Greetings. Welcome to the Atlanta Braves Holdings 2024 Third Quarter Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jennifer Giglio, Senior Vice President of Communications. Thank you. You may begin.

Good morning. Before we begin, we'd like to remind everyone that on today's call, management's prepared remarks may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. A number of factors could cause actual results to differ materially from those anticipated, including those set forth in the Risk Factors section of our annual and quarterly reports filed with the SEC. Forward-looking statements are based on current expectations, assumptions and beliefs as well as information available to us at this time and speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non-GAAP financial measures including adjusted OIBDA. The full definitions of these non-GAAP financial measures and reconciliations to the comparable GAAP financial measures are contained in the Form 10-Q and earnings press release available on the company's website. Now I'd like to turn the call over to Terry McGuirk, President and CEO of Atlanta Braves Holdings.

Good morning, and welcome to the Atlanta Braves Holdings third quarter 2024 earnings call. I want to start briefly discussing the updates to voting and governance arrangements that the Atlanta Braves Holdings previously disclosed in August. These updates, which have been approved by Major League Baseball, further empower our Atlanta-based management team to lead this organization and make decisions that we believe will create value for our shareholders. We're excited about the future of the organization, and I speak for the entire Braves management team when I say that we are grateful for the continued support of John Malone and Liberty Media. The Atlanta Braves is a franchise defined by excellence, both on and off the field. We hold ourselves to the highest standards to benefit our fans, our partners and you, our shareholders. The team is coming off another exciting season with our seventh consecutive trip to the postseason. While we fell short of our ultimate goal of winning another World Series, our players showed fight and perseverance that made us all proud. We are confident in the leadership of our team, the talent on the field and our ability to compete and win at the highest level. As shareholders, you know that the team we put on the field is just one important piece of the organization. We are really a multifaceted business that includes an incredible in-stadium experience at Truist Park, a multiuse real estate development around our ballpark called the Battery Atlanta, and media and entertainment assets. For our third consecutive year, we welcomed more than 3 million fans to the ballpark during the season, and millions more tuned in on television and radio. The Battery Atlanta continues to be a top live, work and play destination in the Southeast and a leading example of a mixed-use development anchored by a sports venue. As we look to next year, I am thrilled that we will have the opportunity to host the Major League Baseball All-Star game. We thank Major League Baseball for the opportunity to welcome fans from around the world to Atlanta and showcase Truist Park and the Battery Atlanta on the national stage. We understand the significance of our role as a part of Braves Country, which comes with the privilege and responsibility of supporting our community. We continue our work through the Atlanta Braves Foundation and Henry Louis Aaron Fund to create tangible impact that benefits not only Braves fans but the entire Southeast region that they call home. As we begin this new chapter in the history of the Atlanta Braves, I want to reaffirm that we understand the unique responsibility we have being the only publicly traded Major League Baseball team. It's one that we have prepared for and that we do not take lightly. We look forward to meeting many of you in the coming weeks at Liberty Investor Day and beyond that as part of our regular engagement with investors and analysts. And now I will turn over the call to Derek and Jill, who will walk you through the results from the quarter.

