O's payroll rose beyond $77 million $12M tax not included

**Angelos stays course

October 07, 1998|By Joe Strauss | Joe Strauss,SUN STAFF

The damage from the Orioles' fourth-place season can now be calculated by something more than front-office intrigue, coaching changes and atrophied broadcast ratings. Salary commitments attached to the veteran team's 79-83 record will likely approach $89 million after the club pays luxury tax on a major-league payroll that swelled to $77.11 million, including benefits.

The figure, based on management and labor sources, confirms the largest payroll in the game's history, but will only cause the club to break even or show a nominal loss, according to club executives.

Though disappointed by the failed season, the Orioles say they remain committed to providing a loyal fan base a high-dollar, high-visibility roster next season. The philosophy may lean more toward youth in 1999, majority owner Peter Angelos said yesterday, but not cheaper talent.

"The club can get younger, but the mandate is it has to be a winner," Angelos said. "Youth is great if it can win. Youth for the sake of youth is not our goal."

Angelos tethers his deep-pockets philosophy to revenues expected to exceed $140 million for the season. A rule of thumb within the industry is that major-league payroll may approach 50 percent of gross revenues.

By that definition, the Orioles did not spend beyond their means despite a highly visible crash landing that left them with their most losses since 1991. While Angelos continues to preach against $10 million salaries for individuals, he has no intention of cheapening the overall product.

"I think all of the franchises should do the best they can to keep it below [$70 million]," Angelos said. "Eventually, through the introduction of younger players, that should come down assuming another round of $10 million players doesn't assert itself. If that happens, $70 million is going to be the top number in the major leagues. Hopefully I can reduce that, but right now I don't see that in the cards."

The Orioles earned about $70.085 million in base salary this season with an additional $2.025 million for performance incentives such as plate appearances, games pitched and All-Star recognition. Benefits, which include insurance and contributions to the players' pension fund, average about $5 million per team.

The sum, $77.11 million, does not include a projected luxury tax of $12 million assigned to the Orioles as a percentage of overall payroll. The game's five highest payrolls are liable for the tax as prescribed by the Basic Agreement.

Facing nine potential free agents, the Orioles have the opportunity to remake themselves before next season. Indications are that the club will attempt to get younger and faster after targeting a starting pitcher and a closer as its two priorities.

4 Angelos allows that payroll could swell further.

"I don't know if we're at a point where you say 'enough,' but we'll do our best to keep it [at $70 million]. But I don't set a maximum point. If additional spending makes a difference, we will go the extra step," Angelos said.

According to a club source, the Orioles enjoy a "10 percent variable" in the formula that dictates payroll as half of revenues.

Given stable revenue projections for next season, latitude for a $77 million payroll exists. Incentives, benefits and a corresponding rise in the luxury tax would obligate the club to nearly $100 million.

While Angelos has yet to discuss ticket prices for the 1999 season with chief operating officer Joe Foss, he does not believe a third increase in as many seasons will be necessary.

"We'll do what we have to do to give our fans an exciting and hopefully championship team," said Angelos. "The percentages are that the same reasons for this season's disappointment won't revisit us in 1999."

Pub Date: 10/07/98

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