Going, going . . . O's on the block Auction for team set for tomorrow

August 01, 1993|By Ian Johnson | Ian Johnson,Staff Writer Staff writers Michael Ollove and Mark Hyman contributed to this article.

In an ornate federal courthouse a few hundred miles north of Camden Yards, the Baltimore Orioles will be auctioned tomorrow to one of four suitors eager to obtain the city's most beloved asset.

The courtroom proceeding is expected to conclude one of the most unusual chapters in the Orioles' history, a period that witnessed the highest profits in team history -- generated by the move to a celebrated new stadium -- but that is ending with the sale of the team because of the bankruptcy of its owner, Eli S. Jacobs.

For the bidders, the attraction is one of the most prosperous franchises in baseball. The price, at least $146 million, will be the highest ever paid for a baseball team.

For thousands of Orioles fans, the new ownership will prompt a series of concerns, ranging from the price of a ticket and a hot dog to the competitiveness of the team on the field. And of course, nervous Baltimore fans will be looking for assurances that the new owners will never take their team away.

This year, Mr. Jacobs had a deal with a group, headed by William O. DeWitt Jr. of Cincinnati, a part-owner of the Texas Rangers. In late March, though, when Mr. Jacobs was forced into bankruptcy, the deal was derailed.

The disruption gave time for Baltimore lawyer Peter G. Angelos to assemble a local group of investors to make a run for the team. Two other prospective buyers emerged, New York art dealer Jeffrey H. Loria, and Jean S. Fugett Jr., a Baltimore-born lawyer who heads TLC Beatrice International Holdings Inc., the largest black-owned corporation in the United States.

The price tag -- established in a first round of bidding -- already has forced one would-be buyer to drop out. Last weekend, the owners of Nobody Beats the Wiz, a chain of electronics stores, said they were ending their pursuit of the team, citing the price, uncertain revenues and unresolved player union disputes.

Since then, concerns about the cost of buying the Orioles have been heightened by a revenue-sharing formula for Major League Baseball franchises that could reduce the Orioles' operating profit by $8.7 million a year. Major league owners are expected to consider the proposal at a meeting this month.

Worries about a bidding war that could inflate the price dramatically have prompted talks between some of the groups about a possible merger. The hang-up: Nobody has been willing to step aside as the team's majority owner.

Role of baseball officials

Besides uncertainty over the price and the team's financial prospects, another wild card in the competition for the Orioles is the role of Major League Baseball, which says it has final approval over any new owners. Although each of the bidders has spent scores of hours over the past few weeks trying to satisfy baseball officials that it would be an acceptable owner, some of the participants say they are unsure of the criteria being used.

According to sources close to the process, at least some of the preconditions are clear.

The bidders have agreed to place $2.5 million each in escrow and produce an array of financial documents to prove that they can raise the money that they bid tomorrow to Judge Cornelius Blackshear of the U.S. Bankruptcy Court for the Southern District of New York.

If a bidder wins the auction tomorrow but then on the Sept. 15 closing date is unable to come up with the money, he forfeits the $2.5 million.

"You've got to be able to qualify people somehow so this is a one-ring circus instead of a complete circus," Mr. Loria said.

Another goal of Major League Baseball's review is to ensure that the would-be owners have financial strength and that the team does not end up in bankruptcy court again.

"They're looking for evidence that the groups have more than just $150 million. They want evidence that the team can be run properly for years to come," one person involved in the review said.

While the process might be onerous to some, attorney George Stamas said he understood baseball's concerns. "They have to be sure that you're the right sort of person to join," said Mr. Stamas, who represents the Angelos group. "You put your head down and follow the guidelines because you want to get in and be part of the group."

Despite this scrutiny, Major League Baseball has not officially given its seal of approval to any of the bidders.

Judge Blackshear said at a previous hearing that the main consideration is to get Mr. Jacobs' creditors as much money as possible. At a hearing in June, the auction's floor was established when the DeWitt group offered $146.25 million. The Angelos group told the judge it intended to bid $148.1 million, and that figure is almost sure to be topped shortly after the start of the 2 p.m. hearing.

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