Struggling in a recessionary climate that has seen the value of its real estate investments plummet, USF&G made a business decision yesterday that may leave the Orioles' plan for a new spring training facility in Naples, Fla., in limbo.
The company decided Tuesday, two days ahead of today's deadline, not to exercise its option to purchase 450 acres in Naples. The site was to include commercial, retail and recreational development and a gift parcel of 158 acres to Collier County, 98 acres of which was to be used as a training facility for the Orioles.
"We determined the opportunity for profit from the commercial and retail development of the property was not at an acceptable level at this time," Norman P. Blake, chairman, president and chief executive officer of USF&G, said last evening. "Such an investment would not be in the best interests of our stockholders, employees, agents or insureds.
"After careful consideration of the proposed purchase, we have decided not to exercise the option to buy the property because it does not meet management's strict requirements for return on investments."
USF&G, under the new leadership of Blake, is expected to make $75 million in cost cuts. W. Minor Carter, senior vice president of USF&G Corp., said the Naples project would have cost the company about $17 million.
Carter said the Orioles were informed of USF&G's decision prior to yesterday's announcement, but added USF&G's decision should not be viewed as an end to the Orioles' plans.
"It is simply an investment decision that didn't pass muster," Carter said. "And while it is true, on one hand, we are not renewing our option, it is also true, on the other hand, that it would be inappropriate to say it is the end of the project or the spring training facility."
Last summer, USF&G worked hand-in-hand with the Orioles to help pass a 3 percent tourist-accommodation tax in Collier County, from which funds are to be used to help build a modern spring training headquarters by 1992.
By the time the tax passed in September, the Orioles already had given a plan to county officials for a complex that would include a 6,000-seat stadium that could be expanded to 7,500, five practice fields and a sixth infield with artificial turf. The cost of the complex was estimated at $15 million.
The Naples site is near Interstate 75, but Carter said it was not the only site nor the only option the Orioles have.
Carter would not say the Naples project is part of USF&G's overall cost-cutting project, but Blake made it clear in statements to the Sunday Sun, Dec. 2, that these are the kinds of cuts to be expected.
"Everything is up for grabs," he said then, adding he planned to look at the company's six-year sponsorship contract with the Sugar Bowl.
Presently, real estate is not one of the things that USF&G does best. Overall, the company lost $15 million during the third quarter and the value of its $13.9 billion in assets is shrinking as its $1 billion invested in real estate is being hard hit by the economy.