18 replies to this topic

[BSLChrisStoner]

Balt Sun: Orioles CEO John Angelos said ‘everything is stacked against’ small-market MLB teams. Is he right?

[Mike in STL]

No.

 

The link in that article to this other article posted today also proves that, as the Orioles 2022 operating income was 4th highest in MLB. Can only imagine that the 2023 income will be very much higher at seasons end. 

 

Balt. Sun: Analysis: As Orioles’ player spending plunged from pre-pandemic levels, team income and value soared

(BTW, this is a great article for once from this paper).

 

The Orioles referred an interview request for this article to a spokesperson for Angelos, who declined to comment.

 

The club’s player payroll — including salaries, benefits and bonuses — averaged $74.5 million over the past two years after averaging $140 million during the seven years before the pandemic-affected year of 2020, according to Forbes. The club’s operating income averaged $75 million over the past two years after averaging $9 million in the same years before the pandemic.

 

The team’s finances have taken a front-row seat this summer as the Orioles play their best baseball in years.

 

Orioles and state officials currently face a Dec. 31 deadline to sign a long-term lease to continue playing at the state-owned Oriole Park at Camden Yards, which opened in 1992 after being built with public money by the Maryland Stadium Authority. State taxpayers will provide at least $600 million more in upgrades if the Orioles sign the lease and commit the team to Baltimore for at least several more decades.

 

But Angelos has held out from signing a lease as he works to reach a deal to redevelop state-owned parcels around the ballpark.

 

Coates, the economist, said that Angelos suggesting the Orioles could not afford to sign top talent to long-term deals without raising prices could be “part of a campaign for bigger subsidies.”

 

“If you can convince the state and voters of the state that they should give you their hard-earned money to be even richer than you already are, then I guess, more power to you,” he said.

 

And while Angelos has said the Orioles will play in Baltimore as long as Fort McHenry stands watch over the harbor, members of the Angelos family have considered selling the team. The team’s incapacitated owner — John Angelos’ 94-year old father Peter Angelos — wants the family to sell the Orioles after his death, according to court documents filed on behalf of Peter Angelos’ wife Georgia and their younger son, Louis.

 

The documents show the family hired an investment banker in recent years to solicit bids for the team. The Angelos family owns 70% of the shares, John Angelos said in January. Sources have told The Baltimore Sun that several groups are likely to bid if the Orioles are indeed for sale.

[NewMarketSean]

I don't trust a word that comes out of his pie hole.

[weird-O]

I wish I was as poor as the Angelos family whines to be.

[ivanbalt]

These days I don't think everything is stacked against small market teams, but the big market teams have some advantages.  The ability to sign any homegrown talent while spending in FA offers advantages.  Not to mention the ability to mitigate bad expensive deals.

 

That said, anything coming out of Angelos' mouth is likely a lie and he shouldn't be trusted in anyway.

[Mike in STL]

These days I don't think everything is stacked against small market teams, but the big market teams have some advantages.  The ability to sign any homegrown talent while spending in FA offers advantages.  Not to mention the ability to mitigate bad expensive deals.

 

That said, anything coming out of Angelos' mouth is likely a lie and he shouldn't be trusted in anyway.

Those big market teams also have to give the small market teams money. And some of those teams (Orioles, Pirates) don't even spend that money. 

[ivanbalt]

Those big market teams also have to give the small market teams money. And some of those teams (Orioles, Pirates) don't even spend that money. 

That's where my second point about Angelos comes in.

[BSLMikeLowe]

[checks calendar]
 

Yep, it’s about that time for John to show up and open his hole to ruin the fun. Just not allowed to have nice things.

[Ravens2006]

The Orioles financial situation does not make them a small market team. By any means. Anything more beyond that trying to frame their situation as "small market" is pure chicanery...

I wouldn't be shocked to hear Angelos is trying to purchase Ft McHenry and develop it too...

[weird-O]

These days I don't think everything is stacked against small market teams, but the big market teams have some advantages.  The ability to sign any homegrown talent while spending in FA offers advantages.  Not to mention the ability to mitigate bad expensive deals.

 

That said, anything coming out of Angelos' mouth is likely a lie and he shouldn't be trusted in anyway.

IMO, your point about being able to mitigate bad contracts is the big advantage. Obviously some teams can afford to spend more than others, but every team can carry a $200M payroll. I'm not suggesting that every team should, but they could if need be.  

