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SPEROS' GREY SKIES TURN CLOUDY

THE BALTIMORE SUN

At face value, almost everything about Baltimore's first season in the Canadian Football League looked magical. The crowds, the trip to the Grey Cup, the link to the old-time Colts -- they all held a dream-like quality last year.

But not everything was the way it appeared.

Beyond the football revival, there were problems.

Attendance, for one, was not what it was reported to be. Not paid attendance, anyway.

The team boasted a league-leading average of 36,377, but as many as 10,500 fans a game got into Memorial Stadium without buying a ticket. Some 7,500 of them came through corporate trades. Another 3,000 got in through an extensive giveaway plan that Jim Speros, the team's general partner and president, implemented to market the game.

There were financial problems. Speros said the team lost $1.1 million last season -- despite revenues of $7.9 million. If not for the cost of his failed attempt to gain use of the Colts name from the NFL and the money spent on the face-lift he gave the stadium, he would have broken even, Speros said.

There was other fiscal fallout. Two local companies sued Speros for non-payment of bills. Several other small businesses discovered he was, at best, slow to pay their bills.

Even though Speros said he did not have cash-flow problems, those developments have raised doubts about the future of the team -- and the league -- in Baltimore.

As the Baltimore Football Club prepares for its second season, Speros still is wrestling with reviving the excitement generated a year ago.

"The real success story is going to be whether I can keep it going," said Speros, a 35-year-old entrepreneur from Potomac, Md., whose previous business ventures were in real estate and restaurants. "Anybody can be a flash in the pan.

"Year two in any business, [there's a] sophomore slump, call it whatever you want. It's your toughest year because people have now seen the product. Some of the glitter has worn off a little bit. Now, you're talking about selling the real package, the real product. I've got my hands full marketing right now. This has not been an easy off-season."

In his first year, Speros was a marketing marvel. Fighting the NFL for the Colts name, he lost in court but won big in fan support and national exposure. Ten years after the Colts abandoned Baltimore, he brought back dozens of former heroes to Memorial Stadium in a nostalgia blitz.

Not everyone liked the attempt to trade on the legacy of the Colts.

"My position is, I don't think he should use the alumni to further his cause," said John Unitas Jr., who handles the marketing of his Hall of Fame quarterback father. "I don't blame him for doing it. It's a shrewd marketing ploy. But I told him, 'I'm not putting my father in position to do things for you to make you a profit.' It's great he's honoring all these guys, but he shouldn't keep doing it."

Speros denied he is using the old players to pad gate receipts. He said he will donate $3 from each ticket for the June 17 alumni game to local charities.

"I feel these guys should be recognized," Speros said of the former Colts. "And I've got the proper format. If it puts more people in the stadium, so be it. To me, it's value added for my fans."

The team's first-year phenomenon was aided by a players strike that closed down the baseball season in late summer, leaving the CFL the only game in town.

Few people knew how many tickets were passed out in the name of corporate trade or charity, though. Speros said the giveaways -- not counting corporate deals -- ranged between 800 and 3,000 tickets a game.

"There's no question that we gave away, in some cases, as many as 3,000 tickets to [charities]," Speros said. "Those tickets were never given to the same people twice. I wanted to give them to people to see the product. I have no problem with that. This year, I'll do it a little differently. This year, I'll probably give between 200 and 800 tickets a game."

In the corporate trade-offs, as many as 7,500 tickets a game were given to companies in return for goods and services such as paint, office furniture and equipment and cars for team personnel.

In a further attempt to heighten awareness, Speros televised home games, a practice he will not follow in 1995. The club's attendance this season figures to be more representative of the fan base.

At this point, Speros has reason to be concerned. By his count, the renewal rate of season-ticket holders is 73 percent. And though only 6 percent have said they won't be back, it appears a significant segment of last year's fans either will opt for single-game tickets or pass altogether on the concept of three-down football.

An off-season of instability with U.S. expansion teams did little to improve Speros' position at home. The league vacated Sacramento, Calif., for San Antonio, and ultimately suspended the Las Vegas Posse franchise after a brutal round of negotiations failed to relocate the team in Jackson, Miss.

The Baltimore corporate community has been slow to warm to the CFL, too. Speros said he had 42 corporate sponsors last year kick in $1.1 million. This year, it's up to 60 sponsors, at $850,000. Sounding like previous hockey and soccer team owners here, he said he needs more corporate support. How will he achieve it? Bring in some 20 local businessman as additional investors, he said, and the team will make a profit. That's a goal he wants to reach in the next two years.

Operating at a loss

Given revenues of $7.9 million, it seems puzzling the team could have lost $1.1 million. Speros paid $1 to the city in stadium rent, had his legal fees for the NFL suit cut in half by Venable, Baetjer & Howard, and saved $500,000 off an announced franchise fee of $3 million.

Speros did not count the franchise fee in his $9 million worth of expenses, but much of that total went to start-up costs. He also gave himself a "small management fee" as general partner, but declined to reveal the amount. He said his financial incentives are bonuses tied to team profits.

