Liberty Media Corp Announces Braves Group Investor Meeting

Jul 18, 2017 AM EDT
FWONA - Liberty Media Corp
Liberty Media Corp Announces Braves Group Investor Meeting
Jul 18, 2017 / 06:00PM GMT 

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Corporate Participants
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   *  Courtnee Alice Chun
      Liberty Media Corporation - VP of IR
   *  Gregory B. Maffei
      Liberty Media Corporation - President, CEO & Director
   *  Terence Foster McGuirk
      The Atlanta Braves - Chairman of the Board and CEO

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Presentation
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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [1]
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 Perfect. Okay, great. So welcome to the Braves Investor Meeting here at SunTrust Park. I'm Courtnee Chun. I handle Investor Relations for Liberty Media.

 Before we begin, I get to read the exciting stuff. This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the Braves mixed-use facilities, future financial prospects, business strategies, uses of cash and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including without limitation, failure of third parties to perform in general market conditions. These forward-looking statements speak only as of the date of this call, and Liberty Media Corporation expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Media Corporation expectations with regards thereto or any change in events, conditions or circumstances on which any such statement is based.

 Now I'd like to introduce Greg Maffei, Liberty's President and CEO.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [2]
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 Thank you, Courtnee, and welcome to all of you here at SunTrust in the room and those on the webcast.

 Today speaking on the call, we will have the Braves Chairman and CEO, Terry McGuirk. Terry and I will give a few opening remarks, and then we'll move into a Q&A portion, where we will be joined by Liberty CFO, Mark Carleton; and our senior adviser, Chris Shean; as well as pretty much all of the members of the Braves management team, as far as I can tell them. Terry is going to introduced them all by name shortly.

 Let me start by saying how excited we all were to open SunTrust Park for its first home game on April 14. It was an amazing evening. Full credit to Terry and his team for delivering this ballpark on-time and on budget. I can tell you I was here. Rob Manfred, the Commissioner of Baseball was incredibly impressed, and the buzz around MLB is that this is such an amazing facility.

 About 4 years ago, Braves management came to us with an investment opportunity around the new ballpark, and we at Liberty were very supportive. As we have said at previous investor events, we've seen numerous presence for appreciation in land surrounding new ballparks and stadium builds and surrounding older sports venues as well, and we want to take part in that value creation. Examples would be LoDo around Coors Field, L.A. LIVE around the Staples Center, Ballpark Village around St. Louis, Wrigleyville around Chicago and Yawkey Way around Fenway Park.

 Battery Atlanta, the name we gave to this mixed-use development surrounding the ballpark, is operational today, and the remaining portions expect to be -- are expected to be delivered on time and on budget as well. 30% of the Battery is open today as measured by square footage, with 70% of that leased.

 Comcast, who is our major office tenant in this mixed-use facility, will move into their space in November. And the Omni, our hotel hospitality partner, it will move in the first quarter of 2018.

 Let's quickly review, if I might, the spend to date on the ballpark and the mixed-use facility as of Q1. On the ballpark, we spent a total of $722 million, including $50 million of other costs and equipment. The Braves borrowed $330 million of this to fund their contribution to the ballpark, and the remaining funds were contributed and provided by Cobb County and related entities.

 As of the end of Q3 -- Q1, excuse me, 2017, (technical difficulty) spent $275 million of their $330 million budget. The remaining $55 million are largely retainage, furniture and equipment and final project invoices submitted -- which we expect to be submitted by contractors through the end of Q3.

 On the mixed-use, the total estimated cost is $558 million, of which the Braves expect to contribute $490 million through a mix of $200 million of equity and $290 million of debt. Our JV partners are providing the remaining $68 million in equity funding.

 As of the end of Q1, the Braves have spent $307 million on the mixed-use facility, comprised of $188 million of equity and $119 million of debt. The remaining $171 million of debt and $12 million in equity funding for the Braves will be deployed as the project development continues, and Terry will speak a little more about the cadence of this project in a minute.

 We expect the Braves to contain to operate with the same financial discipline and prudence that they have historically despite the upgraded new facilities.

 2017, we'll begin to see the positive effects of Battery's operations on the Braves Holdings cash flows, and we expect them to increase annually with full impact in 2019. As we get more cash flows from the Battery and the new ballpark, we expect to deploy cash from normal business operations, potentially including paying down debt and investing in the team to enhance baseball operations.

 As of the end of Q1, the Braves debt was $420 million, which consisted of $100 million of a league-wide credit facility that the Braves participate in as do other MLB teams, with $28 million of it actually drawn at the end of Q1. $85 million of our revolving credit facility worth $1 million outstanding as of Q1. And debt funding for the ballpark from a $130 million secured term loan and a $200 million of secured long-term notes, which are secured by certain revenue streams at SunTrust Park and our nonrecourse back to Liberty Media. Approximately $72 million was drawn under the secured term loan at the end of Q1.

