Owner of Orioles acknowledges financial difficulties In a July letter to creditors, Jacobs halts interest payments, requests time

October 18, 1992|By Jon Morgan and Mark Hyman | Jon Morgan and Mark Hyman,Staff Writers Chau Lam of The Sun's New York Bureau and assistant chief librarian Jean L. Packard contributed to this article.

Orioles owner Eli S. Jacobs, who for years has cultivated a public image of financial invincibility, has privately conceded he has money troubles.

In a July 20 letter to some lenders, the New York financier said that his investments weren't generating enough money to meet all his obligations. He needed time, he said, to sell assets and restructure his debt. Meanwhile, he would stop making interest payments on some loans, according to the letter.

His announcement came after mounting pressure from bankers, some of whom have taken Mr. Jacobs to court.

Over the past six months, three banks -- Mercantile-Safe Deposit and Trust of Baltimore and New York's Berkshire Bank and Manufacturers and Traders Trust -- have sued Mr. Jacobs to recover $27 million in unpaid loans.

Including a lawsuit filed last year by some private investors, Mr. Jacobs is accused of defaulting on a total of $31 million in loans and personal guarantees.

The string of lawsuits and Mr. Jacobs' announcement to his bankers provide a rare look into an empire once estimated by associates to have a worth exceeding $500 million. Several of Mr. Jacobs' most prominent investments have soured in the past two years, and he told his bankers that a number of his holdings have been "stunted" by the recession. But, because his business is shrouded in mystery -- many of his companies are not subject to public disclosure -- it is difficult to establish the extent of his problems.

Mr. Jacobs said in court documents filed last month that his assets "greatly exceed" his liabilities and that he is "in the process of selling substantial assets."

He declined to be interviewed for this article. But through a New York-based spokesman, Mr. Jacobs said last week, "The restructuring process is proceeding on a constructive course, exactly on schedule."

That process could quietly move Mr. Jacobs' current difficulties out of public view, which clearly would be the preference of the secretive investor.

Baseball team owners tend to have high public profiles, but Mr. Jacobs has shunned like a virus all but the most tightly controlled and favorable publicity.

For Baltimoreans, the disputes over Mr. Jacobs' complex finances raise questions about the Orioles, one of the city's chief sources of municipal pride. More than a year ago, Mr. Jacobs said he was considering offers to sell the team. Now, there are some tantalizing hints that a deal may be near.

The revelations about Mr. Jacobs'cash-flow problems proved especially bitter for Mercantile, which has been countersued by Mr. Jacobs. Just four weeks before his July announcement that he couldn't make interest payments, the bank had given him a $21.3 million unsecured loan to restructure his finances. (An unsecured loan means no collateral is required.)

It was merely the latest show of support by the bank, which had backed Mr. Jacobs from the moment he emerged as a buyer of the Orioles in December 1988.

As soon as he learned of Mr. Jacob's interest, H. Furlong $H Baldwin, the chairman of Mercantile Bankshares, the bank's holding company, began an aggressive courtship.

Within days of the sale announcement, the banker helped set up a get-acquainted lunch with Gov. William Donald Schaefer and a breakfast with key legislators. While others were put off by the aloof manner of the Wall Street financier, Mr. Baldwin quickly became his closest contact in the Baltimore business world, according to corporate leaders.

Mercantile got an important new customer and Mr. Jacobs got a new source of money.

Soon after Mr. Jacobs assumed control of the Orioles, Mr. Baldwin joined the team's board of directors. The banker later offered Mr. Jacobs a seat on the bank's board, according to statements filed in court by Mr. Jacobs. Though he declined the position, Mr. Jacobs did follow Mr. Baldwin onto the boards of the Baltimore Symphony Orchestra and the Johns Hopkins University, the most prestigious in town.

And when Camden Yards opened this year, Mr. Baldwin's bank had a skybox adjacent to Mr. Jacobs' own suite, where a roster of famous guests relax in leather furniture, shielded from other fans by privacy walls.

"I think he [Mr. Baldwin] was thought to be by all of us as the closest person to Mr. Jacobs in the business community. . . . So to see them suing each other was surprising," says Mathias J. DeVito, chairman of the Columbia-based Rouse Co.

People who know both men describe them as a perfect match and yet the oddest of couples: competitive in business, they are driven by their work.

Supportive of Republican causes, they know the value of Democratic contacts. Ivy Leaguers, they amassed wealth and success and clearly revel in the influence that buys, according to acquaintances.

The loans

But where Mr. Baldwin moves deftly through circles of power, speaking his mind and openly courting influential people, Mr. Jacobs is stiff in public.

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