Is the U.S. sports asset valuation frenzy facing a "cooling-off moment"? MLB lockout concerns trigger a short-selling surge, Atlanta Braves (BATRK.US) stock short interest triples to a record high

According to the Zhihui Finance APP, as the labor negotiations between Major League Baseball (MLB) and its players reach a deadlock, the specter of the canceled 1994 World Series resurfaces, and sports club valuations soar to record highs, a short-selling storm surrounding the MLB labor dispute is quietly brewing. According to the latest data from S3 Partners, the only publicly traded MLB team stock in the United States—Atlanta Braves Holdings (BATRK.US)—has seen its short interest triple over the past 12 months, reaching as high as 6.8% of tradable shares, the highest level since it spun off from Liberty Media in 2023. At current prices, this equates to a bearish bet of around $170 million.

Labor Negotiations “Death Spiral”: Salary Cap Battle Reignites the Nightmare of 1994

Sam Pierson, Director of Research at S3 Partners, stated bluntly: “There appears to be a general expectation of a lockout. You can imagine the shorts eagerly awaiting December—when a lockout could occur and there’s no certainty as to when the next MLB game will be played.”

The surge in short interest has closely synchronized with the deteriorating pace of labor negotiations. The current MLB Collective Bargaining Agreement (CBA) expires on December 1, 2026. In late May, after the players union (MLBPA) rejected the league’s proposed $245.3 million salary cap, BATRK’s short interest roughly doubled. This is the first time since 1994 the league has proposed a hard salary cap—a controversy that ultimately triggered a players’ strike and the cancellation of the World Series. The rift between MLB and the players union is widening at a remarkable speed.

League’s proposal: MLB has put forth a hard salary cap of $245.3 million, accompanied by a salary floor of $171.2 million. According to Spotrac, the Atlanta Braves currently have a total payroll of about $253.5 million, already surpassing the proposed cap level. If enacted, eight teams would need to cut a combined $578 million from payroll.

Players’ demands: The MLBPA is calling for the minimum salary to be doubled from $780,000 to $1.5 million, for the luxury tax threshold to be raised, and for an overhaul of the free agency system. MLBPA interim executive director Bruce Meyer made it clear that the salary cap is a “completely unacceptable” proposal.

A lockout seems almost inevitable. In a survey of 101 players, 80 (about 80%) predicted a lockout would occur. Former MLB pitcher and Hall of Famer John Smoltz warned: “If the parties can’t resolve this issue, baseball will suffer. They can’t afford the cost of a lockout—especially given the achievements and great games in recent years.”

USA Today reporter Bob Nightengale cautioned that new owners care more about real estate than the teams themselves, making them more willing to extend a lockout over the salary cap. “If it doesn’t happen now, it never will.” MLB could allow the lockout to drag on until mid-April of the following year, forcing players to miss paychecks.

Team Valuation Boom: Padres Sold for $3.9 Billion, Lakers Change Hands for $12.5 Billion—the Bulls’ “Scarcity Logic”

As shorts bet on a lockout, bulls are also increasing their positions. Over the past 12 months, actively managed funds have increased their BATRK holdings by 10%, and hedge funds have grown their long positions by 17%.The bulls’ confidence comes from the structural rise in sports club valuations. This summer: the Los Angeles Lakers were sold for a record $12.5 billion; the San Diego Padres went for $3.9 billion; Apollo Global Management acquired a stake in the New York Yankees; Arctos Partners under KKR is negotiating to acquire 10% of the Atlanta Falcons.

Rob Tillis, founder of Inner Circle Sports, points out that the global sports industry is worth about $450 billion, with increasing valuations driven by rising real estate values, growth in media rights, and the allure of these scarce assets to an expanding cohort of ultra-wealthy individuals.

Morgan Stanley analysts note that since publicly traded sports clubs are rare, stocks like BATRK are driven more by overall industry expectations than by quarterly earnings. The Braves’ holdings are not limited to the team itself—they include the stadium and adjacent real estate, making it a scarce “sports real estate” investment target.

Core Logic of the Bull-Bear Battle: Which Side Will Prevail in December?

The essence of this bull-bear showdown is a bet on the fate of the MLB season after December 1st.

The short case: A lockout would delay or even cancel the season—no games mean no ticket sales, no broadcasting income, no merchandise sales. Each missed game is a “friend” to the shorts. Both sides remain “far apart” on the salary cap issue. Pierson from S3 notes: “Once a new CBA is settled and television contracts are reset, today’s record prices may seem cheap. But the likely path involves a lockout period, which will create opportunities for shorts.”

The bull case: The Padres’ $3.9 billion sale price (unanimously approved by all 30 team owners) already factors in that the next labor agreement (very likely with a salary cap) will benefit owners. The scarcity of sports assets, the Braves’ long-term local broadcast rights value, and the potential proceeds from the 2029 national broadcast rights auction provide fundamental support. As S3 summarizes: “Missed games reward the shorts in BATRK; an owner-friendly deal rewards the bulls.”

As the only MLB team publicly traded, BATRK’s scarcity is both its advantage for bulls and a target for shorts. Morgan Stanley analysts point out that with so few listed sports clubs, BATRK’s price is driven more by industry-wide expectations than by quarterly results.

S3 Partners data shows that in this $3.4 billion company, institutional investors hold about $1.4 billion, hedge funds hold $900 million, and shorts hold $169 million. Each side’s position size has hit a new post-spin-off high this year. On December 1, when the CBA expires, the moment will come to decide who is right—and whichever side blinks first, it will show up in the data.