 The debt funding for the mixed-use is project level debt entered with our JV partners and is also nonrecourse back to Liberty. As we noted, $119 million of debt funding had been spent to date on the mixed-use.

 So in general, I think we're a fairly light-touch owner and very supportive of the Braves management. You could ask them whether we're actually a light-touch owner in a second. We feel very confident in the Braves team from top to bottom, led by Terry, and the other folks in this room. We are very supportive of the investments they've made in growing the team talent from within and how they've invested in -- from the Minor Leagues up. And we expect both investments will begin to pay off now.

 With that, let me turn it over to Terry, and he can give you some more details.

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [3]
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 Thanks a lot, Greg. With me here today, for those on the call and for those in the room, as I introduce the Braves senior management, just raise your hand so people know who you are.

 First off, we have Vice Chairman, John Schuerholz with us, who will be inducted into baseball's Hall of Fame in Cooperstown in about 1.5 weeks. John? Congrats.

 Also with us, Derek Schiller, President of Business. I don't think you need a hand; Mike Plant, President of Development; Chip Moore, our CFO; Greg Heller, the Chief Legal Officer; John Hart, our President of Baseball Operations. And also here with us, Bill Bartholomay, who is an Emeritus Vice Chairman; and John Coppolella, the General Manager. So we have virtually the entire senior management, and thank you for being here.

 In 2017, the Braves had 2 main initiatives. The first is building out SunTrust Park in 1.5 million square foot mixed-use project, the Battery Atlanta. Second one was, of course, rebuilding our Minor League system and equipping our Major League team with the talent to be a perennial playoff team going forward. I can report that all is going well and that we are achieving or are ahead on all of our goals.

 A few 2017 operating highlights. Overall, the ballpark revenue year-to-date has increased meaningfully in SunTrust Park versus last year. Liberty will have more detail on their Q2 earnings report in a few weeks.

 Through last night's game, attendance has increased a whopping 37% in 2016, with an average attendance of 31,363 at SunTrust Park. We are just short of 73% revenue increase in our suite and premium ticket areas in SunTrust Park, and 93% of our premium season tickets are sold with sales contracts with a minimum of 3 years.

 We've had approximately 2 million people through the ballpark in the Battery project in the last 77 days, that's March 31 through today. We currently have 122 SunTrust Park corporate partners, bringing us the highest corporate revenue in the team's history.

 On the concessions and retail front, we've shown significant increases over last season. And through 84 games, the Braves TV contract -- I mean, TV ratings are up 50% in Atlanta.

 And then we've had 2 great sold-out concerts. On 4/28, we did Billy Joel. And just last week, 7/9, we did Metallica.

 The feedback is even better than we expected. For those in attendance, as you will see later today, the fans are coming to the Battery Atlanta well before games, enjoying the in-game ballpark experience. And fans are returning to the Battery following the games for a night out. What a stark contrast to Turner Field.

 SunTrust Park, the Battery Atlanta -- and the Battery Atlanta have become the new model. Sports teams are looking to replicate as we posted dozens of sports organizations, including representatives of all 4 Major League sports and colleges from around the country.

 A few highlights and comments from fans and press: "There isn't a bad seat in the ballpark." "Fans really enjoyed Monument Garden and the nods to our history throughout the park." "The zip line, climbing wall and everything else inside the kids’ area are a huge hit." "Traffic has been a non-issue."

 And of course, everyone wants a chance to Beat the Freeze, which has become one of the most popular in-game entertainment elements in all of Major League sports, according to several media outlets, according -- where a random Braves fan races from foul pole to foul pole against our own costumed The Freeze, you'll see tonight.

 Few Battery stats. The Battery Atlanta has been incredibly vibrant. Tenants are often overflowing with customers on game days and comfortably full on nongame days. We've leased over 75% of our available residential inventory. And Pollack Shores, our residential partner, said, it's the highest uptake that they've experienced in any of their projects, and they've raised the rents in this area to Buckhead, Atlanta levels, above the original pro forma.

 70% of the retail space has been leased. As Greg said, we are holding some spaces for some best-in-class operators, but we expect to be fully leased on current spaces by the second quarter of 2018.

 Yard House, Atlanta favorite Antico Pizza, the Cordish-run Live! at the Battery Atlanta all have shown strong sales. Mizuno opened their first-ever Experience Center, and the Coca-Cola Roxy has had several major concerts, including T.I., John Mayer with Dave Chappelle and Glass Animals. And they also have a strong lineup of concerts for the summer and fall.

 And Comcast moving again, as Greg said, of its 1,000 employees will occur in the fourth quarter, and the Omni hotel in the first quarter 2018.

