Industry analysts and MLB experts on Orioles’ $1.725 million valuation: ‘Low’

Around baseball, the reaction to the Baltimore Orioles’ valuation of $1.725 million was surprise and, in some cases, disbelief.

Seven industry analysts and rival officials, granted anonymity in exchange for their candor, used the same word to describe the price:

“Low.”

The Orioles officially announced the sale of the franchise on Wednesday to a group led by David Rubenstein, a Baltimore native who founded the private equity firm The Carlyle Group. According to Puck News, which first reported the sale, the Rubenstein group will initially buy around 40 percent of the club. The group, according to a source briefed on the terms, will then have the option of gaining full control following the death of Peter Angelos, pending Major League Baseball approval.

That approval would likely take months as the league conducts background and financial checks on members of Rubenstein’s group and reviews the sale through internal committees. People in the sport offered a variety of possible reasons why Peter’s son, Orioles managing partner John Angelos, accepted the $1.725 million valuation, even though higher offers might have been available at the past and in the future.

Those reasons included John’s possible frustration over the recently entered lease negotiations for the Orioles at Camden Yards, cash flow problems the family might be experiencing, and the influence of Georgia Angelos, John’s mother and Peter’s wife. John Angelos runs the club in the absence of his father, who is 94 years old and has been incapacitated by illness since 2018.

A spokesman for John Angelos declined to comment.

Other major league teams in recent years sold for less than the Orioles. The Miami Marlins bought $1.2 billion in 2017, the Kansas City Royals $1 billion in 2019. The Cleveland Guardians, under the same type of route-to-control deal the Orioles are using, were valued at $1 billion. dollars in 2022.

While Miami and Cleveland There are bigger media markets than Baltimore.The Orioles are seen as a franchise with greater potential due to the current quality of the team and the passion of their fan base.


Georgia and Peter Angelos at an event in 1996. (Andre Chung/Baltimore Sun/Tribune News Service via Getty Images)

Peter Angelos bought the Orioles in 1993 for $173 million. Forbes estimated last March that the Orioles were worth $1.713 million. That valuation, however, did not include Mid-Atlantic Sports Network (MASN), in which the team is the majority shareholder in a dual ownership with the Washington Nationals.

MASN is included in the Rubenstein group’s purchase, and some in the industry expect the group to sell the network to Ted Leonsis, the owner of the NHL, NBA and WNBA franchises in Washington and a different regional sports network, Monumental, which airs the three teams. . Like all regional sports networks in this cord-cutting era, MASN isn’t as valuable as it once was. But Leonsis might at least want to buy the Orioles’ television rights to improve their programming at Monumental in the spring, summer and fall.

At the end of 2022, Leonsis bet on the Nationals with similar intentions, providing perhaps the most relevant piece of information when evaluating the Orioles’ valuation. Leonsis offered $2.2 billion for the Nationals, according to a source briefed on the discussions. The Lerner family, owners of the Nationals, did not accept the proposal, apparently believing that the team was worth more.

Washington is a larger market than Baltimore, but the Nationals became a junior partner in MASN as a condition of moving from Montreal to Washington in 2005. So why did John Angelos, president and CEO of the Orioles, in the absence of his Father, no. Expect a price similar to what Leonsis proposed for the Nationals?

The deal between the Orioles and the Rubenstein group apparently came together quickly, taking Maryland state officials and another group interested in the club by surprise.

A little more than six weeks ago, the Orioles reached an agreement with the state on a new long-term lease to remain at Camden Yards. The deal included $600 million in public funds for stadium improvements and potential development rights around the stadium.

“If John (Angelos) can hear me now, it is deeply disappointing and disturbing that you can look your state in the eye and blatantly lie to us about your intentions.” Maryland State Treasurer Derek Davis told the (Baltimore) Sun. “We had a right to know, given the amount of investment we were committing to this.”

People in the game, however, cited a combination of factors that could have increased Angelos’ urgency to sell and persuaded him to move forward with the deal sooner rather than later:

The final terms of the new Orioles lease

Angelos, in his negotiations with the state, sought to develop an area around Camden Yards and make it similar to The Battery Atlanta complex adjacent to the Braves’ Truist Park, which opened in 2017.

He didn’t get those rights.

All the Orioles received was an option to end the 30-year lease after 15 years if they didn’t reach an agreement with the state on a development plan that might not even be viable. The land needed for such a project does not exist around Camden Yards. The stadium is located in downtown Baltimore, while Truist was built in a suburb 10 miles from Atlanta.

Angelos fought hard for the development rights, evidently believing they were worth hundreds of millions of dollars. When he failed to secure them, he was left without, at least in his opinion, a potentially lucrative source of income and a vehicle to increase the value of the franchise.

Cash flow problems

The Orioles’ bill in their years-long dispute with the Nationals over television rights is yet to come.

In June, MASN, controlled by the Orioles, agreed to pay the Nationals about $100 million in unpaid rights fees for the period from 2012 to 2016. In November, a league-appointed committee ruled MASN owed the Orioles and Nationals around $300 million each for the period from 2017 to ’21. Rights rates for 2022-26 have not been determined.

MASN had about $105 million in escrow preparing for the possibility of the first payment. It’s unknown how the network (and, by extension, Angelos) planned to come up with the money for the 2017-21 period.

What is known is that the Angelos family seeks to become more liquid sell a variety of land assetsincluding One Charles Center, a 22-story office tower in downtown Baltimore.

Family considerations

The influence of Georgia Angelos, Peter’s wife and John’s mother, was no small factor in the family’s decision to sell, according to two sources briefed on the discussions.

Georgia’s exact motivations are unclear, but she and John were sued by their other son, Louis Angelos, for control of the team in 2022. According to the lawsuit, Georgia determined that it was in the family’s best interest to sell the team, but John deception. make him believe that she was working toward that goal when she ultimately wanted to thwart him.

According short claim documentsGeorgia’s attorneys wrote that her husband did not intend for the family to own the team forever, saying, “Although Peter felt that the Orioles should be sold after his death so that Georgia could enjoy the great wealth they had amassed.” together, he felt that the decision was ultimately up to Georgia.”

By identifying a buyer before Peter’s death, the family achieves a resolution. The two-step sale (40 percent now, 60 percent later) allows the family to receive a cash injection while avoiding the full capital gains tax they would incur if they sold the entire club before the Peter’s death.

In a statement Wednesday, John Angelos said: “When I took over as president and CEO of the Orioles, we had the goal of restoring the franchise to elite status in major league sports, keeping the team in Baltimore in the coming years. and revitalize our group of partners. The relationship with David Rubenstein and his partners validates that we have not only met but exceeded our objectives.”

The deal could work for Angelos. The question is whether it will create a downward domino effect on other teams’ valuations in the future.

(Top photo (left) of Louis Angelos, Orioles executive vice president Mike Elias, John Angelos in 2018: AP Photo/Patrick Semansky)