Ehrlich satisfied state, O's are OK

Governor says relocation to D.C. won't hurt as long as Angelos' terms are met

October 07, 2004|By Ed Waldman | Ed Waldman,SUN STAFF

Gov. Robert L. Ehrlich Jr. is satisfied the state's interests will be safe if the Orioles are successful in striking a deal to protect the club from financial harm by the new team in Washington.

Orioles owner Peter G. Angelos has been negotiating with Major League Baseball over the past 10 days about how baseball will guarantee that the fiscal health of his team will not suffer once the former Montreal Expos begin play at RFK Stadium in April.

"With the numbers I've been provided and given what I know, the answer is yes, I'm satisfied," Ehrlich said yesterday. "In that sense, it's obviously a win-win for Maryland. I'm governor of Maryland, and there are baseball fans in suburban Washington - Montgomery, Prince George's, southern Maryland. Those fans are quite pleased with a baseball team in Washington, at least a large percentage are.

"On the other hand, the Baltimore Orioles are a valuable asset to the state of Maryland. Obviously, the stadium authority and the bonds we've floated are very relevant in this mix."

Before the negotiations began, Angelos said he would consider a deal only if it met two standards: protecting the value of the Orioles and protecting the state and the taxpayers' investment in Camden Yards.

Angelos, who was in Milwaukee on Monday to negotiate directly with baseball commissioner Bud Selig, declined to comment yesterday.

MLB president Bob DuPuy, who has been the point man for baseball in the talks, did not respond to an e-mail seeking comment.

The Maryland Stadium Authority built and operates the Camden Yards sports complex. The money to pay for the operations of Oriole Park and M&T Bank Stadium and for the debt service on millions of dollars in bonds comes from several sources, including annual payments by the Orioles and Ravens, a ticket tax, a $1 million annual payment by the City of Baltimore and the state lottery.

The Orioles' rent is calculated as a percentage of various revenues. Even in the mid-1990s, when the team was setting a major league record for consecutive sellouts, the rent fell short by as much as $3 million a year in covering the cost of the 12-year-old park's operation. But the ticket tax - $4.7 million last year - made up the difference. If the Orioles' attendance falls as a result of the new team in Washington, the proceeds from the ticket tax would fall, too.

Neither the Orioles nor Major League Baseball has discussed the deal publicly, but sources familiar with the negotiations said it calls for baseball to guarantee the Orioles' locally derived revenue - ticket sales, concessions and items other than game broadcasts - won't fall below a benchmark of about $130 million. If they do, baseball will make up the difference.

"The protection [for the state] pertains to the revenue flow," Ehrlich said. "That's what the guarantees are all about. Should there be a diminution in revenue, which guarantee will kick in, and when and how much has been really what this has been about."

In addition, the deal calls for MLB to guarantee the club's resale value at roughly its current level as the lone occupant of the market - about $360 million. If Angelos and his partners, who paid $173 million for the Orioles in 1993, sold the team for less, baseball would make up any shortfall. The $360 million will grow over time, according to increases in the value of baseball franchises nationwide.

The final aspect of the deal would be the creation of a regional sports network to produce and market the local on-air and cable broadcasts of the two teams. Both teams will receive equal profit distributions from the new network, but the Orioles will own 60 percent of the network's stock, to 40 percent for the Washington franchise.

Angelos had fought to keep a team out of Washington altogether, arguing nearly a quarter of the Orioles' fans come from the D.C. region and the new team would siphon off a substantial number.

Ehrlich said he has been "optimistic from Day One" Angelos will reach a deal with baseball.

"I do think the odds are it will get done, but it's not a done deal as of yet," the governor said.

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