We Think Atlanta Braves Holdings (NASDAQ:BATR.K) Has A Fair Chunk Of Debt

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Atlanta Braves Holdings, Inc. (NASDAQ:BATR.K) makes use of debt. But the real question is whether this debt is making the company risky.

When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

Check out our latest analysis for Atlanta Braves Holdings

How Much Debt Does Atlanta Braves Holdings Carry?

The image below, which you can click on for greater detail, shows that at September 2024 Atlanta Braves Holdings had debt of US$641.0m, up from US$555.3m in one year. However, because it has a cash reserve of US$102.9m, its net debt is less, at about US$538.2m.

How Healthy Is Atlanta Braves Holdings' Balance Sheet?

The latest balance sheet data shows that Atlanta Braves Holdings had liabilities of US$321.7m due within a year, and liabilities of US$693.1m falling due after that. Offsetting these obligations, it had cash of US$102.9m as well as receivables valued at US$88.1m due within 12 months. So it has liabilities totalling US$823.9m more than its cash and near-term receivables, combined.

This deficit isn't so bad because Atlanta Braves Holdings is worth US$2.43b, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Atlanta Braves Holdings can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Over 12 months, Atlanta Braves Holdings reported revenue of US$678m, which is a gain of 5.3%, although it did not report any earnings before interest and tax. That rate of growth is a bit slow for our taste, but it takes all types to make a world.

Caveat Emptor

Importantly, Atlanta Braves Holdings had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$51m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled US$87m in negative free cash flow over the last twelve months. So to be blunt we think it is risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 1 warning sign for Atlanta Braves Holdings that you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.