Orioles, city discuss change in stadium rent Lump-sum payment rather than about half of team's profit offered

August 28, 1991|By Mark Hyman

As the Baltimore Orioles prepare to leave Memorial Stadium, team and city officials are discussing a change in the formula used to determine this year's stadium rent.

The Orioles have asked the city to put aside their 9-year-old lease, which requires the team to pay about half its profits as rent. Instead, team officials have proposed that the city accept a lump-sum payment of about $3 million, according to two people familiar with the bargaining positions of both sides. Neither would agree to be identified, citing the sensitivity of the talks.

The talks, which began before the current baseball season, have also encompassed other issues related to the team's move next season to a new ballpark at Camden Yards. Among the points under discussion are the number and location of luxury seats, if any, that the city would have for its use at the new, state-owned ballpark, the sources said.

Mayor Kurt L. Schmoke confirmed that the city is talking with the Orioles, but he declined to comment on specific proposals. "We've completed some aspects of our negotiation," he said, "but we haven't completed the entire negotiation."

Orioles President Larry Lucchino also declined specific comment. "Our policy in discussing negotiations of any type -- contract negotiations, lease negotiations, player negotiations or front-office negotiations -- is that we don't think it is an absolute necessity to tell newspapers these things," Mr. Lucchino said.

Before any changes in the lease would become final, the Board of Estimates -- a panel of the city's five top elected and appointed officials -- must approve them.

Since 1982 when city officials agreed to a proposal by the late Orioles owner Edward Bennett Williams, the team's rent has been tied to its profits, an arrangement that has resulted in a wide range of payments. In 1988, for example, the Orioles paid $33,365. The year before, the team paid nothing, although the city did receive $1.1 million in taxes it collects on tickets sold. But the rent payment generally has climbed in years when the Orioles have racked up high attendance. In 1989, a record attendance year, the team paid a record $5.2 million to the city.

Last year, the Orioles paid $1.8 million, according to city Finance Director William R. Brown. That payment would have been higher but for a special expense incurred by the Orioles -- $8 million in so-called collusion damages to major-league players. All major-league teams were assessed such damages. Without the collusion expense, the Orioles' stadium rent again would have topped $5 million, the sources said.

Despite their team's disappointing sixth-place showing so far in the American League East Division, Orioles fans have shown their loyalty this year. With 17 games remaining at Memorial Stadium, the team is poised to set yet another attendance record.

That makes some local officials, who said they were unaware of the negotiations over the 1991 rent, question why the city would consider altering the existing contract.

"I'd be very cautious jumping at this offer coming from the Orioles," said Councilman Joseph T. "Jody" Landers, D-3rd, who is a candidate for the Democratic nomination for comptroller. "Why would they even be talking about it unless there was an expectation that profits are going to be very high?"

Former Mayor Clarence H. "Du" Burns, who is running against Mr. Schmoke in the Sept. 12 Democratic primary, criticized the city for engaging in the talks. "We're not in a shape to give away anything," he said. "We've taken our chances all these years [with the existing lease]. I'd be darned if I'd change it now."

Sources close to the negotiations, however, said each side sees some advantage in renegotiating. City officials apparently see a chance to receive a rent payment much earlier than in past years. Under the current contract, the team is not required to make its 1991 payment before March 31, 1992. In each of the past two years, the actual payment has come even later because of extended discussions between the team and the city over various calculations.

For the Orioles, an early agreement could be advantageous for two reasons. First, the team would know what its rent would be earlier than usual and plan for it. Second, if the season went well FTC financially, the lump sum agreed upon with the city might be lower than under the existing lease.

At the team's request, the city has altered the Orioles' lease before. Before last year's rent was paid, the city and the Orioles agreed that the team would be allowed to include up to $2 million in interest payments as an operating expense. Orioles officials said they asked for the change because Eli S. Jacobs, the team's principal owner, had assumed debts when he bought the team for about $70 million from the Williams family. The Orioles said they needed relief so they would have more money to acquire players, among other reasons.

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