 On the on-field performance front, at All-Star break last season, the team was at woeful 31 and 58, .348 winning percentage and last placed 22.5 games back. Through last night, we are at 45 and 46, at .495 winning clip and in second place in the NL East, and we are 7 games back of a playoff spot and 5 games back in the loss column for those who counted that way, which is way I do it.

 Ender Inciarte, who the club signed to a team-friendly 5-year deal after he won his Gold Glove last season, just made his first All-Star appearance. Since the trade deadline last season, the team is 77 and 71, at .520 winning clip, which is the fifth best mark in the NL.

 A year after finishing with the second fewest runs in baseball, the Braves are on pace to score 760 times this season, which would be the most since 2007, and they're averaging better than a home run a game, which they haven't done since 2013.

 On the trade front, we acquired Brandon Phillips before the season, and we've acquired Matt Adams from the Cardinals shortly after Freddie Freeman got hurt. And they've been 2 major trades and they've kept us competitive. Both acquisitions were made without trading any of the organization's hot prospects from the farm system. Very notable.

 Ron Acuna and Mike Soroka represented the Braves during last week's MLB All-Star Futures Game and did so beautifully and were well recognized.

 But most importantly, the Braves Minor League system has been ranked #1 by MLB.com, Baseball America and ESPN heading into the 2017 season. On the re-forecast by Baseball America just last week, 9 Braves are in Baseball America's Top 100 Prospects list. The next highest team has 7. Two teams have 0.

 We drafted and signed Kyle Wright in June from Vanderbilt, who was widely acclaimed as the best pitcher in the 2017 draft. So we're continuing to stock up that Minor League system, and it will continue to be #1, thanks, John Hart and John Coppolella.

 And with that, I'll turn it back to Courtnee.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [4]
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 Thank you. Thanks, Terry. Thanks, Greg. So we did pull up the questions in advance from investors and analysts. And we're going to go through those now. And then we will, after that, open it up to the room for some questions.

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Questions and Answers
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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [1]
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 So Greg, let's start off with you. How would you suggest that investors look at the value of [batter] the stock today?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [2]
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 I think most analysts and investors and you guys are the ones who do it, so you know better than I. Look, and we're in 2 different lines of business. The baseball team itself, most of those are valued on a multiple of revenues. And then the real estate portion, more traditionally done -- TCF, cap rates, something along those lines. So there's 2 parts to evaluate here. There are comps for both. You can obviously find out there. Most recently, there are transaction comps around baseball. The sale of the Mariners and the rumored sale of the Marlins are both places to begin.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [3]
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 And so with those sports use valuations that we've seen out there, do you think those data points are relevant for the Braves?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [4]
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 I think they are interesting, though I can certainly make a case why the Braves are a stronger property. The Mariners are more comparable than the Marlins. But we have a far bigger trading area than the Marlins or the Mariners, and the Mariners sale did include an RSN, and that is obviously something where we're a ways away from whatever we might do there. According to Forbes, Mariners were traded about 5.2x revenue. The recent report suggests that at the $1.17 billion that's rumored for the Marlins, they would trade at 5.7x revenue. Those are -- if you apply those numbers, like 5.7x, you'll get a team valuation of just -- of $1.5 billion just for the team portion, not the stadium portion. And I would note we have a far more favorable financial profile than the Marlins when you look at history, when you look at TV contracts, when you look at payroll flexibility, when you look at revenue growth opportunities and, as I mentioned, the size of our really total available market. We are a far more attractive franchise than them.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [5]
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 Okay. Terry, can we talk a little bit more about the team turnaround strategy? Where do you think you are in the process of retooling the farm system?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [6]
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 Well, we're certainly well ahead of schedule. We started into this, we -- just historically, we won the East in 2013. We're in first place halfway through '14 at the All-Star break. We went 26 and 40 in the second half of 2014. And that's where we started the plan on how to rebuild this organization. When we went to the Minor League system, we did not have a good Minor League system at the time. So starting really in the end of '14, we started into this rebuild. Typically, Kansas City, Chicago, the Mets, the ones that have done it successfully, it's been a 5-year project. We were well ahead. We're past our midpoint. All of those teams had 100-loss seasons. The Houston had 3 of them in its process. So we feel that this is sort of a magical rebuild, where the glide slope is nothing but up from here. We're going to do, we think, nothing but better. So the answer is things are going really well.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [7]
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 Great. Greg, how important do you feel it is for -- when you have a winning team for the stock valuation?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [8]
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 Look, I think there's not an absolute correlation. But over time, winning teams accord higher values. Particularly, if you have a sustained period of poor performance, I think it's hard to imagine a premium valuation. That having been said, the Braves have a long history of storied performance, a long history of success on field. And we're a premium reputation, so certainly short-term declines in on-field performance are something we can work through. But as Terry noted, I think we're definitely in the upswing.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [9]
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 Okay. So moving to talking a little bit more about the development. So Terry, there's still some undeveloped land as part of the parcel that we purchased. Can you talk more about the strategic optionality with this land?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [10]
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 Sure. Well, we purchased approximately 82 acres. We've used 60 acres approximately today, 44 in the Battery development, 16, which we have used for the -- for SunTrust Park, leaving about 22 acres for future development. It is all very, very, we think, valuable property and part of a Phase 2 that the Battery would enter into after we complete what we're doing in '18 and beyond. There's one piece of land, which is one of my favorites, a 1.5-acre piece right on big Highway 285, which has probably been noted by some of the brokers as one of the most attractive hotel and office potential building sites in North Atlanta. So we've got some great land to build on.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [11]
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 And then approximately how much are we earning on an annual basis from rents on properties within the Battery? So at 100% occupancy, how much would we expect to earn from rents? And when would we expect the Battery to be fully leased?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [12]
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 And that was for me? No?

