In the baseball world, the reaction to the Baltimore Orioles’ $1.725 billion valuation has been surprising and sometimes disbelieving.
Seven industry analysts and competitor officials all used the same word to describe the price:
“low.”
The Orioles officially announced Wednesday that they are selling the team to a group led by David Rubenstein, a Baltimore native who founded the private equity firm Carlyle Group. According to Puck News, which first reported the sale, Rubinstein Group will initially buy about 40% of the club. The group will have the option of taking full control after Peter Angelos’ death, pending MLB approval, according to sources with knowledge of the terms.
The approval could take several months as the alliance conducts background and financial checks on members of the Rubinstein Group and reviews the sale through an internal committee. Industry insiders have offered a variety of potential reasons for why Peter’s son, Orioles managing partner John Angelos, would accept a $1.725 billion valuation, although there are likely to be higher offers in the past and in the future.
Those reasons include John’s possible frustration with the recent Orioles lease negotiations at Camden Yards, cash flow issues the family may be experiencing, and the influence of John’s mother and Peter’s wife, Georgia Angelos. John Angelos has been managing the club in his father’s absence. His father is 94 years old and has been incapacitated due to illness since 2018.
A spokesman for John Angelos declined to comment.
Other major league teams have sold for less than the Orioles in recent years. The Miami Marlins were valued at $1.2 billion in 2017 and the Kansas City Royals were valued at $1 billion in 2019. The Cleveland Guardians would be valued at $1 billion in 2022 under the same path control arrangement used by the Orioles.
While Miami and Cleveland are larger media markets than Baltimore, the Orioles are viewed as a team with greater potential due to the current quality of the team and the passion of the fan base.
Georgia and Peter Angelos at an event in 1996. (Andre Chung/The Baltimore Sun/Tribune News Service via Getty Images)
In 1993, Peter Angelos purchased the Orioles for $173 million. Forbes last March estimated the Orioles were worth $1.713 billion. However, that valuation does not include Mid-Atlantic Sports Network (MASN), of which the team is the majority owner and has dual ownership with the Washington Nationals.
MASN is included in the acquisition by the Rubenstein Group, which some industry insiders expect to sell the network to Ted Leonsis, owner of the NHL, NBA and WNBA franchises in Washington, and Monumental, another regional sports network that broadcasts All three teams. Like all regional sports networks in this cordless era, MASN isn’t as valuable as it once was. But Leonsis may at least want to buy the Orioles television rights to bolster his programming on Monumental in the spring, summer and fall.
Leonsis’ bid for the Nationals in late 2022 with similar intentions provides perhaps the most relevant data point when assessing the Orioles’ valuation. Leonsis made a $2.2 billion offer for the Nationals, according to a source briefed on the discussions. The Nationals’ owners, the Lerner family, took no action on the proposal, apparently believing the team was worth more.
Washington is a larger market than Baltimore, but the Nationals became a smaller partner with MASN as a condition of moving from Montreal to Washington in 2005. So why doesn’t Orioles Chairman and CEO John Angelos do this in his father’s absence? Hold out for a price similar to what Leonsis offered for the Nationals?
The deal between the Orioles and the Rubenstein Group appeared to come together quickly, surprising Maryland officials and another group interested in the club.
More than six weeks ago, the Orioles reached an agreement with the state on a new long-term lease to stay at Camden Yards. The deal includes $600 million in public funding for stadium upgrades and potential development rights around the stadium.
“If John (Angelos) could hear my voice right now, it’s very disappointing and disturbing that you would look at your state and blatantly lie to us about your intentions.” Maryland Treasurer Derek Davis told the (Baltimore) Sun. “Given the amount of investment we have committed to this, we have a right to know.”
However, industry insiders cite a variety of factors that may have increased the urgency for Angelos to sell and convinced him to move forward with a deal sooner rather than later:
Final terms of Orioles’ new lease
Angelos, in talks with the state, has sought to develop an area around Camden Yards similar to the Atlanta Battery complex that opened in 2017 adjacent to the Braves’ Truist Park.
He has not earned these rights.
All the Orioles get is the ability to terminate the 30-year lease after 15 years if they don’t come to an agreement with the state on a development plan that may not be feasible. The land required for such a project does not exist around Camden Yards. The ballpark is located in downtown Baltimore, while Truist was built 10 miles outside of Atlanta.
Angelos fought hard for the development rights, which he apparently believed were worth hundreds of millions of dollars. When he failed to acquire those rights, at least in his mind, he lost a potentially lucrative revenue stream and a tool to increase the value of the franchise.
cash flow problem
A bill from the Orioles and Nationals in their years-long battle over television rights fees is set to expire.
In June, Orioles-controlled MASN agreed to pay the Nationals about $100 million in unpaid rights fees from 2012-16. In November, a league-appointed committee ruled that MASN owed the Orioles and Nationals about $300 million each from 2017-21. Rights fees for 2022-26 have yet to be determined.
MASN holds approximately $105 million in escrow to prepare for the possibility of an initial payment. It’s unclear how the network and Angelos plan to raise funds between 2017 and 2021.
It is known that the Angelos family is seeking to increase liquidity by selling various land assets, including One Charles Center, a 22-story office tower in downtown Baltimore.
family considerations
The influence of Peter’s wife, John’s mother, Georgia Angelos, was a significant factor in the family’s decision to sell, according to two sources with knowledge of the discussions.
Georgia’s exact motives are unclear, but she and John were sued by her other son, Louis Angelos, in 2022 over control of the team. According to the lawsuit, Georgia believed selling the team was in the family’s best interest, but John misled her into believing he was working toward that goal when ultimately he wanted to stop it.
According to court documents in the lawsuit, Georgia’s attorney wrote that her husband did not intend for the family to own the team forever, saying, “While Peter believed the Orioles should be sold after his death so that Georgia could Enjoy the great wealth they have.” After coming together, he believes the decision was ultimately made by the state of Georgia. “
The family reached a resolution by identifying a buyer before Peter’s death. A two-step sale – 40% now, 60% later – enabled the family to receive a cash infusion while avoiding the full capital gains tax that would have been incurred on selling the entire club before Peter’s death.
“When I served as Orioles chairman and CEO, our goal was to restore the Orioles to elite status in major league sports and position the franchise for the future,” John Angelos said in a statement Wednesday. Several years to stay in Baltimore and revitalize our partners team. The relationship with David Rubinstein and his partners is proof that we not only met but exceeded our goals.”
This deal could work in Angelos’ favor. The question is whether this will have a downward ripple effect on the valuations of other teams going forward.
(Louis Angelos, Orioles executive vice president Mike Elias, and John Angelos pictured above (left) in 2018: AP Photo/Patrick Semansky)
