Do you want to buy an MLB team?
A piece of a team, at least.
By purchasing shares of Liberty Braves Group (Nasdaq: BATRK), you can acquire a small ownership stake in the Atlanta Braves, one of baseball’s finest franchises.
Since its debut in the National League in 1876, this franchise has won…
- An MLB record of 21 divisional titles
- 18 National League pennants
- Four World Series championships.
From 1991 to 2005, the Braves had one of the most dominant runs in baseball history, winning an unprecedented 14 consecutive division titles.
What I like about the Atlanta Braves franchise is its unique location.
This team represents almost the entirety of the Southeast region of the United States.
That basically means the Braves have a monopoly in its neck of the woods.
The Braves have fans not just in Georgia but also in surrounding states that don’t have their own team.
The Braves’ popularity is reflected in the sizable broadcasting and ticket revenues that the team generates.
Every year, Forbes provides an estimate of what all MLB franchises are worth.
This year, Forbes estimated that the Braves are the 10th-most-valuable MLB franchise and are worth $2.1 billion.
When buying shares of Liberty Braves, you also get a piece of The Battery Atlanta.
This is a valuable real estate development that neighbors the Braves’ home stadium, Truist Park.
Estimates peg The Battery as being worth around $350 million.
To determine what shares of Liberty Braves are worth, I combined the $2.1 billion value of the Braves and the $350 million value of The Battery.
Subtract the $550 million in net debt that the group holds, and we arrive at a total value estimate of $1.9 billion.
With Liberty Braves’ 52.8 million shares outstanding, that puts my estimate of this stock’s value at $36.
With shares currently trading around $28, there’s a 29% upside to the fair value of these shares.
That’s interesting to me as an investor.
Making it more interesting is the fact that Forbes’ estimates of MLB franchises have been conservative in recent years.
The purchases of the New York Mets in 2020 and the Miami Marlins in 2017 took place at an average premium of 15% to what Forbes estimated.
That means there could be more than a 29% upside here.
In addition, the values of these MLB franchises have been growing at a steady clip over the past decade.
In 2012, Forbes estimated the Braves to be worth $630 million.
So the franchise’s value has more than tripled in the past decade.
That is an annualized rate of growth of almost 13%.
I’d take that rate of value increase on an investment any day of the week.
Put it all together, and Liberty Braves shares are trading at a nice discount to their current value, and based on recent history, that value seems likely to increase in the years ahead.
This is a good combo.
While I don’t see deep undervaluation here, I think that Liberty Braves Group shares are slightly undervalued with future value growth ahead.
Valuation Rating: Slightly Undervalued
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