The Orioles, baseball's most profitable team a year ago, would suffer their first operating loss since 1982 if players carry through their threat to strike Aug. 12 and stay away from major-league ballparks through the World Series.
A season-ending strike would saddle the Orioles with an operating loss of $5.1 million this year, club officials said yesterday.
Before the season, the Orioles had projected a $7.9 million operating profit, bringing the full economic impact of a work stoppage on the team to $13 million.
The latest projections are a major comedown for the Orioles, who last year rang up an operating profit of $25.5 million. Rising player costs and shrinking revenues from national television were expected to reduce the club's profits drastically this year, even if the full season were played.
Despite yesterday's sobering projections, which club officials said put Orioles among the top three or four clubs in strike-related losses, team owner Peter G. Angelos said he was confident that club investors could ride out whatever financial hardship a players strike might bring.
"This is a very successful operation. It's so viable," Mr. Angelos said. "It sets us back, but I'm confident we can handle it."
A strike would deprive the Orioles of revenue from two major sources -- national television and the sale of game tickets.
The Orioles expect to earn about $5 million from radio and TV coverage of this year's expanded playoffs and the World Series. Revenue from the national TV deal is split evenly among the 28 clubs.
A players strike on Aug. 12 also would force cancellation of almost one-third of the Orioles' regular-season games. Of the 47 games affected, 25 are scheduled for Camden Yards, an especially costly blow because of the sellout crowds that flock to the Orioles' ballpark.
Each Camden Yards game generates net gate receipts to the Orioles of $366,000, according to club estimates. Another $153,000 per game goes to the club from the sale of food and other concession items.
Those losses would be blunted somewhat by reduced expenses. The club maintains a staff of 350 to 400 game-day employees who would not be needed during a strike.
The possibility of a protracted strike was very much in the air last August, when Mr. Angelos led a group of local investors that bought the team for $173 million, then a record price for a sports franchise. "I knew it all along. I knew the potential was there," the owner said.
So, the Orioles investors have taken steps to fund the team's losses during a work stoppage. In case of a strike, club officials said that the team's losses could be covered either by calling on a bank line of credit or by drawing on a $20 million "equity revolver" into which several partners have pledged money.
When they bought the team, the Orioles investors, who number about 20, borrowed approximately $60 million from NationsBank. They also have a $35 million line of credit with the lender that they have drawn on to pay expenses during the season.
This year, the Orioles investors are paying interest only on their loan -- principal payments begin next year. In their loan agreement, the investors agreed not to take any distributions from the team this year.
When the Orioles have borrowed to their credit limit with the bank, they might turn to the equity revolver. About a half-dozen investors have pledged money to the account, with Mr. Angelos' share the largest -- $12.6 million. (His total contribution to the team is $40 million.)
Others participating in the equity revolver are author Tom Clancy, who has a total investment of $19.7 million, including $4.7 million in the equity account, and comic-book entrepreneur Stephen A. Geppi, $3.9 million, including $940,000 in the equity revolver. Cincinnati investors, led by businessman William O. DeWitt Jr., have invested $7.7 million, including $1.9 million pledged to the revolver.
Mr. Angelos, who is authorized to call on the revolver funds, wouldn't predict what steps he might take to pay the team's bills during a strike, but said: "I'll do whatever is necessary. That is my typical reaction."
Mr. Clancy said: "I knew that [additional investment might be needed] when I got into it. It's not my nature to run away. I will honor my obligations."
The owner added that he would not consider trimming the club's expenses by firing front-office employees. "I don't think employees here should suffer economically because the players are on strike," Mr. Angelos said.
Other Orioles investors said that the prospect of a strike troubled them but added that they weren't worried about their investments.
"None of the owners I know went into this with the primary goal of making money," said David H. Bernstein, chairman of the board of Duty-Free International.
The last time the Orioles suffered an operating loss, 1982, was the season after a 50-day strike by the players. Orioles attendance dropped modestly from 1980 levels.