ORLANDO, Fla. — MLB commissioner Rob Manfred called the Orioles’ $1.725 billion valuation established in billionaire David Rubenstein’s agreed-upon purchase of a majority stake in the ballclub “a good number” Thursday, expressing his approval of how the sale price reflects the current market for the league’s teams.
“Well, I think that if you think about it, Miami [Marlins] sold for $1.2 [billion in 2017]. It’s a full half again as much,” Manfred said in a news conference at the Four Seasons after the MLB owners meetings this week. “Would I like it to be higher because I like high franchise values? Yeah, of course I would. But I think given the various issues related to that club and to the media situation in general, I think it’s a good number.”
The sale, which is still making its way through the MLB approval process, saw the Angelos family cede control of the team for the first time since patriarch Peter Angelos purchased it for $173 million in 1993. Among the five most recent MLB clubs whose majority stake was sold dating to 2016, the $1.725 billion figure ranks second behind only hedge fund manager Steve Cohen’s $2.4 billion purchase of the New York Mets in 2019.
As far as MLB sales go, the Orioles’ deal ranks competitively. Forbes assistant managing editor and creator of the magazine’s sports team valuation database Michael Ozanian saw strong value in the amount for the Angelos family.
“I thought it was a good price,” Ozanian said in a phone interview. “I tend to look at the sale prices in relation to revenue … So, that works out to a revenue multiple of 6.5. Price divided by revenue is 6.5, so that seems about right.”
Using Forbes’ revenue estimations from the year teams were sold, the Orioles’ 6.55 sale-to-revenue ratio sits behind the Mets (7.06) but ahead of the Marlins (5.83), Seattle Mariners (4.42) and Kansas City Royals (3.98). Forbes’ most recent estimations of the Orioles’ revenue projected $264 million for 2022.
However, broadening the lens to include teams from the NFL, NBA and NHL paints a different picture. The Orioles’ valuation ranks ninth among the past 15 North American professional men’s sports teams sold. While all eight of the teams ahead of them play in larger media markets, the Orioles’ sale-to-revenue ratio is 12th behind both the NBA’s Utah Jazz (7.35) and NHL’s Pittsburgh Penguins (11.84), who reside in similarly sized markets.
The Athletic reported Feb. 1 that seven industry analysts and rival officials described the valuation as “low.” It’s the timing of the agreement that makes the deal puzzling. In selling only the 40% stake Rubenstein is set to take on, controlling owner John Angelos is subjecting that portion of the price to significant capital gains taxes. The deal does include a provision that Rubenstein will purchase the remaining equity upon the death of the 94-year-old Peter Angelos, two sources told The Baltimore Sun at the time of the deal.
Documents from a 2022 lawsuit filed by Peter’s other son, Louis, revealed that the now-ailing owner wished for the team to be sold after his death so Peter’s wife, Georgia, “could enjoy the great wealth they had amassed together.” In those same filings, Georgia’s account of events revealed she felt it was in the best interest of the family trust to sell.
When asked about the timing of the Orioles’ sale on Wednesday in Orlando, executive vice president and chief operating officer Greg Bader declined to comment. Adding to the questions to sell now is the uncertainty surrounding major future expenses related to Oriole Park at Camden Yards, as well as significant sums due to the neighboring Washington Nationals in backpay for their share of the Mid-Atlantic Sports Network’s revenues over the past decade-plus.
Only six weeks before the sale was announced, the Orioles signed a new lease to keep the team at Camden Yards, where it has played since the stadium opened in 1992. The lease was described by Maryland Gov. Wes Moore, a Democrat, upon its finalization as a 30-year deal, but the agreement comes with several caveats.
The lease remains 30 years long only if the state and team can agree to a developmental rights deal for public land surrounding the stadium by 2027. If two sides do not agree to a developmental plan, the lease is either reduced to 15 years with four five-year options or the Orioles could take the option to keep it at 30 by agreeing to stop paying rent and take over stadium operations and maintenance, costs that resulted in Maryland paying more than $6 million annually over the past 10 years even when offset against the Orioles’ rent.
In his statement that followed the announcement of his purchase, Rubenstein expressed a desire to follow through on redeveloping the state-owned properties.
“Importantly, the impact of the Orioles extends far beyond the baseball diamond,” Rubenstein wrote. “The opportunity for the team to catalyze development around Camden Yards and in downtown Baltimore will provide generations of fans with lifelong memories and create additional economic opportunities for our community.”
If a 30-year lease is finalized, the Orioles would unlock $600 million in stadium authority funding to pay for stadium upgrades. Under the terms of the 2022 state law passed by the General Assembly and then-Gov. Larry Hogan, a Republican, the team can only receive roughly $400 million while the lease remains at 15 years because the stadium authority must be able to pay off all bonds sold before it expires. The money to pay off the bonds will be recouped through lottery revenue.
MASN represents an entirely different wrinkle that still has yet to play out. A source told The Baltimore Sun that MLB has the power to require the Orioles to relinquish the Nationals’ TV rights as part of a sale. The jointly owned regional sports network has been the subject of several lawsuits and appeals over the last two decades.
At the center of the disputes has been disagreements over the amounts MASN, and therefore the Orioles, owed the Nationals for the fair market value of their rights fees for the periods of 2012 to 2016 and 2017 to 2021. The two sides reached a settlement in June for the first period and avoided another prolonged court battle with a separate agreement in December.
As cord-cutting continues to eat into TV profits, future projections for any regional sports network whose majority subscriber base is made up of cable subscribers are already murky. The valuation of MASN is a moving target, even if the Orioles get some kind of deal with the Nationals to return their rights.
While the Orioles’ sale price doesn’t set any new benchmarks for MLB club valuations, it does reflect a solid result for the Angelos family given all the factors working against a maximized sale price. Their budget sheets will need some ironing, but if that was the price Rubenstein needed to pay to acquire a ready-made contender with a passionate fanbase eager to latch on to a sustained winner, he struck a deal at the perfect time.