[Nigel Tufnel]

They should be a bigger market team, but Angelos managed to alienate a huge portion of that market by trying to keep a team out of Washington.  Aking those people to support the Orioles is kind of like asking Ravens fans to support a team owned by Paul Tagliabue. 

 

A new owner might be able to mend those fences - and it should be one of their first orders of business - but I don't think an Angelos will ever be able to.

[makoman]

They should be a bigger market team, but Angelos managed to alienate a huge portion of that market by trying to keep a team out of Washington.  Aking those people to support the Orioles is kind of like asking Ravens fans to support a team owned by Paul Tagliabue. 

 

A new owner might be able to mend those fences - and it should be one of their first orders of business - but I don't think an Angelos will ever be able to.

At this point I would guess most people in the DC area, if they didn't stay with the O's already, are mostly entrenched as Nats fans and aren't going to switch back. Or if they are super casual they will just give whatever support they give to the team that's close. Like you suggest, how many Ravens fans going to give the Commanders a new shot now that they have a new owner? I guess maybe Snyder had a chance to keep more fans ~20 years ago and running the team the way he did didn't help. But I feel like that's similar, the window to open that market back up to the O's probably ended a long time ago.

[weird-O]

At this point I would guess most people in the DC area, if they didn't stay with the O's already, are mostly entrenched as Nats fans and aren't going to switch back. Or if they are super casual they will just give whatever support they give to the team that's close. Like you suggest, how many Ravens fans going to give the Commanders a new shot now that they have a new owner? I guess maybe Snyder had a chance to keep more fans ~20 years ago and running the team the way he did didn't help. But I feel like that's similar, the window to open that market back up to the O's probably ended a long time ago.

I agree with you. At this point, it's too late to capture the hearts of the DC fanbase. The damage done by Peter can't be corrected.  

[Nigel Tufnel]

Yeah, you're unlikely to get Nats fans to convert to the Orioles at this point.  But you don't need to - all you need to do is get some of them to come to a game at Camden Yards once or twice a year without feeling like they're betraying the Nationals.

[Ravens2006]

DC and NoVA is a very tranplant / transient heavy area in general because of all the government, military / DoD, healthcare, financial, etc jobs and headquarters that are in and around the capitol.  I don't think the goal is or should be converting folks to primary "Orioles fans"... but it should be trying to (it will take time) make the Orioles a likeable (which they are for TV purposes right now, young and high energy) secondary team for people to tune in to, and go to some games on occasion, etc.  

 

I don't think they need to dominate the entire MASN area.  They need to dominate their "home" part of it, and leverage the rest for some financial gain as well.  Plus they, in theory, benefit from the Nationals popularity regardless.  The fact that ownership refuses to invest that financial money tree in the Orioles in a round-about way is solely the choice of John Angelos at this point.  Their control of MASN in the nation's now 3rd largest MEGA-MARKET makes them unquestionably way more than a "small market" operation.  Pocketing huge profits and crying poor is a scam.

[Mackus]

Revenue only matters if you're spending near the max of what your revenue can support.  The Orioles could support a payroll well over $100M without selling a single ticket.  They don't need to maximize anything, they just need ownership who gives a crap, which they clearly do not have.  

[SonicAttack]

The O's franchise makes a lot of money - much more than any so called "small market" team; MASN is giant cash maker for the O's.  Unfortunately for O's fans, the O's are the only major source of income for the Angelos family (John) so John is going to keep as much of the generated revenue as he possibly can, and barebones the O's for as long as he is the owner.

I truly believe that once Peter passes, the family will sell and takes the billions the sale will make; better to have billions then then have millions.   But Peter will probably last another 6 years, so, yeah....

 

This is all on John, Elias would love to work for an owner who is invested in winning and spending on the team, all of which John isn't. 

But Elias loves being the man in total control, he just would like a much larger operating budget.  If Elias can get total control guarantee from another owner (say like the Angels) he will jump as soon possible and will take Hyde with him (he wants a puppet manager).

[mdrunning]

I think we can all agree that our current ownership is awful and most Oriole fans want them as much as they would like to have a wart on the tip of their noses.

 

I don't know if it's accurate to say that MLB's economic system is stacked against the smaller market teams (and yes, the Orioles are a small market team), but there are pronounced revenue disparities between the haves and the have-not-as-muches. Yes, there is more revenue sharing now in baseball than before, but that has created a situation where one might have to pay to win--and there is a definite correlation between payroll and winning--but it doesn't always pay to win. In other words, winning and profits do not always go hand-in-hand.

