Troubles at Merry-Go-Round Enterprises have cut deeply into Chairman Leonard "Boogie" Weinglass' net worth, but the iconoclastic, self-made multimillionaire says that won't affect his efforts to bring a pro football team to Baltimore.
Merry-Go-Round stock is trading at about $7.50 a share, down from a high of $21.38 just over two years ago, about a month after he first expressed an interest in owning a sports team. Since then, the value of the roughly 5.1 million shares he owns in the retailer has been cut from about $108 million to $38 million -- a paper loss of $70 million.
No one knows whether the company's problems represent a blip or a bust, but Mr. Weinglass and fellow investors are moving ahead with efforts to buy a National Football League expansion franchise. He has, however, put off plans to be a part-owner of the Orioles, until and unless Baltimore is eliminated from the football expansion race.
"We have money. Money is not an issue," said Mr. Weinglass, a Baltimore native who lives in Aspen, Colo.
If the NFL owners pick Baltimore, they are expected to choose between Mr. Weinglass' group and Malcolm Glazer, a Florida-based corporate investor who also is seeking a franchise. Mr. Glazer, whose investments have included Tonka Corp., Harley-Davidson Inc. and Formica Corp., says he can write a check for the tens of millions of dollars needed to land a franchise.
Mr. Weinglass, who left active management of Merry-Go-Round in 1981 but came back this month as a consultant, says he has plenty of money, too, despite the recent slide in Merry-Go-Round's stock price. He's taken on a few new investors and lined up financing commitments from NationsBank, he says.
Even if the stock's value fell to zero, he could still handle the deal, he adds. "I'm not as comfortable as I once was, but I can do this. . . . The deal was never contingent on the stock."
Herbert J. Belgrad, chairman of the Maryland Stadium Authority and coordinator of the Baltimore NFL bid, says the league has informed him that both the Weinglass group and Glazer family have passed NFL background checks.
And Mr. Weinglass and NFL sources who have seen his application say he has not pledged Merry- Go-Round stock as part of the deal.
But last summer, when the stock began to tumble, NFL officials called Mr. Weinglass to ask him whether it was a problem for his bid, according to one league source who spoke on the condition of anonymity. "He's indicated to us it's not a concern of his," said the source, adding that the NFL has asked bankers to analyze the financing plans of all prospective ownership groups.
In addition to Baltimore, Jackson ville, Fla., Memphis, Tenn., St. Louis and Charlotte, N.C., are seeking one of the two expansion franchises the league will award late next month.
One financial expert involved in NFL expansion, who spoke on the condition of anonymity, said a Baltimore group would need to pump about $120 million into a team in the first few years before revenues began to cover expenses.
But tax advantages can lessen the impact. Much of the NFL's $140 million franchise fee, for example, can be attributed to player contracts for tax purposes. That means it can be deducted on the team's tax filing.
In January 1992, Mr. Weinglass estimated his net worth at $150 million. His Merry-Go-Round holdings were worth $56 million then, or about $11 a share. He also held about $8 million worth of real estate in Maryland, Colorado, Florida and New York. He plans no sales of real estate or Merry-Go-Round stock to finance the team. Instead, he will draw upon the proceeds of several stock offerings and stock dividends over the years, he says.
Those transactions have been very lucrative, according to documents that are filed whenever a director sells stock in a publicly held company. When the formerly private company was converted into a publicly traded corporation in 1983, Mr. Weinglass and co-founder Harold Goldsmith netted about $13 million each.
Since then, the stock has split several times and Mr. Weinglass has sold shares through public offerings and in block trades, diversifying his investment portfolio. He's raised $68 million this way, about $40 million of it in 1989 and 1990.
Dividends, which the company began paying in 1990, brought Mr. Weinglass another $679,999 through last year and should pay $271,320 this year if there is no change in the 5.32 cent-per-share annual rate.
Mr. Weinglass acknowledged that the invitation to two new, Baltimore-based NFL investors was motivated partly out of a desire to bring new money to his group.
The investors command significant financial resources. John Paterakis is the owner of H&S; Bakery of Baltimore, a closely held company that, among other things, provides McDonald's with many of its buns. Henry Rosenberg is chairman of Crown Central Petroleum Corp. and an heir to the vast fortune established by his grandfather, Louis Blaustein, the founder of American Oil Co.
Other investors in Mr. Weinglass' NFL investment group include moviemaker Barry Levinson, ex-Colt Joe Washington, local real estate investor and Meyerhoff family heir Richard Pearlstone, retailer E. Douglas Carton and local attorney and prospective Orioles owner Peter G. Angelos.
Two other members of the group are retail executives who have seen their stock holdings battered in a re cession and anemic recovery: Michael Sullivan, Merry-Go-Round's president, and David Bernstein, chairman of Duty Free International.