Orioles & Stadium Authority agree on TWO year extension of OPACY lease

[sevastras]

On 2/8/2021 at 7:04 PM, eddie83 said:

True. That said I find it hard to fathom a city building a new stadium with the current economic landscape.  

Housing prices increased 18% last year in my current city. My current state also runs on a surplus. Not sure where you live, but there are areas that are thriving. 
That said, I don’t see any indication that the team is or would be moved. A 2 year/5 year is a great situation to put yourself in for a lease like this. You have flexibility and if the sky starts falling, you’re not caught with your pants down. It gives time to weigh out the options and gauge the climate better in the future. Baseball as a sport is less supported than 30 years ago and there is indeed uncertainty. Let things clear up a little while mapping the road ahead. If there is a down turn in the next couple of years, even more flexibility to negotiate a more favorable lease. If things “normalize”, then you have a clearer picture. If things are still, “unprecedented” then you have the 5 year option to exercise for more time. 
I would be worried if it were a 1 year or ownership said, “We are just going to go month to month for a while.”  

[spiritof66]

In recent years, I've said these things, probably repetitively, about the relocation or sale of the Orioles. To be about as brief as I'm capable of being:

1. MLB has committed to reserve for Tampa and Oakland the first choices of relocation cities in case they decide to move. (Tampa has chosen Montreal, maybe, sort of.) While getting those two troubled situations straightened out has taken much, much longer than had been anticipated, it appears there's enough honor among MLB's thieves to stick by those commitments. Part of the problem with relocating, for the Rays and A's as well as for the O's and anyone else, is that there aren't a lot of great options out there, other than the unavailable ones of adding teams in NY and LA. Supporting an MLB team sufficiently to make it competitive on the field is difficult -- as proven by the inability of some current cities with great baseball traditions to do that. Finally, MLB has been adamant about not allowing a team to forsake a long-time MLB city with an adequate stadium. That might change, though I don't see why it would, and I think any such change would happen a long time from now. My conclusion is that the only circumstance under which  the Orioles would be permitted to move in the next 15 years would be if an expansion team were coming to Baltimore.  

2. Based on the limited information available, I concluded a few years ago that the Angeloses will find it very difficult to retain their current ownership share of the Orioles because of the federal estate taxes and the Maryland estate and inheritance taxes imposed on the owner's estate and his heirs. (If the owner leaves some or all of the team to his widow rather than his sons, some or all of the estate taxes can be deferred until her death, but that would create other problems.) To pay those taxes, I believe the Angeloses will have to sell the team or a substantial portion of their interest in it; the federal government (and, I'm guessing, the state) will give them time to raise cash in either of those ways. Everything that's happened with the Orioles in the past few years is consistent with the Angeloses' recognition of that reality. That doesn't prove that they'll be selling, but I've seen nothing that suggests they won't be.

[Camden_yardbird]

That kind of cements that the team will be sold in the next two years.  Although as pointed out it is highly unlikely the Orioles are moved, the short lease expands the market in a sale to buyer who might consider moving the team or even building a new stadium.

While MLB would more likely move TB or Oak first, billionaire owners can make barriers move.

At the very least it gives a potential new owner the leverage the threaten a move over the MSA and the city.

[mojmann]

17 hours ago, spiritof66 said:

IMO, the next most important is the wealth of the people in that market

Good points, but Baltimore Metro punches above its weight in per-capita income. It's 13th.

Source: https://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas_by_per_capita_income

[Frobby]

9 hours ago, spiritof66 said:

Based on the limited information available, I concluded a few years ago that the Angeloses will find it very difficult to retain their current ownership share of the Orioles because of the federal estate taxes and the Maryland estate and inheritance taxes imposed on the owner's estate and his heirs. (If the owner leaves some or all of the team to his widow rather than his sons, some or all of the estate taxes can be deferred until her death, but that would create other problems.) To pay those taxes, I believe the Angeloses will have to sell the team or a substantial portion of their interest in it; the federal government (and, I'm guessing, the state) will give them time to raise cash in either of those ways. Everything that's happened with the Orioles in the past few years is consistent with the Angeloses' recognition of that reality. That doesn't prove that they'll be selling, but I've seen nothing that suggests they won't be.

Since you apparently know more about this than I do, please explain to wildcard why Angelos can’t make that problem go away by putting the team into a trust.   

[spiritof66]

4 hours ago, mojmann said:

Good points, but Baltimore Metro punches above its weight in per-capita income. It's 13th.