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [13]
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 No, I'm sorry. Terry.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [14]
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 She's always happy to throw it to me. Don't worry.

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [15]
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 No, no. Well, first of all, we're just into the Battery. We're 30% open in the Battery. We've given some statistics on how much we've leased and the timing. We think this is sort of a first, second quarter '18 completion to the overall Battery occupancy. So it'd be premature to talk about what exactly -- we're going to have 550 apartments. We have approximately a few -- a little over 200 of them leased at the moment, and the uptake has been great, as I said. As fast as we can get them ready, they're getting leased. But to give you the final numbers, we don't even -- until they happen, that's when we'll know them. And I'm not even sure they're going to be releasable at that point. So all good.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [16]
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 Okay. Then one more to Terry, and then we'll give you a quick break. So you recently switched to counterparties on concessions, from Aramark to Delaware North, where they collect a fee from gross sales. Are you seeing any revenue uplift working with this new counterparty?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [17]
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 Yes. We love our new deal with Delaware North. It has been -- there's been a very nice uplift in concession revenues and in per caps which are the most important metrics. We've sort of flipped the relationship with Aramark. They really drove the business and we took a commission. Now -- we were never quite satisfied with the quality. We've flipped it back in the Delaware North plan, where we now operate the -- all of the quality control and the pricing. They take a percentage of the gross and we basically go with the rest. And so it's just a flip of the old deal, with us having much more of a sense of how to -- what our fans want, how to deliver. And it's been very successful to date.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [18]
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 Great. Okay, great. Let's do a little bit bigger picture. So how do you think about the state of sports rights in the world of OTT and alternate distribution platforms, putting pressure on sports networks?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [19]
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 So we at Liberty have been looking at sports for a while not only through our ownership of the Braves but our more recent ownership of Formula One and done a fair amount of work in sports rights. I think you look at 2 trends. I mean, in general, the fears around what's happening on pay television and what makes a compelling sports is about a few things that still gets numbers, that still has draw, and that still is non-DDR-able live content that's meaningful. As you may know, Liberty also has other places where we have live content, like Live Nation. So we thought a lot about the fact that it's live. It's also worth noting that all of these new platforms, whether it be Facebook, Yahoo! or a zillion other OTT platforms, in general, the more people who want to buy your content, the better and that explosion of platforms is a plus for us. And sports has been one of the places you've seen where they've come to big games. Baseball is also relatively unique in that the sheer volume of content, 162 games, is so much content, so powerful that it gives us an opportunity to create new distribution platforms. BAM has certainly taken advantage of that because it's got the scale and content. I don't know what you'd add, Terry, but...

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [20]
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 Well, I mean, I've been buying or selling premium rights for over 40 years in the media business, and I have never seen them go down. There always seem to be something around the next corner which drives them forward. Today's world is the digital and digital applications and the OTT world. I think these are incredibly good for Liberty and the Braves. We -- our rights, our product is going to become more valuable as it is sought for these digital applications in the OTT world. And I think we're just seeing the beginnings of this distribution mode.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [21]
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 A couple more points. What I'd note is Terry has said he's not only living 40 years doing sports rights. He's also the Chairman of BAM. So he has a unique perspective on what's going there. And then, think a little bit more about the Braves. We bought the team in 2007, a complicated deal, lots of advantages. But one of the disadvantages was a long-term television deal, some of which we've ameliorated and improved upon, but much of which is imperfect compared to where we think we can get. If you look, we have a territory today which compares quite favorably to many. For example, the Red Sox have approximate 4 million to 5 million homes in their territory. We have something like 12 million to 15 million. And if you think about there's 2027 approaches and we unleashed that, there's only just new opportunities that are going to be opened up for Liberty and the Braves to find value for those rights.

