June 28, 1992|By Mark Hyman | Mark Hyman,Staff Writer
The Orioles were dramatically improved on the field from 1965 1979, when they were owned by a colorful brewery president, Jerold Hoffberger. But they failed to catch on with Baltimore fans or to make much money. After years of trying to find local investors to buy him out, Mr. Hoffberger sold the team to Mr. Williams for the bargain price of $12 million.
It was a good investment that Mr. Williams turned into a great one. Under the new owner, the Orioles reinvented themselves as a regional franchise able to attract customers from Pennsylvania to Virginia. The plan worked so well that Mr. Williams, who bought the team with the idea that it might be moved closer to Washington, changed his mind.
Mr. Williams did get his new stadium, courtesy of the state of Maryland. Some called it unfriendly persuasion, others blackmail. Although he publicly never demanded a new ballpark, he refused to sign more than a one-year lease at Memorial Stadium.
The message was clear, made even more so by the memory of the overnight departure of the Baltimore Colts in 1984. The state, fearful that the Orioles would leave, eventually agreed to build a new stadium. With that, Mr. Williams signed a lease committing the Orioles to play in the new ballpark for 15 years. He died three months later.
Mr. Jacobs, a New York investment banker who also owns a home in Baltimore County, has said that he bought the team because he is a baseball fan. He also seems to be astute at the business side. Stories of Mr. Jacobs' tight-fisted style run the gamut from directives that lights be turned off when workers leave their offices to a memo that circulated shortly after he bought the team warning that the team's photocopying bill was too high.
That frugal touch also shows up in the October budget documents, which give a detailed breakdown of where the team then projected its money to go.
For example, the ocuments show the Orioles had calculated their 1991 Memorial Stadium rent, based on profit-sharing, to be $3.68 million. But a few months earlier, the team had suggested putting aside its lease, offering instead to pay the city a lump sum of $3 million. The rent was due by April 1, but the team asked for an extension because of the "disruption and demands" of moving to the new ballpark.
Holding down payroll
The same drive to hold down expenses applies to players. For 1992, the Orioles expected to pay players on their major-league roster $19.5 million, the October budget shows. Although that is 26 percent more than last year's level, it still puts the Orioles in the basement of player payrolls. Only three of the other 25 major-league teams pay less to their players this season than the Orioles do, according to figures published Friday by USA Today.
That could change next year if the Orioles are successful in re-signing superstar shortstop Cal Ripken Jr. Earlier this month, the Washington Post reported the Orioles have offered Mr. Ripken $30 million for a five-year deal. No agreement has been reached.
Both at Memorial Stadium and at the new stadium, Mr. Jacobs appears to enjoy his role. When the Orioles played at Memorial Stadium, he hired a private caterer to keep his guests and himself well-stocked with gourmet-grade hamburgers and crab cakes. At the new ballpark, his private office, entertainment area and assorted other rooms on the fifth floor of the B&O Warehouse stretch over about 2,500 square feet. The state picked up the bill for that, but the owner wasn't satisfied with some aspects of the job and ordered changes at the team's expense.
Mr. Jacobs also seems willing to spend freely when he is paying, in effect, himself. Every year since he bought the Orioles, his New York investment company, E. S. Jacobs & Co., has charged the team a management fee, the documents show.
In 1989, when Mr. Jacobs owned the team for about six months, that fee (plus unidentified expenses billed to the team) was $762,880, according to team financial records. It has increased every year since, and the team's October budget for the 1992 season projected it at $1.325 million.
People familiar with major-league baseball say arrangements such as this aren't uncommon. In any case, Mr. Jacobs reportedly has done this before. He has held stakes in companies that make everything from kitchen cabinets to computer products. Some of those companies have paid fees to his investment company.
Memorex Telex and Triangle Pacific, for example, paid a total of $1.3 million in consulting fees each year, and a third company, Flagship Express Inc., paid $750,000, Business Week reported in a November 1991 article about Mr. Jacobs.
When the Orioles were playing at Memorial Stadium, the issue of the consulting fees was a sore point. The team's ballpark rent was determined by its profits, which shrunk with each dollar the Orioles paid to Mr. Jacobs' investment company.
Moving to the top
Under a new, more flexible lease at Camden Yards, the effects are less certain.
