Ownership has taken on corporate identity

June 10, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

If the Orioles do get a new owner, it may not even be person.

Team owner Eli Jacobs has announced that he is considering selling the team. And if recent history is a guide, the club probably will not fall into the hands of a single, paternalistic baseball fan with deep pockets.

PTC The days of a game-loving owner doting over his players and leading fans in refrains of "Take Me Out to the Ballgame" are rapidly ending. The modern franchisee tends to be more business than baseball, more money than music.

And increasingly they are corporations or heads of corporations that use the teams to promote their products. At least two, for example, are owned by beer companies: the St. Louis Cardinals by Anheuser-Busch Co. and the Toronto Blue Jays by John Labatt Ltd.

And Orioles owner Eli Jacobs -- a financier often described as typical of the modern businessman/owner -- uses Memorial Stadium to entertain plenty of people important to his business holdings.

Experts say there are several reasons for the changing face of baseball ownership. The most obvious is the price: teams that sold for $2 million in the 1950s are now commanding $100 million or more.

Those prices exclude all but the richest of investors, who have pushed out the "hobbyists" in favor of accountants and bottom-line managers who may know more about leveraged buyouts than the infield fly rule.

"It used to be that an owner would buy a team as a hobby and ego satisfaction. But it has changed," said Gene McHale, former president of the New York Yankees and current president of American Sports Associates, a sports consulting firm. "It has become a business and people are looking at it more and more like a business."

At the same time, baseball owners like to promote stability and tend to steer clear of quick-hit artists interested in getting in and out with a profit, McHale said.

"I don't think someone would be admitted to the baseball fraternity if they intended to just sell it at a profit," McHale said.

Gerald W. Scully, author of "The Business of Baseball," said the most likely buyers of teams today are investor groups.

"There's nothing left of the family owned baseball clubs. That has gone by the boards in the past 25 years," said Scully, who is also a professor of economics at the University of Texas at Dallas.

One thing has not changed: The big leagues are still largely an all-male, all-white fraternity. Only two teams, Boston's Red Sox and Cincinnati's Reds, count women among the major stakeholders. And despite the integration of the dugout more than 40 years ago, no team has a majority owner or general partner who is black.

"We are certainly looking at minority and fair employment issues, but that's about all I can say about that," said Jim Small, a spokesman for baseball commissioner Fay Vincent.

Although he resists the characterization of some current owners as "not baseball people," he acknowledges that consortiums, corporations and partnerships now dominate where single owners used to tread.

Only one team, the Pittsburgh Pirates, counts its city among its stakeholders. And none is owned by a stock-issuing, publicly traded company, although several are units of publicly held conglomerates.

The owners have drafted guidelines for ownership, but the rules evolve on a case-by-case basis with the 26 owners serving as final arbitrators, Small said. Each transfer of a team has to be approved by three-fourths of the owners in its league, and a majority of the other league.

Admittance to the fraternity usually requires several things, Small said: money to support the team, ties to the community, and a reputation unblemished by association with gamblers and the like.

The romance of baseball still plays a role in attracting buyers and bidding up prices. Despite the growing role of business in baseball, the teams tend not to be great investments in the traditional sense. About a third lost money last year.

"The economics of franchise ownership is an enigma to begin with," said Stewart Rog, a principal and sports consultant with Deloitte & Touche.

Most investors buy a company on the anticipation of receiving operating profit. Many baseball teams are money-makers, but owners tend to make most of their profit when they sell, Rog

said.

"Most owners have usually done well from the ownership of the club. But it usually comes from the cash out, not the cash flow," Rog said.

Then why the spiraling prices? (The Orioles sold for $2.5 million in 1953, $12 million in 1979, and $70 million in 1988. Experts say it could fetch $90 million to $120 million today.)

"It's the pride, the fact that they have individuals who want to be associated with sports and athletes," Rog said.

"They [members of the ownership groups] can come from corporate America, guys who have made it to the top . . . You're talking about somebody who is in the upper socialite category," he said.

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