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [22]
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 It goes back to that first question you had about the valuation, the footprint of our franchise and the [broad] homes that sit in there are so valuable, so unique and among the largest in all of baseball, that it's something that really haven't -- it hasn't been shown as one of the highest-value issues in our franchise, but it is.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [23]
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 So Greg, you brought up MLBAM. So we get a lot of questions about that. So Terry, how does management think about the value of our MLBAM stake? And is there a path to unlocking the value of this asset?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [24]
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 Well, BAM is owned by all 30 teams. We're 1/30th owners. It is a daily active business, among the most successful digital applications in all of sports. It makes a lot money. It distributes that money to the teams. It retools itself this year to sort of go back into the marketplace and be just as compelling and cutting-edge as it's ever been. It's spawn BAMTech out of itself. It created BAMTech, and BAMTech was a value now that is realized. And there will probably be other things in the future. Bob Bowman and Rob Manfred are doing a fabulous job and it's their baby. We're part of the management and board as owners of 1/30th, but it's just rocking and rolling along beautifully.

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [25]
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 So I think I would only add one thing. I'd highlight BAMTech is a great example. BAMTech is a small portion, the technology arm of what was BAM. And Terry noted the value has been realized, but in fact, only partially realized because Disney bought a piece. BAMTech, we the -- baseball still owns 2/3, and there's a lot of value there that's only being unlocked over time. And that ignores the portion of the value that is BAM, which is the online distribution of our content. So I think there's -- it's definitely a gem of an asset which has only been partially exposed through the Disney valuation.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [26]
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 And then further on that, who's driving BAMTech now that Bob Bowman is back with MLB?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [27]
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 Well, BAMTech now has its own board. Michael Paull came over from Amazon, and he is the board chair. Rob Manfred, I would posit, is probably still the most important board member. The Commissioner is right on the development every day. There's just a lot going on in that world and it's bubbling with activity every day. It's a very successful digital application that baseball created and I think they're very proud of it.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [28]
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 Okay. And then -- so we hear a lot about e-sports. There's a certain amount of buzz to that in the investment community. Can you talk about what MLB is doing with the e-sports and just generally your view on the space?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [29]
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 Well, my view is that it's a very exciting space. There's a lot of upside. We just now -- it's been around 5 or 6 years in sort of a mainframe area. But it is not -- it's not something that I would say is a mature industry. Baseball has just begun to sort of size it up and see how it works and fits. MLB BAM would be the arm and avenue that baseball would touch it. It already has a relationship through BAM with League of Legends. So I think you'll see more from baseball on the e-sports front. So that would be sort of a typical way that we touch it from a technical or an artistic standpoint. From an investment standpoint, there are teams that are making investments in e-sports franchises. It's something that we don't preclude. I've talked to Greg and he has a great interest in sort of just making sure we're on top of all of these elements. And Greg, you can...

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [30]
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 No, I think that's entirely right. I think there will be -- obviously, there's already enormous interest particularly among younger players. And I think we will look at, we have looked at e-sports opportunities at the Liberty level. And I don't -- I think, I'm confident some point we'll make a move somewhere along the line of e-sports.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [31]
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 Okay. So getting back to baseball. How active are the Braves in decision making at the MLB level, deciding on the direction and negotiating national sports rights? When do negotiations start for the next national broadcast deal, with the current deal expiring at the end of 2021?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [32]
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 Well, baseball has an incredibly robust senior staff. And so the operations of baseball are run by BAM on the marketing and sales and revenue area. There are the merchandising and so on. First, the rights negotiation for 2021 and sort of how they fit in with all of the other ways that baseball exploits its many pieces of product. Usually, it's about 1 year, 1.5 years out that baseball begins to go into active negotiations. I actually think that it will happen maybe a little bit sooner on this round. It's usually the relevant committees and committee chairman that have some activities involved in that. I have been involved in the past in our last round of negotiations. And so it's a ways away and that sort of the form that it takes.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [33]
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 And are those national broadcasters, have you split evenly among the 30 MLB teams?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [34]
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 Yes, they are. All revenue on the national basis are split 1/30th.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [35]
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 Okay. And then switching over to the local media contract. Can you remind us of the terms of that deal? How do you think it stacks up relative to other local sports rights deals? And would you look for an opportunity to renegotiate early?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [36]
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 Well, the popular lure around our local television rights have been -- have run rampant over the years. So nobody -- we've never released what the numbers are, and so I can understand a lot of the guessing. We were able to reacquire a package of games from TBS, midstream since Liberty bought the team 2012 period. And through that, we're able to renegotiate our overall deal that runs through 2027 with Fox. Our deal previous to that was probably middling to below the middle of Major League Baseball. Once we did that renewal, we probably jumped into a top 10 kind of a deal. Now every one of these deals, when you try to put a metric on it as to where it sits, you can only sit there for a very short period of time because you have a continual renewing of deals. And when you're at a -- when you renew a deal, you usually jump to the front. And by the time you run the gamut of your 10 or 15 years, you're usually down at the bottom and you then recycle. So we're in the process of probably thinking in that relationship to other teams. But we're still a top 15 out of 30 team deal and we're very proud of that.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [37]
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 Okay. And then one more for you, Terry. What limits does the MLB impose on leverage? And where are you comfortable?