Thanks, Terry, and good morning to all. The team finished with an 89 and 73 record in the 2024 season, ultimately making the 2024 MLB playoffs, as Terry said, for the seventh straight season before losing in the Wild Card Series to the San Diego Padres. We had strong performances from key players throughout the season, including from Marcell Ozuna, who led the team in all major offensive statistics, as well as Chris Sale, who became the first player in franchise history doing the pitching Triple Crown leading the National League in wins, ERA and strikeouts. Chris won Players Choice, NL Outstanding Pitcher and NL Comeback Player of the Year awards. It was another exciting year in which we sold over 3 million tickets for the third straight year, which was the fifth highest total in Major League Baseball. Heading into the season, there continues to be a 20,000-person waiting list for season tickets, and we have seen high renewal rates to date on season tickets for 2025. Overall, our fans continue to love their experience at Truist Park and the Battery Atlanta. In fact, MLB recently completed a league-wide fan survey, and the Braves ranked #1 in overall guest experience. We are proud of this response from our fans, but remain committed to continuing to make the experience even better. To that end, we will begin further upgrades to the ballpark ahead of the 2025 season. This includes a new seating product called The Bullpen, which includes access to the exclusive lounge underneath seats and an extension of the Coors Light Chop House seating area, among other announced enhancements. While the pending bankruptcy proceeding of Diamond Sports Group LLC has not previously had a material unfavorable impact on the company's revenue and the company has received scheduled payments to date, we cannot currently predict whether such bankruptcy proceeding is reasonably likely to have a material unfavorable impact on our revenue in the future. We have seen several of the master planning projects completed earlier this year, already adding value and enhancing the fan experience. So we're excited to see how these additional upgrades improve the fan experience for next season. Simply put, the Battery Atlanta has become a must-visit attraction for folks across Atlanta, the Southeast, the country and the world. As I turn it over to Jill to discuss the financial performance, I want to remind everyone that Braves Holdings revenue is seasonal, with the majority of revenue recognized during the second and third quarters, which aligns with the baseball season. And with that, I'll turn things over to Jill to discuss the company's financials.

Thanks, Derek. Total revenue grew to $291 million in the third quarter of 2024, up from $272 million in the third quarter of 2023. As a reminder, the company manages its business based on the following reportable segments: baseball and mixed-use development. There were 41 home games played in the third quarter of 2024 compared to 37 home games in the prior year period. For baseball revenue, the company saw $273 million in the third quarter of 2024, up from $256 million in the prior year period, primarily due to new sponsorship agreements and contractual rate increases on season tickets and existing sponsorship contracts, partially offset by reduced attendance at regular home season games. Additionally, other revenue increased due to additional concerts at Truist Park. For mixed-use development revenue, the company saw $17 million in the third quarter of 2024, up from $16 million in the prior year period, primarily due to increases in parking and rental income. However, due to higher baseball operating costs, the company's operating income fell to $6 million in the third quarter of 2024 after seeing operating income of $16 million in the prior year period. In addition, the company's adjusted OIBDA fell to $31 million in the third quarter from $40 million in the prior year period. Baseball operating costs increased primarily due to increases in Major League player salaries, MLB's revenue sharing payments and Minor League team and player expenses. As of September 30, 2024, the company had $100.9 million of cash and cash equivalents. Substantially, all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA-rated money market funds and other highly rated financial and corporate debt instruments. ABH is in compliance with all financial debt covenants as of September 30, 2024. And with that, operator, let's open the line for questions.

Our first question is from Ben Swinburne with Morgan Stanley.

I guess two questions, and I know you have the investor event coming up, so you probably don't want to front run that too much. But I'd love to hear maybe Terry and Derek, if you want to talk about kind of the biggest growth opportunities you see for the business over the next several years? I know you mentioned some of the stadium enhancements for '25. But as you think about longer-term, like how do you think about driving revenue and cash flows over a multiyear period with the assets that you have? And then I just was curious on the financials. Nice growth in EBITDA year-on-year so far this year. You're still slightly negative cash from operations and CapEx is up a decent amount. I wonder if you can just help us think about the conversion of EBITDA to free cash flow this year and in general for the business as you guys look ahead.

Thanks for your question. It's Derek. I'll respond. As it relates to revenue growth, we believe we have obviously a very substantially well-performing business. We're continuing, as you've heard, to invest into both sides of the business being the ballpark as well as the Battery. And so we think there's still a lot of upside in both areas. We talked about the master plan projects. We're continuing to invest in Truist Park. And the way that we look at it is each project has an eventual return on investment. So we study that closely and look at what are the best things that we should be doing for the future, investing in those. Overall, where the key guidance is for us is, is it good for the fans. And ultimately, if it's good for fans, it's going to be good for the business. On the Battery side, there's still upside and room for growth. We're continuing to reinvest into the Battery and trade out where we need to, trade out leases for higher-performing leases, bringing better tenants, and we'll continue to do that as well as evaluate new opportunities. So I still think there's really a lot of room for growth for us. Jill, do you want to answer the financial question?

