Baltimore’s biggest business names experienced a busy year in 2017.
Under Armour stumbled after years of rapid growth. Seizing the political zeitgeist, Sinclair Broadcast Group doubled down on becoming the nation’s largest broadcaster with its bid to buy Tribune Media. And McCormick & Co. acquired the French’s Mustard and Frank’s Red Hot Sauce brands.
The first new building — a distillery — opened at Port Covington, and the project undertaken by a private real estate firm owned by Under Armour founder Kevin Plank made a serious bid for the biggest economic development prize in America, Amazon’s proposed second headquarters. As did Columbia. And College Park. And just about every city in the nation.
Meanwhile, Evergreen Health Co-op, a Maryland insurance company created under the Affordable Care Act, failed after it became insolvent when a buyout deal fell through.
Throughout it all, the Maryland economy grew. Home sales were strong. The number of jobs grew substantially.
At Under Armour, the past year marked the end of an era, as one analyst put it. The years of eye-popping growth in sales, profits and stock value skidded to a halt in 2017. Its sales faltered, the company reported losses for two consecutive quarters and the stock price plunged. The turnabout was driven by the loss of key wholesale customers, intense competition from rivals, slumping demand and changing consumer tastes.
By summer, Under Armour hired a new president, Patrik Frisk, a former executive for the parent of Timberland and The North Face, who reports to founder and CEO Plank, and announced a restructuring that included 280 layoffs. Numerous top executives departed, while co-founder Kip Fulks left for a sabbatical.
The year didn’t start well for Under Armour, which found itself mired in controversy and defending its image after Plank sparked a social media backlash — even among the company’s own athletes — when he praised President Donald Trump’s pro-business philosophy.
Plank responded with a letter to the city, in a full-page ad in The Baltimore Sun, stressing that the company values diversity, equal rights and opportunity, and saying his choice of words about Trump “did not accurately reflect my intent.” In August, Plank distanced himself further from Trump, becoming the second CEO to resign from a manufacturing advisory panel assembled by the president.
Trump’s election and the subsequent pro-business swing of the Federal Communications Commission represented an opportunity for Hunt Valley-based Sinclair Broadcast Group. In May, Sinclair announced plans to buy Tribune Media for $3.9 billion, expanding its reach to television stations with a potential audience of 72 percent of U.S. households.
(Tribune Media was formed in 2014 when Tribune Co., then the parent of The Baltimore Sun, split its broadcasting and publishing divisions into separate, independent companies.)
While Sinclair said the acquisition of Tribune’s 42 large-market TV stations would give it the scale necessary to compete for viewers and advertisers in the digital age, the proposed merger faces opposition from a diverse group of critics, including the cable television industry, liberal watchdog groups and conservative outlets like Glenn Beck’s The Blaze. They argue that unprecedented control over the local airwaves will decrease media diversity, harming viewers and democracy.
Many observers, however, expect the deal to be approved by the FCC, now headed by Trump appointee Ajit Pai, at a time when the agency has looked favorably on relaxing what it says are outdated regulations, including those governing media ownership.
Sinclair, which also needs approval from the Department of Justice’s antitrust division, has said the deal is on track to close by early next year.
McCormick & Co.
Spice giant McCormick & Co. completed its biggest deal ever this year when it acquired the food business of United Kingdom-based Reckitt Benckiser Group for $4.2 billion. The deal, which closed in August, included the Frank’s Red Hot Sauce and French’s Mustard brands, and is expected to give the Sparks-based manufacturer a top spot as a U.S. condiment maker. Observers said the addition gives McCormick a more diverse product mix and less exposure to the U.S. spice market, which has become increasingly competitive.
Health insurance startup Evergreen Health was undone not by competition but largely by the law that created it. Founded by former Baltimore City Health Commissioner Dr. Peter Beilenson, Evergreen was one of 23 consumer-oriented and -operated insurers created under the federal Affordable Care Act to improve access to affordable policies. But the law also required insurers with healthier customers to make payments to insurers with sicker customers, starving many co-ops for cash.
By 2017, Evergreen was one of the few nonprofit co-ops still running. In a last-ditch effort to survive, Evergreen found investors to buy it and convert it to a for-profit insurer. But the investors backed out in July, leaving Evergreen insolvent and forcing the Maryland Insurance Administration to shut it down.
On the Baltimore development front, the redevelopment of both the former Sparrows Point steel mill site and Port Covington continued.
The Sagamore Spirit distillery and tasting room opened in the first new building at Port Covington, the South Baltimore peninsula where plans call for a $5.5 billion mixed-use project with offices, retail and residences anchored by an Under Armour campus. In September, Goldman Sachs announced it would invest $233 million in the project to become a joint owner with Sagamore Development, Plank’s private real estate firm.
Meanwhile at Sparrows Point, the former steel plant now dubbed Tradepoint Atlantic, FedEx opened a package hub in September and Amazon announced in November it would build another large distribution center that will employ 1,500 people.
But that’s not the biggest Amazon prize drawing Baltimore’s attention. The online retail giant began a public hunt for a second headquarters where it plans to invest $5 billion and employ 50,000 people. Sagamore Development soon offered up Port Covington
While Gov. Larry Hogan promised to personally lobby Amazon CEO Jeff Bezos to bring the company to Baltimore, the state committed to support any other Maryland jurisdiction’s bid with an incentive package worth billions of dollars. Prince George’s and Howard counties were among those to throw their hats in the ring.
Amazon is expected to announce the winning city early in 2018.