 

The Orioles aren't the only example. According to Forbes, the Tigers slashed their payroll some $100 million from 2016 (the last time they were actually any good) to 2020. Now despite 100-loss seasons, dwindling attendance and fewer television, the club is now turning a healthy profit and increasing revenues every year. The way revenues in baseball are set up, if a team is simply looking to turn a profit, investing in player salaries typically does not achieve that goal.

 

Fielding a low-cost and typically lousy team does not have immediate negative effects, since national and local broadcast revenues since those are typically long-term deals. Attendance will suffer, but almost half of that money goes into the revenue sharing pool, so a team that can't draw flies will simply contribute less. Teams make the bulk of their revenue through shared streams, not by their local fanbases, so increasing payrolls to boost attendance will only contribute marginally to a team's bottom line. Making the postseason results in a new stream of immediate revenue, and can help boost season ticket sales for the following year, but the marginal gains realized by increased attendance typically will not pay for the needed increases in player salaries to field a team people actually want to watch.

 

There is no question that the Orioles are a small-market team and were relegated to such status with the arrival of the Nationals. That is just a fact. They get extra international allotments and amateur draft picks not because MLB loves the Angelos family or Baltimore in general. In fact, the Orioles' high-water attendance mark over the past 10 years, which occurred when they won the AL East in 2014, is only 10,000 above their lowest total at Camden Yards before the Nats set up shop just down I-95. People want to point to MASN, which was a cash cow at its inception, but that was because the Nats' rights fees were set low at the outset. Now with the Nats' rights fees much higher, and so many people cutting the cable cord, those profits will only continue to shrink.

 

To me, there are only two ways to discourage such practices. I'm not completely familiar with MLB's revenue sharing agreement, but some disincentives are in order; namely, make losing unprofitable. In what crazy world can a team (and I'm not specifically talking about the Orioles) can a team lose fans and viewership yet still increase profits? The other would be a salary floor on all payrolls. But that would have to be accompanied by a salary cap, and good luck getting that past the players.

[dude]

I'm only quoting one paragraph here, but all 5 paragraphs above are wrong.  This isn't a matter of opinion or viewpoint.  I question why you wrote the things you wrote.  There's no merit.

 

There is no question that the Orioles are a small-market team and were relegated to such status with the arrival of the Nationals. That is just a fact. They get extra international allotments and amateur draft picks not because MLB loves the Angelos family or Baltimore in general. In fact, the Orioles' high-water attendance mark over the past 10 years, which occurred when they won the AL East in 2014, is only 10,000 above their lowest total at Camden Yards before the Nats set up shop just down I-95. People want to point to MASN, which was a cash cow at its inception, but that was because the Nats' rights fees were set low at the outset. Now with the Nats' rights fees much higher, and so many people cutting the cable cord, those profits will only continue to shrink.

 

There's 3 elements to this paragraph.  They are all wrong.

 

The term "small market" is used to represent a financial disadvantage compared to other larger markets.  The Orioles are small market because their metro market is in the bottom 10 of the 30 MLB markets.  That has nothing to do with their overall ability to generate revenue.  In the third paragraph, you talk about media streams being the bigger generator but want to avoid that here.

 

The Orioles drove away a huge portion of their fanbase BEFORE the Nationals arrived.  If they wanted their fanbase, they should have worked to keep them, build the next generation of relationship.  Would OPaCY taken a hit under an optimized condition?  Probably, but they solved that by dumping the fanbase to easily achieved levels WITH the Nationals.

 

The Orioles have the luxury of a 2-team level of interest in one of the top 4 (I hadn't seen #3 until earlier here) media markets in the country.  It's an enormous market and has 6 of the top50 metros in the US with significant population and wealth in the rest of the giant geographical region.  They have given a % back to the Nationals over time, but that final result (and we aren't there yet) is 2/3 Orioles, 1/3 Nationals. While the Nationals have their media fees go up through the legal action, that means the Orioles does too. That has some consequence on the backend, but it's the only 2-team generator in MLB, across a giant media market and the Orioles get the lion's share.

 

If you want a model for Orioles potential spending, the Nationals ran payrolls in the 160-200M range for 6-7 years and they have the minority share of MASN profits. A well run Orioles team should EASILY afford 150+M payrolls.