Yes. Thanks, Derek. You mentioned EBITDA, and I'll address the question focusing on OIBDA. The baseball OIBDA on a year-over-year basis has declined despite growth in revenues, primarily due to increasing expenses, specifically around player payroll, MLB revenue sharing and Minor League costs. From an operating cash flow perspective, what you're seeing is the decrease in cash primarily tied to beyond operating results. Our capital improvements, specifically around the master planning project.

Our next question is from Barton Crockett with Rosenblatt Securities.

I wanted to step back for a second and this kind of inaugural independent call for you guys. And just get kind of a sense of how you frame what you are and what your opportunity is and on a number of accounts. I mean, first off, how do you think you create value? Is it by growing cash flow? Or is it by creating asset value that's not necessarily measured in cash flow, which might be more typical of what we see with kind of sports teams? And why do you need to be a public company versus the more traditional structure of being private? And are there puts and takes in terms of private companies have an ability sometimes to fund cash flow losses just to invest in success that may not be so possible as a public company? And if you are public, are there some advantages from that, like there's been speculation that there could be an opportunity to roll up maybe more sports teams into a public structure like what you guys have. So if you could give us some kind of a sense of strategically, why you should be what you are and where you expect to take it, that would be interesting.

Well, I'll start off. This is Terry McGuirk. With saying that as a management group, we so appreciate the confidence that John Malone has in us and the vote of approval he has given us going forward. Our goal every year is to win a World Series. We have a terrific management team and a great baseball operations head in Alex Anthopoulos. We strive each year to give him adequate payroll to actually put a team on the field that has the capability of winning the World Series. And this is sort of a pretty broad answer to your question. But the greatest way we can drive value is by winning, and the playoffs are the ultimate goal both financially and statistically, and it's just part of our DNA, and we have something very special that we've built here. And I would say, I'll turn it over to my colleagues for some other comments from your questions.

Yes. Thanks, Terry. What I would add is, when you look at these businesses and specifically sports teams, one of the things that we're trying to do each and every year is try to grow top line revenue. And so we are constantly striving to increase the amount of revenue coming into the business. That is a key metric and one that we have been doing successfully over the years. If you look at our history and the growth rate. So when we talk about things like our master plan projects, the investments we have there in the ballpark or the Battery or the opportunity ultimately with new media opportunities and things like that, you also get a sense for what we can do with those and how those relate to revenue. And it's just a good reminder also to say we have an enormous territory from which we operate, and we still think that we have significant room for growth in capitalizing on all of the opportunities amongst that. There's some 34 million to 35 million people in our defined territory, and we’re striving to reach those as well as all the fans outside of that territory as well.

Okay. And if I could just follow-up. I mean one of the elements that I put into that question is the question of rolling up other sports teams into a public structure. That doesn't sound like that's on your radar screen. You seem fairly focused on the Braves. Is that a correct kind of read?

That's correct. We're absolutely laser-focused on what we just talked about all the growth opportunities inside of this envelope. And this management team is, as I said, really focused on the growth ahead.

Okay. Lastly, could you provide some insights into the situation with Diamond and local TV sports? I understand that you can no longer express confidence that there won't be any significant negative impact from Diamond. Can you explain a bit more about the factors at play? We know they have filed for bankruptcy, but what discussions are happening regarding what could lead to a successful outcome for you? Ultimately, what do you think the solution is? Also, in your opinion, what would be the ideal structure for local TV rights for the Braves and MLB to maximize value in the future, if you had the opportunity to create it?