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 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [38]
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 Well, we're very comfortable with our leverage situation and that we will be in compliance with everything that is guidelined by MLB. In the CBA, there are guidelines set out and we're in compliance with all of them.

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 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [39]
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 Okay. So pretty soon, we're going to ask for questions from the audience here, but we've got a few more for Greg. Greg, can we talk about Liberty's philosophy around the management compensation for the Braves?

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 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [40]
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 Well, I think you can just make that comment more broadly about Liberty looks to align its equity compensation or its compensation primarily along equity with the underlying management for shareholders. That's true here as well at the Braves. It's very much focused on long-term growth and the value of the Braves franchise. And now we even have a performance-based incentive plan linked to the value of the company, including the associate real estate. And that compensation when we do settle it out, can be settled at Liberty's discretion in cash or stock. But it's definitely tied for long-term value creation.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [41]
------------------------------
 Okay. What is the current status of ATBs within Liberty Media? Do all of them reside within the Braves? If so, what is the earliest that another company within Liberty Media could become an ATB? And how would that be accomplished?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [42]
------------------------------
 Today, the only ATB at Liberty Media is the Braves. Could we come up with another one? Yes, perhaps. I mean, we did that effectively, if you remember, some of you who are Liberty watchers, that's what we did with GCI. And to extend the operations of Liberty Ventures through its charter operations into GCI, effectively creating the ability to spin GCI and the underlying charter stock away. So complicated issue, no guarantees they're in the path. But I just want to note that today the only ATB is the Braves. Could there be another ATB in the future? Maybe.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [43]
------------------------------
 Within Liberty Media, are the Braves a first spin priority?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [44]
------------------------------
 We have no plans to spin anything. That would be wrong. But obviously, we have shown a willingness in the past at various times to create separate asset-backed securities when we thought there was an appropriate reason and then it would improve valuation, operations or the like for the benefit of shareholders.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [45]
------------------------------
 Is the Battery an ATB? I think this is the last ATB question.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [46]
------------------------------
 Yes. I don't think it is if I already said the end was earlier.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [47]
------------------------------
 Okay. What are the puts and takes of spinning off the Battery as a REIT?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [48]
------------------------------
 I don't think it could be done. The IRS tightened up their REIT rules dramatically a while ago, and we don't think the Battery could be spun off and converted into a REIT. Even though we looked at pretty much trying to make a REIT of everything we own, I don't think that's doable at this point.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [49]
------------------------------
 Okay. And then one last one for Terry before we go to the audience, which isn't really a question but a comment that we got, which was, the freeze to sign to a long-term contract don't let them test the free-agent waters, lock them up.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [50]
------------------------------
 Well, I don't think we're going to let the freeze test free-agent market. And sort of a cheesy answer: I think things are going to stay icy at the forest for some period time.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [51]
------------------------------
 Okay. So do we have any questions? And if you don't mind, could you wait for a mic and we'll get you one? There's one right down here. Oh, there you go, right there.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [52]
------------------------------
 Go, Shane. I like it.

------------------------------
 Unidentified Participant,    [53]
------------------------------
 So obvious we don't have enough numbers to TCF the Battery. But maybe another way to ask is, what would be an acceptable -- okay? What would be the acceptable return on equity to you on the equity you put into the project?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [54]
------------------------------
 When we ask anyone at Braves management, Terry or any of your team, we put this together, we look at IRRs, return on equity that we would see compounded in the low teens was sort of acceptable number across. So when we look at that, frankly, that probably was a conservative set of projections. I like the nodding from Derek and Mike. The conservative set of projections. And it really is a variety because you see higher IRRs at certain parts of the project and lower IRRs on other. And like a lot of our businesses, you can't really separate it out because the value of the Battery in part comes from the experience that gets created by having a first-class hotel, a 5-star hotel. That from having the right kind of other properties that all fit in. So even though certain parts, cap rates may be better on apartment buildings, for example, really the totality of the project is what creates a lot of value. I don't know, Derek, Mike, you guys want to answer or add anything?

------------------------------
 Unidentified Company Representative,    [55]
------------------------------
 No.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [56]
------------------------------
 How do I do? Okay. I didn't even need a cheat sheet.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [57]
------------------------------
 Any other questions?

