhaps the opportunity to charge a seat licensing fee on top of the normal ticket cost, and opens up the possibility of landing a Super Bowl. 

When word came out last Tuesday (Feb.22^nd) about “a mutual understanding” between the team and the Georgia World Congress Center Authority, I tweeted that this new open air stadium was a bad idea at this time, unless, of course, Mr. Blank were to fund the entire project.  With a price tag today slated at $700 million (who wants to bet that final costs will not exceed $1 billion?), the thought that the Falcons would fund the lion share of this project seems small.  It cost Mr. Blank far less to buy the entire team. Sunday’s AJC reports the Falcons are asking for the state or the Authority to issue bonds between $350 and $400 million, with the team planning to cover the rest.  Many questions clearly remain, starting with the $50 million spread and who pays for the inevitable cost overruns.  Meanwhile, the AJC reports that local economists nearly universally forecast that this new project brings no economic value to anyone besides the Falcons.  “Just adding zero to zero” is their headline.

We all appreciate Mr. Blank, his many important contributions to Atlanta and to improving the Falcons.  But this idea to use partial public funding to build an unnecessary new stadium, especially when the state is cutting back the HOPE scholarship and numerous other programs, is a mistake.  Yes, none of us are getting any younger and I am sure Mr. Blank wants to put the wheels in motion because of the long lead time.  But I think this move is more about him growing the value of his franchise, especially as he looks to further diversify his own holdings, and is not really in the best interest of the fans or the taxpayers.  I hope that he and the Falcons will consider less costly options or ones that do not require public funding.  

Meanwhile, across the Gulch, the hapless Atlanta Spirit group wishes it had Mr. Blank’s problems.  Let’s face it, this group’s ownership of the Hawks, Thrashers and Phillips Arena has been just a notch below other Time Warner-connected disasters including its purchase of AOL and the $850 million purchase in 2008 of Bebo, a European social networking company,  which was unceremoniously dumped to a new buyer in 2010 for $10 million (I kid you not).

As you hardcore Atlanta sports fans may remember, Time Warner found a legitimate buyer for this triumvirate of properties in 2003.  A Texas auto dealer named David McDavid was all set to purchase the assets for around $400 million when Time Warner suddenly halted the deal.  For some reason, it decided to sell the properties to a group lead by Turner Broadcasting veterans and two of their successful sons, Michael Gearon and Ted Turner’s son in law, Rutherford Seydel, for approximately $120 million less than Mr. McDavid offered (go figure). Furthermore, the Atlanta group (wealthy but not big time rich) resorted to scampering up and down the east coast to find enough money to complete the deal, bringing in leisure travel entrepreneur Steve Belkin from Boston and some DC- based investors. 

Since then, the whole thing has been a soap opera on such an epic scale that I don’t have a blog big enough to recount all of the events. So here is my “ESPN At The Half” recap: The spurred suitor McDavid is unhappy and sues Time Warner; The new ownership quickly becomes unhappy and sues each other; The Atlanta Spirit sues King and Spalding, Atlanta’s venerable law firm, who was also involved with suing various other parties; To make it even worse, the ownership saddles the franchise for the next six years by signing the largest contract in NBA history to a player who was at the heart of the initial internal squabbles;  Atlanta sports fans consider suing the Atlanta Spirit because they lied about their plans for the Thrashers; Time Warner, sued by McDavid, settles the suit agreeing to pay him $281 million, probably more than they received in selling the assets to the Atlanta Spirit in the first place.  The insanity of it all….

The off court craziness has not helped the teams’ performance. The Thrashers have made the playoffs once in their history, to be then quickly dispatched in four straight losses to the Rangers. Over the years, the Hawks have improved during the regular season but they barely register in the playoffs.  Phillips Arena I guess makes a little bit of money thanks to the nice sponsorship deal with Phillips and all the exorbitant fees they charge for a beer and a hot dog.   But, like everything else with this ownership, we Atlanta fans cannot pay another penny for a Budweiser or tolerate any more law suits, and we beg you, the Atlanta Spirit, to sell the teams now.  Maybe Mr. McDavid will buy it using house money. 

Finally, turning to Turner Field, the Braves are coming off a remarkable season, Bobby Cox’s finale, and if not for a few untimely errors and some bad luck, they could very well have won the pennant or perhaps even the whole enchilada.  Now with two 21-year old studs gracing the right side of the field and the front cover of Sports Illustrated, hopes springs eternal forgetting for a minute the Phillies starting pitching rotation or the World Series trophy sitting in San Fran.  At least we are not the Mets, having to borrow money to meet payroll last fall, or the Cards, losing their ace Adam Wainwright before the season even begins. 

The Braves ownership situation, however, is about to get more complicated.  Purchased from Time Warner in 2007 as part of a broader corporate relationship with large shareholder, Liberty Media, the Braves may soon face their own free agency.  Liberty Media today owns the Braves, but they really do not want to.  They promised back in 2007 that they would own the team for at least 4 ½ years, keep the payroll at a minimum of $80 million a year and generally agreed not be involved or interfere with the Braves professional management that came over from Turner and Time Warner.  Liberty Media, no shrinking violet, agreed to these terms for one specific reason: it allowed them not to pay taxes on the broader complicated transaction it entered into with Time Warner. 

Well, the clock is about to strike midnight and our Cinderella team will soon be looking to find its new prince (I think I just mangled a famous fairy tale’s plot).  Liberty Media reportedly ascribed $461 million to the Braves purchase.  That looks like a steal when compared to recent sales involving the Texas Rangers ($593 million) and the Chicago Cubs ($845 million).  With a strong playoff contending team, a relatively new ball park, a reasonable payroll and history of averaging more than 3 million in attendance each year, the Braves look attractive.  Let’s just hope that the Atlanta Spirit doesn’t get involved.