Jacobs' Oriole price tag is due for a markdown

December 31, 1992|By Mark Hyman | Mark Hyman,Staff Writer

Orioles owner Eli S. Jacobs still is negotiating to sell his team to a group led by Cincinnati investor William O. DeWitt Jr. That hasn't changed since their private talks first surfaced last week, say sources familiar with the bargaining.

But while the secrecy surrounding the negotiations has been partially breached, one subject seemingly remains unknown to all but the principals: the sale price.

Although they are not involved in the Orioles talks, two observers who closely follow such transactions say the price isn't likely to match theastronomical figures mentioned since Jacobs put the team up for sale more than a year ago.

Then, Jacobs' financial advisers circulated a proposal among potential buyers that cited an independent appraisal of the team of $255 million and a price tag of $200 million. Recently, a report speculated that DeWitt would pay $150 million.

But Larry Greenberg, a Minneapolis-based sports facilities consultant, said: "I would be terribly surprised if he got more than $100 million in real dollars. There are teams in very good markets that can be bought for that."

Sam Katz of Public Financial Management in Philadelphia also said he doubted the price would be as high as $150 million, saying the team's value more likely is in line with the prices fetched by the four major-league teams sold this year. Those sales ranged from $85 million for the Detroit Tigers in August to the $125 million paid, in large part by a Japanese investor, last June to purchase the Seattle Mariners.

The Mariners' price was the highest ever paid for a baseball franchise.

"I would say the Orioles are at the high range of that group, perhaps a little higher," Katz said.

Neither Jacobs nor DeWitt has acknowledged they are discussing a deal for the team.

There's little question that the value of the Orioles has soared since Jacobs agreed to purchase the team from the family of Edward Bennett Williams in December 1988. Jacobs and his partners, Sargent Shriver and Larry Lucchino, paid $70 million for the team, which then was playing its home games at aging Memorial Stadium.

In the years since, the Orioles haven't won a World Series, but their financial performance has bettered most teams.

Under Jacobs' management, the Orioles set an attendance record at Memorial Stadium in 1991, then moved to Oriole Park at Camden Yards, where they racked up the most lucrative season in franchise history.

Budget documents prepared before the 1992 season projected operating profits of $18.4 million. Higher than expected ticket sales, including sellouts of the final 59 home games, apparently raised that figure above $20 million.

Operating profits such as that should help Jacobs command a higher price than did the former owners of the Tigers and Houston Astros, who recently sold for from $85 to $90 million, Katz said.

"A lot of people believe the time to sell an asset is when it has reached the zenith of its gold value. That's arguably the case with the Orioles, purely from a business performance basis, even though they haven't won a pennant or a World Series," said Katz, whose company helped the Maryland Stadium Authority devise a financing plan for Oriole Park.

Katz and Greenberg said they doubted that Jacobs' efforts to sell the team have been seriously impaired by two ominous clouds looming over baseball -- a coming showdown with players over a new collective bargaining agreement and the prospect of a smaller national television contract.

"Everyone sees the labor contract as a short-term problem; it will have no lasting impact on the price of teams," said Greenberg, a consultant to cities building sports facilities.

Even when a price for the Orioles is made public, the figure could be misleading. Four years ago, it cost Jacobs and his partners considerably more than $70 million to buy the team.

As part of the deal, Jacobs also agreed to pay $16 million to $17 million in deferred player compensation and to assume future collusion damages assessed against team owners. The Orioles'

share turned out to be about $10.8 million.

In negotiations between Jacobs and DeWitt, similar issues likely have arisen. For instance, the two sides probably have %o discussed who keeps the Orioles' share of expansion fees paid by the National League's newest franchises -- a total of $190 million.

In Jacobs' case, Greenberg said: "It may simply be a question of how he gets paid. In one situation I saw, they included interest payments over 15 years in the total purchase price. . . . [For the seller,] those are ego salvagers."

Recent sales

The prices of the past four major-league baseball teams to be sold (price in millions):

Team.. .. .. ..Date.. .. ... .. Price

Mariners .. .. 6/11/92.. .. .. $125

Tigers .. .. ..8/25/92 .. .. .. $85

Astros .. .. ..10/30/92 .. .. .. $90

Giants .. .. ..11/10/92 .. .. .. $100

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