------------------------------
 Unidentified Participant,    [58]
------------------------------
 Any plans to, I guess, fully distribute the Braves in the sense of monetizing the intergroup interest at F1?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [59]
------------------------------
 Clearly, at some point, we will monetize the intergroup interest. And we thought that was a pretty attractive way to generate tax-free proceeds that would stay behind. I mean, Liberty has this great, just overall -- I'll wax -- I'll pretend I'm John. I'll wax a little bit, Liberty has a great advantage in some ways that we have permanent capital. We have disadvantages in that a lot of it is if we wanted to get out of something tax-free, we generally spin it and give it to the shareholders. We're happy that they get their return. But in a lot of cases, we spun a lot of capital away that otherwise gives us less flexibility to do things in the future. This was kind of a hedge and a pretty clever hedge, full credit to Albert Rosenthaler, [Tim Lemmon] and our team to keep back a little capital in a tax-efficient manner and monetize the success of the Braves in a tax-efficient manner. So it's small relative to the overall valuation, but it's a nice top for equity valuation at Formula One [Farmer] value.

------------------------------
 Unidentified Participant,    [60]
------------------------------
 Can you talk just a little more about how you'd -- how we should think about valuing your piece of the MLB and BAMTech or BAM?

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [61]
------------------------------
 The valuation of BAM is tough to explain publicly because it is a private enterprise inside of MLB and owned by the 30 teams and in a way that we don't disclose all of the different pieces of the business and all the business that it does, nor even the dividends it dividends out to each of the teams each year. So it is a difficult one to sort of get your arms around from an investor's standpoint. And I sympathize, but I don't really have a way of divulging those. Those are MLB businesses. Those are -- we're a partner in that, but we don't really have the ability to release all that.

------------------------------
 Unidentified Participant,    [62]
------------------------------
 Sitting in our seat as an investor, how do you think about the sort of catalyst or moments that will create value over the next -- pick your favorite time frame, but 2 to 3 years in the name, what do you think about sort of the milestones or signposts that we should be looking out for? And when do you expect that value to be realized?

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [63]
------------------------------
 Well, I think the secret sauce of what's going on here is the synergy between the Battery and SunTrust Park and it's a model-breaking phenomenon. Everybody who comes through here looks at it and wants to duplicate it, replicate it. In any new project that is going on anywhere in sports, this is the model. Typically, if you come in and you drop a stadium in a new place, all of surrounding property becomes immediately valuable. It's usually owned by someone else. These are usually municipal stadiums and all of the private property. When we did this, we said we're going to go in and we're going to take a much more holistic approach. We're going to build this all from the ground up. We think it has succeeded brilliantly, and everybody who has looked at it thinks that. We're far -- our goal in 1/1 2017 was to get this project open on budget, on time, the stadium. All of that is done, as you'll see tonight. It's a raving success. People love it. Our fans, they come early, stay late and they are just eating it up. And all the comments back that up. What hasn't happened yet, but still the indices are incredible, is that this Battery is just overwhelmed almost every day that the team is in town. The first week, all the retailers that moved in here, all ran out of food or beer or closed, whatever was going on. They had no idea of the time to uptake that was going to occur here. And so we've got something special. It's 30% open. We're going to open up a 4-star hotel, the highest level, Omni, that's ever been built, that are going to move into the Comcast office building and other places. Less than half of the apartments are presently occupied. These things, already you can feel the positives inside the Battery, but it is just beginning. It's going to -- I think it's going to blow the roof up. And everybody who has seen it sort of, in this business, is basically trying to replicate what we've done.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [64]
------------------------------
 So if I could add. I mean, Liberty is increasingly a company which has investment and operations in live performance, whether it be live concerts or live sporting. And I think you'll see that the Braves have begun a path to create an awful lot of experience, which is more than just put a baseball team on the field. The Battery is a part of that. So you ask for signposts I think part of that will be getting the rest of the Battery completed, getting the rest of the Battery leased, seeing increased events around the whole experience like more concerts from Live Nation.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [65]
------------------------------
 Setting the stage for Phase 2.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [66]
------------------------------
 Yes, setting -- Live Nation, which is a big part of. So I think all of those pieces are part. Other things that could potentially be value, not that we have a plan, but the Braves are potentially somewhere down the road an asset-backed stock. The Braves do have, I think, a chance to do substantially better on field that we start out saying that winning isn't everything. Winning probably does drive soft value.

 And lastly, if you look past your 2-year or 3-year time frame, look a little longer, I think 2027 is going to be a -- there will be changes along the way in how sports rights are valued. But 2027 is going to be a big valuation change for the Braves. So that's a ways out, but those are -- you can look at hard things that are going to happen. Get leased, win, maybe get spun and those rights. Mario?

------------------------------
 Unidentified Participant,    [67]
------------------------------
 Minor question. Do you...

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [68]
------------------------------
 There are no minor questions here.

------------------------------
 Unidentified Participant,    [69]
------------------------------
 No, no. I guess this is minor league questions. You don't own any of your minor league teams, right?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [70]
------------------------------
 Wrong.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [71]
------------------------------
 We own most of our minor league teams.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [72]
------------------------------
 Probably more than anybody, is that fair to say, from the baseball people?