Source: https://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas_by_per_capita_income

Average income is relevant, but what really counts is the number of wealthy people and big companies/service firms who can and will pay a lot for baseball tickets. The chart shows that Baltimore metro is right ahead of New York metro in per capita income, with a population about seven times that of Baltimore metro. I don't know the number of wealthy individuals or companies/firms in either metro area, or how you would assess that, but I'm confident New York's number is much greater than seven times Baltimore's. Maybe thirty or fifty or seventy? I don't know, but it would be a lot. That multiple would be reduced a little when you credit the Orioles with a slice of the D.C. area's large numbers in these categories.

I am confident that there would be a significant, though smaller, disparity if you compared Boston metro or Toronto metro to Baltimore metro --- not just a lot more people, but a lot more moneyed people and companies.

Edited February 12, 2021 by spiritof66

[spiritof66]

3 hours ago, Frobby said:

Since you apparently know more about this than I do, please explain to wildcard why Angelos can’t make that problem go away by putting the team into a trust.   

I'm more than a little stale on this stuff, but here's the basic point: you can't avoid the federal estate tax by giving things to your family members while you're alive instead of waiting for your death.

Let's say Peter Angelos's interest in the Orioles is worth $1 billion. If he transfers the benefits of that ownership interest to anyone other than his wife or a charity, he will have to pay a federal tax mostly at the top rate of 40 percent. If the transfer occurs on his death, his estate will incur an estate tax (state and federal). If he transfers ownership to a trust (again, with the benefits of ownership going to someone other than his wife or a stranger), he will incur a gift tax, with the same rates and exclusions as the estate tax. I don't know about state gift taxes. A trust would enable Peter to alter the timing of the estate/gift tax, but I don't see how that would help.

I can't recall the details on this, but trusts (I forget the name for these trusts) can be tax-effective where the transferor puts appreciating assets into a trust. So if Peter had put his interest in the Orioles into a trust when that interest was worth $300 million, if the trust complied with certain rules it is (or at least was} possible to incur gift taxes on only the $300 million and not on the $700 million. I don't think Peter can obtain that kind of tax advantage.

A transfer of a controlling interest in the club would require approval by the owners.

Maybe I'm missing something, or maybe you have some other sort of trust in mind.

Edited February 12, 2021 by spiritof66

[baloriole4]

6 hours ago, spiritof66 said:

Average income is relevant, but what really counts is the number of wealthy people and big companies/service firms who can and will pay a lot for baseball tickets. The chart shows that Baltimore metro is right ahead of New York metro in per capita income, with a population about seven times that of Baltimore metro. I don't know the number of wealthy individuals or companies/firms in either metro area, or how you would assess that, but I'm confident New York's number is much greater than seven times Baltimore's. Maybe thirty or fifty or seventy? I don't know, but it would be a lot. That multiple would be reduced a little when you credit the Orioles with a slice of the D.C. area's large numbers in these categories.

 

Well said, and also that "average income" isn't really helping the Orioles as people haven't been buying tickets.  Also true of what spiritof66 said is in regards to some of DC creeping into the average income numbers.   Those people in Anne Arundel and Howard County that work and/or associate themselves as DC, spending their time and money on the Nationals are in that average income number too, so its not that rosy for the Orioles unfortunately.      

 

On the corporation/business side there was a very telling chart in The Athletic a few weeks ago in an article about MLB expansion and what markets made most sense to expand to  "What next for MLB expansion" by Eno Sarris on Mon Jan 25..  The chart was "Baseball Markets by Industry Size".    As stated in the article this "table shows how healthy the local industry is in each baseball market, existing or potential.  Private and public company size and revenues and locations were provided by Morningstar, and to be considered for this table the company had to have more than $500 million in revenues last year".   Of the 30 MLB markets (or I guess 27, since New York, Chicago and even LA/ANA are each in there once) Baltimore came in at dead last among the 27 different MLB markets  (Baltimore had 12 companies of $500 million or more for $30.6 bil in revenue. San Diego was second to last and was more than double the Industry Size of Baltimore ($66 bil over 22 companies).   After SD, the numbers quickly grow -- KC 3rd from last at 26 companies for $95 bil....  so 3x larger greater than Baltimore that quickly.     Potential MLB expansion markets of Charlotte, Montreal, Nashville and Portland were all significantly higher than Baltimore.   

It was pretty telling about the state of business based in this area.   Check it out.