Posts
The Ring-Fence
Post 3: Why Owners Keep All the Cash
The Hidden Engine Series
By Randy Gipe | February 2026
Now the question: Why don’t players get any of this?
The MLB Players Association negotiates over “baseball revenue.” Revenue-sharing takes ~48% of local baseball income and redistributes it across teams. The luxury tax (Competitive Balance Tax) is calculated based on payroll relative to “defined revenue.”
But The Battery isn’t “baseball revenue.” It’s real estate operations. And the separation is structural, legal, and permanent.
This is the ring-fence — the moat that protects owner cash from players, unions, and sharing pools.
The Three Layers of Protection
The ring-fence isn't one thing. It's three overlapping structural barriers:
- Segment Accounting Separation — GAAP rules (ASC 280) require distinct reporting
- Revenue Definition Exclusions — MLB CBA and revenue-sharing formulas focus on "club operations"
- Corporate and Debt Independence — Post-Liberty split, Braves Holdings operates fully standalone
Each layer reinforces the others. Together, they make the Battery cash untouchable.
Layer 1: Segment Accounting (The Legal Requirement)
Public companies must report financial results by operating segment under ASC 280 (Accounting Standards Codification, Topic 280: Segment Reporting).
The rule: If management evaluates performance using distinct segments internally, those segments must be reported separately in SEC filings.
Atlanta Braves Holdings reports two segments in every 10-Q and 10-K:
📄 VERBATIM FROM SEC FILINGS
From 10-Q (Q3/9mo 2025, filed Nov 5, 2025), Note 2 — Segment Information:
"The Company has two reportable segments: Baseball and Mixed-Use Development."
From MD&A (Management Discussion & Analysis) section:
"The Mixed-Use Development segment derives revenue primarily from office and retail rental income (including overage rent and tenant reimbursements) and, to a lesser extent, parking and advertising sponsorships throughout the year."
"The Baseball segment derives revenue primarily from ticket sales, concessions, local and national media rights, and team sponsorships related to the Atlanta Braves Major League Baseball club."
Why this matters:
- These are distinct business operations under accounting rules
- Mixed-Use is not an ancillary to baseball — it's a separate real estate business that happens to be near a ballpark
- Revenue, costs, assets, debt, and profitability are all tracked separately
- This separation cascades to tax treatment, legal structures, and MLB definitions
No commingling allowed. Office rent from Comcast doesn't get lumped into "baseball revenue." Parking fees on non-game days aren't "game-day operations." Hotel revenue from business travelers has nothing to do with the team.
Layer 2: Revenue Definitions (MLB CBA & Sharing)
The MLB Collective Bargaining Agreement (CBA) and revenue-sharing formulas define what counts as "baseball revenue" for two critical purposes:
- Revenue-sharing pool — ~48% of "local revenue" from big-market teams goes to small-market teams
- Luxury tax (CBT) calculations — Team payrolls are measured against thresholds tied to "defined revenue"
What's included in "baseball revenue" (simplified):
- Ticket sales (including premium seating, suites)
- Concessions and in-stadium retail on game days
- Local media rights (RSNs, local TV/radio broadcasts of games)
- Team sponsorships (e.g., jersey patches, stadium naming rights if tied to the team)
- National media (centrally distributed from MLB, already pooled)
- Licensing and merchandise (team-branded goods)
What's explicitly or implicitly excluded:
- Real estate rental income — Office leases, retail rents not tied to games
- Non-baseball parking — Parking revenue on non-game days or from office workers
- Hotel operations — Even if team-owned land, hotel is separate business
- Non-team sponsorships — Battery-wide signage/naming rights not tied to the Braves
- Development-related income — Property appreciation, sale proceeds, ground leases
🛡️ THE CBA EXCLUSION
Why real estate stays outside:
The CBA (Article XXIV, Revenue Sharing) focuses on "club operations" — revenues generated by the team's baseball activities. Real estate operations are considered separate business ventures.
Example distinctions:
- Included: Suite rental during games (part of ticketing/hospitality)
- Excluded: Office lease to Comcast (real estate, year-round)
- Included: Naming rights to "Truist Park" (stadium naming, team-affiliated)
- Excluded: Naming rights to Battery buildings or plazas (development assets)
- Included: Game-day parking fees (directly tied to baseball events)
- Excluded: Parking fees for Battery restaurant/hotel guests on non-game days
The structural logic: If the revenue exists regardless of whether the team plays baseball, it's not "baseball revenue." Office rent flows in January (off-season). Hotel bookings continue if the team finishes last. This makes it real estate ops, not club ops.
