Orioles Owner Weighs the Sale of the Team

Eli Jacobs, the New York-based financier, said this week he is considering selling the most publicized and scrutinized of his 25 companies: the Baltimore Orioles.

Jacobs said he has informed Baseball Commissioner Fay Vincent that he would like to resume a lower-profile life and devote more time to his varied business, civic, government and philanthropic interests.

“It’s become very difficult for me to do justice to all of my commitments in a 168-hour week,” said Jacobs, whose companies’ annual revenues exceed $5 billion. “So, as I look at my time commitments, I would consider the possibility of selling the Orioles to the right buyer.

“If I continue owning the Orioles, I’m going to pay a personal price in terms of my lifestyle. I haven’t taken a vacation in almost a year and a half. And I don’t think that’s healthy.”

Jacobs said he decided to explore a possible sale after two “serious” and “credible” investors, whom he declined to name, approached him in January and February. He said he retained the J.P. Morgan investment banking firm in March to assess the marketplace and evaluate potential buyers.

Jacobs’s revelation comes at a time when two of his holdings -- Memorex Telex N.V., a Dutch computer firm, and Triangle Pacific Corp., a cabinets and flooring company -- are experiencing financial difficulties. Jacobs said these difficulties have had no effect on his Orioles business.

The Orioles, troubled with injuries this season, are in last place in the American League East. Still, this could be a favorable time for Jacobs to sell the team. In 1988, he headed a group that paid $70 million for the team, and today the Orioles are believed to be worth upward of $120 million. The entry fee for an expansion team in the National League is $95 million.

The Orioles’ value is enhanced by a $105 million ballpark -- designed in part by Jacobs and financed principally by state of Maryland lottery revenues -- that will open next spring at Camden Yards, a 10-minute walk from the Inner Harbor tourist district and 50-minute drive from Washington.

Another incentive for an owner to sell now is that baseball may face economic problems because of sustained escalation of player salaries and heavy losses incurred by television networks CBS and ESPN in their contracts with baseball.

“This process (of considering a sale) was not initiated by me,” Jacobs said. “I’m reacting to and pondering the possibility initiated by others. There’s no rush to sell. But people have evidenced a high level of interest. There are people who think the Baltimore Orioles are a very strong franchise. But I would only sell to people of quality and substance who share my vision of what baseball in Baltimore is about.”

Jacobs, 53, made these comments during a two-hour interview in New York this week. In the interview -- and in an earlier one in Baltimore -- the intensely private investor discussed a range of topics, from the Orioles’ reluctance to tap into the free agent player market to reports -- “totally untrue,” he called them -- that he has campaigned against an expansion team being awarded to Washington.

The son of a Newton, Mass., real estate investor, Jacobs amassed a fortune during the 1980s through leveraged buyouts: using borrowed money to acquire controlling interests in companies whose stock is publicly traded.

While that strategy was popular -- and successful -- in the ‘80s, it has created credit problems for Jacobs and other investors in the ‘90s. Memorex Telex, for example, expects to default on loan agreements involving about million in debt.

Jacobs said these credit problems have had little impact on his overall financial picture because the affected companies “represent a small fraction of my total assets.” Jacobs has a net worth of more than $500 million, according to a source familiar with his portfolio.

The $70 million Jacobs’s group paid to the estate of Washington lawyer Edward Bennett Williams for the Orioles in 1988 was a record price for a baseball team. Jacobs ended up with 87 percent of the club, putting $35 million cash into the deal, according to an Orioles source. The club was acquired by Williams in 1979 for $12 million.

The Orioles have finished second and fifth in the American League East under Jacobs’s ownership. This season, as they fell to last place, the Orioles replaced their popular manager, Hall of Famer Frank Robinson, with first-base coach John Oates. In the midst of this turmoil, Jacobs -- a confidant of senators, high-ranking White House officials and luminaries from the art and publishing worlds -- has come under increasing scrutiny.

Around the club’s offices, he is considered by some to be distant and aloof. Sports columnists in Baltimore and Washington have called him a tightwad, more concerned with hosting heavy hitters in his sky boxes-President Bush and Queen Elizabeth II were recent guests-than acquiring some for his lineup. On radio talk shows, fans have questioned whether he’s committed to the team for the long haul.

“The long haul? What’s the long haul?” Jacobs said in an interview May 24, the day after Robinson was fired. “Will I own the Orioles five or 10 years from now? ... I never make predictions about futures. We live each day for that day. And the future just sort of takes care of itself.

“My commitment today to the Orioles is 100 percent.”

This week, Jacobs spoke of the impact of his Orioles commitment on his many and varied activities. In addition to owning 25 companies that manufacture everything from toys to plastics to machinery, he serves, for example, on the board at Johns Hopkins University and on the citizens advisory panel established by the Senate Select Committee on Intelligence. He recently donated $3 million to Johns Hopkins for glaucoma research.

“My view is that if one is involved in activities of these sorts, one should be a committed, active, engaged participant,” he said. “I spend a great deal of time on the Orioles. I attend approximately 70 major league games a year. What I’ve found is that there are a number of other activities in life that give me great satisfaction.”

Some critics say there’s nothing wrong with the Orioles that a few high-priced free agents wouldn’t fix. The club has the second-lowest payroll in the major leagues (the Houston Astros’ is lower) largely because it has shunned the free agent market and because many players on its youthful roster are ineligible for free agency (six years of major league service is required).

The Orioles fielded some of baseball’s finest teams from the mid-1960s to the early 1980s, when they won three World Series championships. During the mid-’80s, however, their owner, Williams, invested millions on free agents who flopped, and they lost a club record 107 games in 1988.

Jacobs has rebuilt the Orioles, for the most part, with less costly, home-grown talent: a blueprint developed (before Williams’s death in August 1988) by team president and part owner Larry Lucchino, general manager Roland Hemond and player personnel director Doug Melvin. According to Hemond, the Orioles have increased their scouting and player development budget by 40 percent over the last three years.

“No one has established that there’s a correlation between players’ salaries and baseball performance,” Jacobs said. “Perhaps the best illustration is the Cincinnati Reds, who had a payroll of approximately $15 million last year. They beat the Oakland A’s, who had a payroll in the 30 millions of dollars, in the World Series. And they beat them in four games.

“If you look at the empirical data, and you look at the clubs that spend large amounts of money -- Kansas City and the Yankees being illustrations -- it doesn’t necessarily correlate with success.”

Jacobs opened his wallet briefly to sign former Houston Astros slugger Glenn Davis to a one-year, $3.275 million contract. Robinson said this spring he would have preferred a longer term contract for the star first baseman. Davis has been out most of the season with a neck injury.

“That’s called the breaks of the game,” Jacobs said. “I think luck is a factor in most enterprises. Luck has not been with us.”

Several newspapers have reported in recent weeks that Jacobs tried to discourage other baseball owners from permitting an expansion team in Washington, a market in which the Orioles sell about 25 percent of their game tickets. Washington is one of six cities vying for two National League teams scheduled to be awarded this year.

“I don’t know where the rumors come from but they are totally untrue,” Jacobs said. “ ... The Orioles have no position on baseball in Washington, other than the position that if our vote were required we would vote for baseball in Washington. ... We would not want to be the reason why baseball didn’t come to Washington.”

As Orioles owner, Jacobs leaves most of the day-to-day business to Lucchino, but he has played a direct role in big-money decisions such as Davis’s contract and in the new 46,500-seat ballpark, which he calls “my pride and joy.”

AP-NY-06-05-91 2206EDT