O's owners put profits back in club Earnings defrayed until after 1994

October 09, 1993|By Mark Hyman | Mark Hyman,Staff Writer

The new owners of the Orioles expect the club to remain highly profitable during the next few years, but they don't plan to share in that prosperity right away.

Investors in the group will forgo distribution of profits this year and in 1994, and instead will leave the money with the club, said Peter G. Angelos, the Orioles managing general partner.

The move will allow the Orioles investors to increase the funds on hand for paying down debt service on the $173 million team and for increasing the club's player payroll next year, according to Angelos, the team's controlling owner.

"Profits are a factor to consider because people are entitled to some return on their investments," he said. "But if you're making a list, they're probably last."

Angelos said his current "intention" is to begin distributions in the third year, the investors' second full year as owners. But that would be adjusted, he said, if the payments "in any way jeopardize the financial stability of the club."

The possibility of a money-losing season in the next few years appears extremely remote. The Orioles expect to rake in operating profits this year of about $22 million, according to sources, a figure that would rank them among the most profitable teams in the major leagues. That's down slightly from their record-smashing 1992 season, when team profits are said to have hit $25 million for the club's first season at Camden Yards.

Angelos said the team's roughly two dozen investors were advised of his plan before the sale was completed last week, and none objected.

A couple investors reached yesterday said they supported the idea.

"I don't think people are in this for a profit," said businessman David H. Bernstein, recently named by Angelos as chairman of the club's executive committee. "At the end of the day, sure, you'd like to have some return. But that is not the primary reason people are getting into this."

Orioles investor Roger R. Blunt, who heads an Oxon Hill construction company, said the move to reinvest the team's profits is a prudent business decision.

"Some things that need to be done early [after acquisition of a company] require further investment," Blunt said. "This activity will strengthen the business. That's something we all respect and appreciate."

The Orioles owners have a huge investment in the club. The price was the highest ever for a sports franchise, and it more than doubled the $70 million that Angelos' predecessor, Eli S. Jacobs, paid for the Orioles in 1988. The new group has borrowed more than $90 million to finance the deal.

Jacobs charged millions of dollars to the team in loans and management fees. But Angelos, an attorney who heads a law practice in Baltimore, said he doesn't expect to draw a salary or fees from the Orioles.

"If I was shutting down my practice or if my income from that end would be curtailed, then I could justify drawing compensation for my time and effort," he said. "But I'll be practicing law just as vigorously as before, and I'll find the time to really do the job here. I don't think I'll claim two streams of income."

Said Bernstein: "It shows Peter believes what he's doing. He's not lining his pockets with this by any means."

The new owners are moving ahead with their transition. Angelos, who spent much of last week working at his law firm, plans to meet with members of the Orioles staff early next week.

Meanwhile, Angelos has named Joe Foss, former chairman and chief executive officer of First American Bank of Washington, as head of his transition team.

Foss, who was an adviser to Angelos while he was putting together his bid for the Orioles, held lengthy interviews last week with a number of senior team officials, including Larry Lucchino and Tom Daffron.

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