Parity clause isn't certain O's windfall Legal experts say football lease sweeter, but only to a point

'Fairly comparable' is key

Angelos study alleges 3 areas of inequality

February 14, 1996|By Brad Snyder and Jon Morgan | Brad Snyder and Jon Morgan,SUN STAFF

Orioles owner Peter Angelos has a right to a deal as sweet as the one given to Baltimore's new football team, but whether he is eligible for a taxpayer-paid windfall is far from certain, according to independent legal experts.

The Orioles' lease with the Maryland Stadium Authority, written years before the Browns announced their move, contains a clause guaranteeing the baseball team "fairly comparable" lease terms with any football franchise playing next door.

Opponents of the football deal say the stipulation could cost the state millions of dollars.

However, independent legal experts who reviewed both teams' contracts at the request of The Sun say that probably overstates the case. But, they say, some enhancements to the Orioles' lease may be required.

"I think he [Angelos] is correct to the extent that the Browns' lease may be more of a sweetheart lease," said Martin J. Greenberg, director of Marquette University's National Sports Law Center.

But the difference is not necessarily vast, he said. The deals for both the Orioles and the football team are among the most lucrative in sports, something that attracted the Browns and has made the Orioles one of the richest and most valuable franchises in baseball.

And it is not a simple one-for-one comparison. Each team has items in its lease that the other does not. For the Orioles to prevail, they must show inequality of the entire package, while taking into account differences in the economics of each sport.

In a Jan. 22 letter to Gov. Parris N. Glendening, Angelos raised the possibility of invoking the parity clause in his lease that prevents the Browns from receiving a more favorable deal than the Orioles have. If he does ask for concessions and if the two sides cannot agree, it will be settled by an independent arbitrator agreed to by the state and the Orioles.

The stadium authority acknowledges that the deal it used to lure the football team -- essentially the same one offered the NFL during the failed expansion race of 1993 -- was of necessity lucrative. But in a fact book put out last month, the stadium authority said: "We do not expect the Browns' lease to diminish the rent paid by the Orioles."

Angelos has not yet said if he will invoke the clause. He hired a team of auditors to review the records of the stadium authority, and the team has pinpointed three areas of alleged inequality it is considering formally raising:

* Rent vs. operating costs

The Orioles pay rent equal to a percentage of the money made on tickets, food sales and other revenue, and the state pays for operating and maintaining the stadium.

The Browns will instead reimburse the state for stadium costs, estimated to be up to $4 million a year (if the team had paid a traditional rent, the stadium could not be built with cheaper, tax-exempt bonds).

The stadium authority says the arrangement has worked to the Orioles' advantage so far: The state has paid $18.9 million to operate Oriole Park since it opened in 1992, and the Orioles have paid $16.1 million in rent. (Operating costs are higher in baseball because of its greater number of home games: 81 vs. eight for football.)

The Orioles say they may be able to reduce the cost of running Oriole Park, possibly through contracting out the work, ferreting inefficiencies or as a function of the fixed costs that soon will be shared with a football team.

But maintenance costs typically rise as a facility ages. And the state is likely to resist shortcuts that would drive up the capital improvements it is required to make.

* Stadium sky boxes

Because of resistance in Annapolis toward publicly funded luxury suites, the Orioles paid the $9 million it cost to build their 72 sky boxes. They were financed through a state loan, with payments depreciated and amortized over the years. The payments are now about $1 million a year, and the Orioles may argue that this is part of "rent."

The football stadium's 108 suites will be paid for by the state, along with the rest of the $200 million stadium, although the team will contribute up to $5 million for construction costs.

* Control of non-stadium events

The football team will control the scheduling of all events and receive half of the net revenue from non-football bookings, such as concerts, that the team will promote. The Orioles can veto non-baseball events during the season, but make no money from those held before or after the season.

The stadium authority already has offered this right to the Orioles, but baseball's spring-to-summer season limits the number of outdoor events that can be held. Football's schedule leaves the stadium open in the summer.

According to all three lawyers contacted by The Sun, the Orioles cannot emphasize the areas where the football team comes out ahead and ignore lease provisions that favor the Orioles.

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