Verification from filings: Braves Holdings segment notes explicitly separate Mixed-Use revenue from Baseball. No cross-allocation. The MLBPA (players union) audits teams' books under CBA provisions, but those audits focus on defined "club revenue" categories. Real estate operations are outside scope.
Layer 3: Corporate & Debt Independence (Post-Liberty Split)
In July 2023, Liberty Media completed a tax-free spin-off of Atlanta Braves Holdings as a fully independent public company.
Before the split:
- Braves were a tracking stock (Liberty Braves Group) inside Liberty Media Corporation
- Shared corporate overhead, legal/finance functions
- Capital allocation decided at Liberty parent level (competing with Formula 1, SiriusXM, etc.)
- Battery cash flow was part of broader Liberty portfolio
After the split:
📄 VERBATIM FROM POST-SPLIT FILINGS
From 10-Q (Q3 2025), Note 1 — Basis of Presentation:
"Liberty and Atlanta Braves Holdings operate as separate, publicly traded companies and neither has any continuing stock ownership, beneficial or otherwise, in the other."
Meaning:
- No shared ownership
- No intercompany debt
- No cross-guarantees or shared liabilities
- Full corporate independence achieved by September 2024 (transitional services ended)
Why this matters for the ring-fence:
- 100% of Battery cash flow stays with Braves Holdings
- Pre-split: Cash could be reallocated to other Liberty entities
- Post-split: All Battery OIBDA accrues directly to Braves shareholders/management
- Debt is separate and self-contained
- Mixed-Use facilities financed via dedicated credit facilities (SOFR + ~2%, maturities 2026-2029)
- Baseball/stadium debt separate (different lenders, different covenants)
- No cross-default provisions linking the two
- Strategic flexibility for bolt-on acquisitions
- Example: April 2025 Pennant Park purchase ($93.7M cash)
- Funded directly from Braves Holdings balance sheet
- No need for Liberty parent approval or competing priorities
- Standalone decision = faster execution
🏦 DEBT INDEPENDENCE (FROM 10-Q NOTE 8)
Mixed-Use Debt (as of Sept 30, 2025):
- Credit facilities: ~$139M outstanding
- Term debt: ~$344M
- Total: ~$483M
- Interest rate: SOFR + ~2% (low-cost, floating rate)
- Covenants: Debt service coverage ratios specific to Mixed-Use cash flows
Baseball/Stadium Debt: Separate
- Different lenders, different facilities
- CBA rules apply only to stadium/baseball debt, not development
Result: Mixed-Use can lever up independently to fund expansions (more office buildings, residential phases) without touching baseball finances or MLB approvals.
How the Ring-Fence Works in Practice
Let's walk through a concrete example to show how the three layers interact:
💼 EXAMPLE: COMCAST OFFICE LEASE
Scenario: Comcast leases 50,000 sq ft of office space in The Battery for $2 million/year (base rent + reimbursements).
Accounting treatment (Layer 1):
- Revenue recorded in Mixed-Use Development segment
- Not allocated to Baseball segment
- Reported separately in every 10-Q/10-K
MLB CBA treatment (Layer 2):
- NOT counted as "club revenue" for revenue-sharing
- NOT counted toward luxury tax calculations
- Reason: Office lease is real estate ops, not baseball ops
- Comcast employees work there year-round, unrelated to games
Cash flow destination (Layer 3):
- $2M flows to Braves Holdings (independent entity)
- After ~$300k variable costs (14-15% margin), ~$1.7M to Adj. OIBDA
- After ~$100k debt service allocation, ~$1.6M net owner cash
- Zero goes to MLB revenue-sharing pool
- Zero goes to players
- 100% owner-kept
Compare to a $2M local TV deal for baseball:
- Counted as "baseball revenue"
- ~48% ($960k) goes to MLB revenue-sharing
- Remaining ~$1.04M after sharing
- Players' share determined by CBA (roughly ~50% of defined revenue long-term)
- Net owner cash after all: ~$500-600k
The moat in action: Same $2M top-line, but real estate delivers 3x more owner cash because it's ring-fenced.
Why the Union Can't Touch It
The MLB Players Association is sophisticated. They audit teams. They negotiate over revenue definitions in every CBA cycle. So why haven't they captured Battery-style development income?
Three reasons:
1. Legal/Accounting Separation Is Real
- It's not a loophole or trick — it's genuine business segmentation
- Braves Holdings operates Mixed-Use as a standalone real estate business
- Has its own management (Braves Development Company, Mike Plant), separate P&L, independent debt
- MLBPA can't claim it's "hidden baseball revenue" when it's plainly reported as real estate
2. Precedent Is Set
- Many teams have non-baseball revenue streams: YES Network (Yankees local media company), Cardinals' Ballpark Village, etc.