Sure. Well, again, restating what we've talked about, Diamond is in bankruptcy. So we are obviously following on to what happens with that bankruptcy. There's a number of dates upcoming that we'll be watching closely and trying to understand that. I think one of the things that I'll remind you and everybody else thinking about this business is we're not just waiting for bankruptcy to define what might happen, but also studying what are the potential opportunities for us. And so for us, we're going to be prepared for any eventual outcome. No matter what happens, we think we're in a very enviable position. It's a good reminder to talk once again about the territory. We have one of the largest television territories in sports. And we have an opportunity, we think, to capitalize even further on that territory should those rights come back to us. But right now, we're watching closely the bankruptcy and seeing what might happen.

Our next question is from David Joyce with Seaport Research Partners.

I have a couple of questions. First, you've seen some acceleration in concert activity. What opportunities do you see to expand that? Is it more of a strategic add-on? Also, do you believe that the climate and weather allow you to broaden the fan or attendee calendar beyond the current baseball season? Secondly, regarding the master plan you've already implemented for most of the property beyond the park and the Battery, are there any additional plans for real estate development, or are you mostly at capacity now?

Thank you for your question. Regarding concerts and special events, more fans have been coming to Truist Park and the Battery, and they have clearly enjoyed their experiences. We have been rated as the top overall guest experience according to the Voice of the Consumer study conducted by Major League Baseball. When people visit, they tend to have a great time. Beyond baseball games, we are exploring various opportunities and working closely with promoters to bring in more concerts on non-game days. Additionally, there are numerous other special event opportunities available. We are set to host a golf event soon at Truist Park, among other types of special events. We believe this facility is well-suited for a wider range of non-game day special events. We are actively collaborating with our team to develop these opportunities. Concerning the Battery, we are evaluating all potential options there, including some undeveloped real estate attached to it. We are continuously assessing and looking for opportunities in that area. Furthermore, we can enhance and transition existing leases in the Battery to improve the overall experience for our guests and the financial outcomes. We are always in search of better-performing assets at the Battery.

Our next question is from Matthew Harrigan with Benchmark.

I have two questions. First, do you have any updates on sports betting, both from a general MLB perspective and specifically regarding the Braves and the situation in Georgia? Second, while I understand this is a minor point compared to TV rights, I've noticed that Meta Quest is aggressively promoting their NBA product. I know there are initiatives with Meta Quest related to Home Run Derby and similar events. What are your thoughts on the video game market, particularly in relation to AR and VR? Although it may not compare to the NBA, there seem to be opportunities both now and in the future.

Yes. Thank you for your questions. On the sports betting question, we are frustrated that sports betting is not yet legalized here in Georgia. And we continue to put it out there that we would support legalized sports betting. We think it's good for the game, and it's something that with regulation helps with all types of controls to make sure it's done the right way, as opposed to in the back corners and out of the light. We've seen that sports betting is getting legalized throughout the country. In fact, I think there's most recent election here last night, and you saw another state get legalized sports betting. So our hope is that the politicians here in Georgia will legalize that and do that; we're working closely to see that that happens. On the question about media, I think Major League Baseball, sports in general, and then specifically the Braves, we are all trying to figure out what are the opportunities that are out there for us to capitalize on new media opportunities, including whether it be AR, the use of AI, and the various types of ways that we can bring new and unique content to our fans. We've dabbled in that in the past, and we continue to look at the opportunities there. I don't think anybody's got a perfect solution on that. I would say for us, we want to be players in that and see what the opportunities are, but I don't think we have anything specific to announce or go through at this point in time. Hopefully, fewer injuries next season. Yes, sir. All right. With that, I'm going to close it out. We appreciate your time and attention. We thank all of you for your questions, and we look forward to seeing many of you in New York at Liberty Media's Investor Day on November 14. With that, we'll close it out, operator. And I'll say in final, go Braves.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.