------------------------------
 Unidentified Participant,    [73]
------------------------------
 And what's happened to the valuations of A, AA, AAA if you own them? And can you, within the framework of the franchise you have, you can sell those, right?

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [74]
------------------------------
 Right. We own and control most of our minor league teams. We are somewhat the envy of all the other major league teams. In fact, most new owners into the game are trying to go and acquire more of their minor league teams because player development is the coin of the realm and it more assures you that you're going to develop your players in the way you want to do it. And so Jim Crane in Houston has done this rebuild and they're a powerhouse now. They're running around trying to buy every minor league. That's one of his goals and he's done. He's bought at least one, I know.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [75]
------------------------------
 So I would also note, perversely, sort of back to the comment about you've got to look at the pieces altogether. If you were in a short-term value maximization mode, you might sell all the minor league teams because they don't make any money cumulatively against our payroll substantially. But they would be a big detriment to the long-term feeder and creation of value over time and in on-field performance. So that's a total case of, are you in this for the short or the long-term? And the Braves franchise is the oldest franchise and we're the oldest franchise around.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [76]
------------------------------
 Oldest operating franchise.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [77]
------------------------------
 The oldest continuing operating franchise and definitely in it for the long term.

------------------------------
 Unidentified Participant,    [78]
------------------------------
 Bill Bartholomay was there.

------------------------------
 Unidentified Participant,    [79]
------------------------------
 I was there.

------------------------------
 Unidentified Participant,    [80]
------------------------------
 As you look around at live sports, live entertainment, is there any synergies within the broadcasting rights or any other rights that you could imagine if you own the -- I know there's major league -- another professional team in the same city? Not that, that would happen here, but just conceptually.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [81]
------------------------------
 Well, there are some prohibitions depending on the sport, right?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [82]
------------------------------
 I'm listening to the question.

------------------------------
 Unidentified Participant,    [83]
------------------------------
 In other words, could you own a football team or a hockey club?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [84]
------------------------------
 There are some that are cross purposed but go ahead.

------------------------------
 Unidentified Company Representative,    [85]
------------------------------
 No, I think that there are -- it would be hard to do. I mean, I come from a company that owned all 3 major league sports, not 4, but owned a basketball team, a hockey team and a baseball game -- a baseball team. And we -- I'm not sure we did a credible job at finding synergy other than management, fewer management personnel. So far, I've not seen it done, but it's interesting. For the future, it could be done.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [86]
------------------------------
 We live at Liberty in a town where -- and we used to own for a brief period of time both the Avalanche and the Nuggets. And the current owner, Stan Kroenke, owns them. And it's not readily apparent that there's been synergy across those. Maybe in the formation of an RSN if you're short on content, you can get there. That might help you scale your content rights. But it's not been obvious yet.

------------------------------
 Unidentified Participant,    [87]
------------------------------
 Now that you're pretty far down the path of developing the Battery, are there any tax implications to either holding or selling your partial stakes in those various real estate assets?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [88]
------------------------------
 Well, I think just we have basis in an X amount and we would be paying on what we perceived would be gains on each of those properties, so there will be taxable gains. But other than that, I don't see any huge tax consequences.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [89]
------------------------------
 We've been mostly driven by the IRRs. And whether holding -- at stabilization, selling or holding for larger returns and gains. And so these are positive problems, and it all looks good.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [90]
------------------------------
 But I do want to emphasize. I mean, we started out saying valuation -- I started out saying valuation is look, teams are x, real estate is y. I do think there is a real synergistic element to be done here. When we think about the entertainment experience and drawing fans in, getting a higher margin and because of the whole way that the thing is put together, I do think there is a synergistic element. So even though I, at times have said, should we be selling this piece of that? You do consider whether that really fits overall your ability to create the whole synergistic experience you want to create.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [91]
------------------------------
 Any other questions? One more.

------------------------------
 Unidentified Participant,    [92]
------------------------------
 Just a follow-up on the minor league teams. Are they ATBs themselves?

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [93]
------------------------------
 That is a complicated question to answer. A very good one, but it's complicated.

------------------------------
 Courtnee Alice Chun,  Liberty Media Corporation - VP of IR   [94]
------------------------------
 All right. I think that's it. So I think we'll wrap it up here. Thanks for joining us. Thanks for everybody on the webcast.

------------------------------
 Terence Foster McGuirk,  The Atlanta Braves - Chairman of the Board and CEO   [95]
------------------------------
 Thank you.

------------------------------
 Gregory B. Maffei,  Liberty Media Corporation - President, CEO & Director   [96]
------------------------------
 Thank you very much. For those who are staying for the game, go Braves! We get a lot of fun going on.




------------------------------
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