Price tag for Orioles sets record Cincinnati group to offer a deal of $141.3 million

June 11, 1993|By Mark Hyman and Jon Morgan | Mark Hyman and Jon Morgan,Staff Writers

A graphic in yesterday's Sun incorrectly described some terms of a proposed deal to sell the Orioles. The graphic should have said that the prospective buyer, a group led by William O. DeWitt Jr., gets a fee ranging from $750,000 to $3.25 million if the deal falls through. Also, the DeWitt group is obligated to pay for some signing bonuses for the 1993 baseball season, including a $1.5 million payment to Cal Ripken Jr.

The Sun regrets the errors.

A group of Cincinnati investors has agreed to pay $141.3 million for the Orioles -- a record for a baseball team -- in a proposed deal expected to be filed today in federal court.

Under the terms of the contract, an unsigned copy of which was obtained by The Sun, the investment group has also agreed to pay the Orioles owners interest and fees which will push the total value of the deal to about $150 million, according to William O. DeWitt Jr., the lead investor in the group.

FOR THE RECORD - CORRECTION

Lawyers for Eli S. Jacobs, the majority owner of the team, who landed in bankruptcy two months ago, are expected to file the contract in the U.S. Bankruptcy Court for the Southern District of New York today, beginning a push to have deal approved by a bankruptcy judge. The judge, however, can reject the terms or turn to other bidders. Major League Baseball also will consider the offer.

Four other investor groups say they want to buy the team, and court filings due today are expected to explain how they can present their bids to Judge Cornelius Blackshear.

Mr. DeWitt said he thought the price was sufficiently high to prevent anyone from offering more, but "we'll see what develops.

"It's a fairly tough business deal where it is, so to the extent that the price gets higher, it's tougher to make sense of it," he said last night in a telephone interview from his Cincinnati home.

The highest price ever paid for a baseball team was $125 million paid last year for the Seattle Mariners.

"The Orioles are an excellent franchise. It's a good market, a wonderful stadium and they have a great tradition in the %J community," Mr. DeWitt said.

"I think it's worth it."

The 58-page contract gives a glimpse of how any bidding for the Orioles may go. The contract calls for Mr. DeWitt's investment group to receive a lucrative fee if the deal falls apart.

The fee would be established by an elaborate formula laid out in the contract and could range from $750,000 to $3.25 million.

Mr. DeWitt says the fee essentially means another bid likely would have to be at least $2 million above his price in order to cover the termination fee.

Among the more unusual aspects of the deal is a provision that prevents the buyers from erasing the memory of Mr. Jacobs' four years as the Orioles lead owner. The contract bars the new owners from changingnamed areas of the stadium.

A source familiar with the deal said this includes a plaza named for Mr. Jacobs. Mr. DeWitt declined to comment on that.

In the contract, the DeWitt investors agree to a "base purchase price" for the team, but the amount can be adjusted up or down based on independent appraisals completed at the time of a closing.

They agree to put down a $2.5 million deposit. They will also paseveral million dollars in interest and other costs, he said.

Other key terms:

* The DeWitt investors are obligated to pay for certain signing bonuses for the 1993 baseball season, including a payment to Orioles shortstop Cal Ripken Jr.

Mr. Ripken received a $3 million signing bonus from the Orioles in a five-year contract signed last year.

Of that, $1.5 million was to be paid during 1993. The buyers also must assume deferred player salaries and bonus payments.

* Mr. Jacobs is required to bring to a sale closing evidence that he has ended his management contract with the team. The owner's management fees and expenses, which fanned controversy, were estimated last year at $1.32 million, according to team budget documents.

The deal, however, does allow Mr. Jacobs to ask a court to compensate him for the termination of his management fees from the Orioles. That payment would come out of the sale price, according to the documents.

* Mr. Jacobs also would be blocked from collecting a finder's fee for closing the contract, which had been in negotiation for more than eight months.

Under the contract, only J. P. Morgan Securities, Inc., the investment bank which screened investors for Mr. Jacobs, would be entitled to such a fee.

An attachment to the main contract also details a dispute about a debt owed by Mr. Jacobs to The Orioles Inc.

According to the contract, the company contends it is owed $13 million by Mr. Jacobs. He disputed that, and the parties agreed to a settlement of $2.8 million payable to the company out of Mr. Jacobs' share of proceeds from the sale. The money would go to the minority partners in the Orioles, Sargent Shriver, the former Peace Corps director and vice presidential nominee, and the team's president, Larry Lucchino.

Lucchino might stay

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