Double play: Orioles agree to 30-year lease Original stadium deal was for 15 years

September 02, 1992|By Mark Hyman | Mark Hyman,Staff Writer

Four years after they negotiated a lease that triggered construction of the Camden Yards ballpark, the Orioles and the Maryland Stadium Authority have completed a final version that radically changes some of the agreement's key terms.

The Orioles have agreed to play in the new ballpark for 30 years, doubling the team's 15-year commitment spelled out in a memorandum of agreement signed by the parties in May 1988.

The final lease also disposes of the controversial "partnership" formula, which ties the team's rent to its profits, in favor of a conventional agreement that entitles the state to a percentage of money collected from such things as ticket receipts, parking and stadium advertising.

The lease, which was completed last night by Stadium Authority and Orioles negotiators, is expected to receive formal approval today in Annapolis by the State Board of Public Works.

The new terms seemingly ensure the Stadium Authority's reaching its goals of paying off the debt on the $106.5 million stadium and keeping the Orioles in Baltimore for decades to come.

The lease's 30-year term is particularly important because it matches the term of the revenue bonds issued to finance the ballpark.

"When we entered into discussions back in 1987 with [former team owner] Edward Bennett Williams, our objective was to ensure the Orioles remained permanently in Baltimore," authority Chairman Herbert J. Belgrad said last night. "We felt confident with a 15-year lease. With a 30-year lease, we feel we've met our objective."

The Orioles had been reluctant to sign long leases, both at Memorial Stadium, where Mr. Williams proposed a series of one-year deals, and in negotiations over the new ballpark.

But team President Larry Lucchino said the old objections had been overcome, in part, because of the success of the new stadium.

"The average lease term for the 18 baseball teams with public landlords is somewhere around 24 or 25 years. This term is above average, but so is the facility," Mr. Lucchino said.

In 1988, the Orioles also cited Major League Baseball guidelines, which urged teams not to enter into leases of more than 15 years. But Mr. Lucchino said baseball's position has relaxed since then, spawning a number of longer-term leases. The Cleveland Indians and Texas Rangers, who expect to move into new stadiums within the next three seasons, have leases of at least 20 years, the Orioles president said.

Like the Stadium Authority, the Orioles had reasons to bring the lease talks to an end, including a desire to finalize their financial obligations to the authority.

Mr. Lucchino said there was no connection between the agreement and speculation of an impending sale of the team. That speculation intensified last week with the news that Mercantile Safe-Deposit and Trust Co. had filed suit against Eli S. Jacobs, the team's principal owner, seeking repayment of a $21.3 million loan that the bank says is in default.

"I will tell you that was never my motivation. That was not our motivation," Mr. Lucchino said. "There was some eagerness to complete this, but that was because some unfinished business needed to be done."

In the final agreement, the Orioles and the Stadium Authority, whose negotiators included Mr. Belgrad and the authority's lawyer, Alison Asti, greatly simplified the formula used to determine the team's rent. The May 1988 agreement called for the Orioles to pay rent based on their year-end profits, an arrangement similar to one between the Orioles and Baltimore for the team's use of Memorial Stadium.

At Memorial Stadium, that agreement produced very high rents in years when the team was highly profitable and no rent during unprofitable years -- most recently in 1987. The formula also created tension between landlord and tenant over which of the Orioles' expenses should be counted against profits.

Mr. Belgrad said he hoped the lease revisions would eliminate such tensions.

"We want this partnership to continue in the best interests of the Orioles and the state," Mr. Belgrad said. "One of the areas we TTC anticipated would inevitably lead to dispute is defining items that fell into the category of expenses. We wanted to reduce areas of conflict," Mr. Belgrad said.

"This is a simpler, more conventional arrangement," Mr. Lucchino said of the revised rent formula.

Whether the new rent formula produces higher or lower rents remains to be seen. But it probably will mean no change for the next several seasons because of a provision in the May 1988 agreement that allowed the Orioles to calculate their rent using both partnership and percentage formulas, with the team paying the lesser amount. With team profits expected to be extremely high in the first few seasons at Camden Yards, the club almost certainly would have chosen to pay rent using the percentage formula.

Shortly after Opening Day, Mr. Belgrad estimated the team's rent for 1992 as high as $9 million.

Lease at a glance

Key parts of the Orioles' lease at the Camden Yards ballpark:

Term: The Orioles agreed to play at the new ballpark through the 2022 season.

Rent: The Maryland Stadium Authority and the Orioles abandoned the formula that tied the Orioles' rent to their profits. Instead, the team's rent will be a percentage of receipts from sources such as admissions, parking and food.

Ballpark security: The Orioles have agreed to share with the Stadium Authority the costs of hiring Baltimore police officers to provide security for fans during games.

Ballpark advertising: Both parties agreed to increase the area for advertising in the ballpark.

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