- CBA has always treated these as "other business ventures" outside sharing
- To change this, union would need to renegotiate fundamental CBA definitions — extremely difficult, owners would never agree
3. Risk/Reward Asymmetry
- If union tried to claim Battery cash, owners would argue: "Fine, then share the losses if development fails"
- Construction risk, lease-up risk, debt service, property downturns — all owner-borne
- Players don't want downside exposure
- Easier to negotiate higher % of defined "baseball revenue" than fight over real estate
Result: The ring-fence holds. Union focuses on core baseball revenues (where they have leverage) and leaves development alone.
The Risks to the Ring-Fence (What Could Break It)
No moat is eternal. Here are scenarios where the separation could weaken:
⚠️ POTENTIAL VULNERABILITIES
1. CBA Renegotiation (Post-2026)
- Current CBA expires Dec 1, 2026
- Owners pushing for hard salary cap; players resisting
- If negotiations get contentious, union COULD demand: "Expand 'revenue' to include all team-controlled development"
- Likelihood: Low (owners have too much leverage, union would have to give up a lot to get this)
2. Legal Challenge (Antitrust/Monopoly)
- If MLB's antitrust exemption ever gets revisited, real estate dealings could be scrutinized
- Argument: Owners use public subsidies (stadium infrastructure) to enable private development (Battery), creating unfair market advantage
- Likelihood: Very low (Congress unlikely to act, courts have upheld exemption repeatedly)
3. Public Subsidy Clawback
- Local governments (like Cobb County) could demand profit-sharing if Battery appreciation exceeds projections
- Example clause: "If development generates >X% return, county gets Y% back"
- Likelihood for Braves: Zero (deal is done, no clawback in 2013 agreements)
- Likelihood for future deals: Moderate (taxpayers getting smarter, may demand participation)
4. Corporate Structure Change
- If Braves Holdings were acquired or taken private, new owner could restructure
- Consolidated reporting could blur lines (though segment accounting would still apply)
- Likelihood: Low in near-term (current ownership stable)
Bottom line: The ring-fence is structurally solid for the foreseeable future. Most threats are hypothetical or distant.
The Broader Implication: Why Every Owner Wants This
The Battery model spreads because the ring-fence works.
When owners see:
- $97.5M in revenue that's 100% theirs (no sharing)
- 71% margins (vs. 5-10% on baseball)
- Cash flow independent of wins/losses
- Land appreciation compounding wealth
- All protected from unions and revenue-sharing
...they want to replicate it.
Every new stadium or renovation now includes integrated development:
- Texas Rangers (Globe Life + Texas Live!)
- LA Rams (SoFi + Hollywood Park)
- Philadelphia Phillies (Citizens Bank Park + South Philly redevelopment)
- Nashville SC (Geodis Park + mixed-use)
- Colleges (Wake Forest, Texas A&M)
The template: Public builds roads/parking (traffic infrastructure). Private builds stadium + development (captures value). Owners keep the upside, ring-fenced from labor/sharing.
Next: Proof in Volatility
We've shown the numbers (Post 2) and the structural protection (this post).
Post 4 will prove the model works even when baseball doesn't: a detailed breakdown of the 2025 season, where the Braves finished 76-86, missed the playoffs, saw attendance drop — and still set revenue records and more than doubled profit.
The ring-fence held. The engine kept running. That's the ultimate validation.
SOURCES
Segment Accounting (ASC 280):
- Atlanta Braves Holdings 10-Q (Q3/9mo 2025, filed Nov 5, 2025): Note 2 — Segment Information
- FASB Accounting Standards Codification Topic 280 (public reference)
Revenue Definitions:
- MLB Collective Bargaining Agreement (2022-2026): Article XXIV — Revenue Sharing (summary provisions, full text not public but key terms widely reported)
- Luxury tax / CBT framework: MLB official disclosures, media reports on thresholds and calculations
- Braves Holdings MD&A sections: Revenue source descriptions (verbatim quotes from 10-Qs)
Corporate Independence:
- Liberty Media split-off: Atlanta Braves Holdings 10-Q Note 1 — Basis of Presentation (post-July 2023 filings)
- IRS confirmation of tax-free treatment (referenced in Liberty Media/Braves disclosures 2023)
Debt Structures:
- Atlanta Braves Holdings 10-Q Note 8 — Debt: Facility descriptions, interest rates, maturities, covenants
CBA Negotiations Context:
- 2026 CBA expiration: MLB.com, player association statements (2025-2026)
- Revenue-sharing mechanics: Academic analyses, sports business journalism (ESPN, Athletic, Sports Business Journal)
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