The Sale of the Braves… Tick, Tick, Tick
Since April of last year, Time Warner broke off dealing with any other bidders for the Braves besides Colorado-based Liberty Media. It's not just the Braves that are at stake, mind you - it's a complex deal based around dodging taxes. The Braves are a cog in a much larger deal where $1.35 billion in cash and the Braves go to Liberty in exchange for 107 million shares of Time Warner stock that Liberty owns. The deal has been sitting in the background of MLB's business dealings all this time, and we’re coming up on a deadline to make it work.
By May 17th the deal has to be completed in total, as at that date tax laws that impact the entire affair change. After May 17th, the amount of monies that can be involved in the tax dodge will be lessened. This isn't some deal where Liberty or MLB or Time Warner sets a date and is pushed out. No, this is a deal that has outside forces in play, so the pressure to get the deal done by the deadline is huge given the loss of tax-free dollars that's in play. All the parties are making a gamble here (Time Warner, Liberty Media, and MLB). MLB wants to make sure that it can have as much day-to-day control as possible given to a local executive such as Braves president Terry McGuirk.
The problem is that the IRS has some strict guidelines surrounding how this type of stock-swap deal works, and they may not fit in with MLB's view of ownership. Since MLB is used to tight controls on who is and isn't within the ownership ranks, the deal will be interesting to watch. If the Liberty/Time Warner deal collapses, Falcons owner Arthur Blank and Atlanta real estate executive Ron Terwilliger have said they still have interest in purchasing the club.
This is not encouraging, other than the minor pleasure that we'll have a resolution of Liberty Media's purchase of the team by the middle of May. I'd like more details on the IRS guidelines in question, but reading between the lines, it appears that Liberty Media is actually going to have exert some control over the team to make this purchase work. Unless we operate under the assumption that a media holding company will do a better job of running the day-to-day operations of a baseball team than the figures who have run the team for a very successful period, then this is a bad thing. Presumably, Liberty Media would hire someone to operate the team, but that creates a big variable in the whole situation. Most importantly, would this new figure be able to keep Cox and Schuerholz happy? Or is that a moot point because they're both planning on retiring in the next few years, in which case Liberty Media will then get to pick their replacements?