"On an accounting basis, we lost $1.1 million," Speros said. "There are reasons why. We've got bills to settle up. Electric, BG&E;, city bills, police bills, bills that were never billed to us until the end of the year. All those bills are being completely negotiated right now. Pertaining to our lease, we're responsible for a percentage of those bills."

Speros said he paid nearly $600,000 in legal fees for the NFL suit, even with the generous reduction from Venable, Baetjer & Howard. He also paid $583,000 in stadium improvements, having received much of the labor -- and all of the paint -- through corporate trade.

The team exceeded the league's $1.9 million salary cap by $10,000, which was the amount of bonuses paid to the coaching staff for reaching the Grey Cup, Speros said.

Speros will not have to pump money into the stadium this year. During the off-season, he won legislative approval for $2 million in stadium improvements to be paid with Maryland Stadium Authority funds.

Speros' success has been hailed from Canada to Baltimore.

"I think he did a fabulous job putting the deal together," said Irv Cross, a former NFL cornerback who sold his 2 percent share of the team after the Grey Cup. "He was so highly motivated to get it done."

Image problem

Orioles owner Peter Angelos called Speros a "very enterprising young man," and said a corporate shortfall may have more to do with the level of the CFL product.

"Without detracting from his efforts -- he hustles real hard -- I think the corporate community isn't too enthusiastic about that team, [because] it's not the NFL," Angelos said. "If it's not the NFL, I think the impression that is conveyed is, Baltimore is not major-league. Is it a valid analysis on the part of those who are apprehensive? Probably not. But it's perception that counts."

At Speros' request, the Greater Baltimore Committee will hold a kickoff luncheon for the CFL team on June 15, two days before the home exhibition opener. Don Hutchinson, GBC president, said there was general support in the corporate community for Speros, although he is still unknown to many leaders.

"I don't think anybody in Baltimore knows Jim on a personal basis," Hutchinson said. "It's always helpful if people think you're involved in the community. Jim hasn't been that visible, hasn't been that active in town [as Angelos has]. But generally speaking, there's a comfort level with him."

Speros has made an effort to be visible. He is a member of the Baltimore Chamber of Commerce, the GBC and the CEO Leadership Program and serves as an honorary chairman in any number of charities. Citing the drain on his family -- he and his wife, Ellen, have two children -- he said he has pulled back.

"I can pick the phone up, and I can get on television right now -- any time, any radio station," Speros said. "But in my opinion, I've got to watch the overexposure. The story isn't about Jim Speros anymore, it's about the football team."

Disputes over bills

What doesn't help Speros is a perception that he is stingy with the team's money. Twice last year, he was sued by companies over non-payment of bills.

He settled one suit, against the telemarketing firm of Success Holdings, out of court last December. A second suit, filed by A & G Cleaning, which cleaned Memorial Stadium most of last season, is at the deposition stage. There have been settlement talks, both sides say.

Speros said he withheld payment in both instances because he was overcharged. He said he still intends to pay the cleaning firm.

"I get thousands of bills," he said. "I paid $10 million last year. Success Holdings and A & G are less than $50,000 of the bills. Percentage-wise, it's very small. If that's all the problems I have, God bless me."

According to court documents, A & G is seeking $38,778.10 in defaulted payments, cleaning equipment that Speros kept and lost profits -- plus interest and court costs. Speros' records show a balance owed of $10,419.09.

Grace Blackstone, co-founder of A & G, attempted to have a city loan to Speros for stadium renovations held up (he has received $360,000 of that $500,000 loan, however). Blackstone said she doesn't like the way Speros does business.

"He makes hasty statements," she said. "He's very, very cocky. He has good intentions, [but] he never follows through. He's made appointments with dozens of people, and he doesn't show up. He doesn't send apologies. Then he holds you accountable for whatever decision he had to make in your absence."

She's not the only business person to have to wait to be paid by Speros. It took him at least six months to pay a local sporting goods store for a minor team purchase last summer. It took him 80 days to respond to a series of bills from a local radio personality for sponsorship.

Speros, who has an investment of $500,000 in the team, said he's adhering to his past business practices. But he denied the late payments were caused by a cash-flow problem.

"I run all my businesses like this. I pay on 30 and 60 days," said Speros, who retains some rental properties but spends 12 hours a day working for the team. "I hold as much cash as I possibly can at all times. If anybody's complained, I haven't heard it.

"I run, in my opinion, a very tight operation. People tell me I squeak. That's fine with me. But that's how I run my operation."

If projections prove accurate, Speros expects the team to break even this season, a year he considers critical to long-term success.

"When I hear about an NFL team coming, I think, 'Should I pack my bags?' " he said. "[But] I'm here. If [the CFL] can't work in Baltimore, it can't work anywhere in the States.

"I've got a 60-month, five-year plan. I've got high expectations. I drive these people in the office pretty hard. I can weather any storm. I want to win on the field, and I want to make money."

BALTIMORE FOOTBALL CLUB'S EXPENSES

A list of the cost of doing business for the Baltimore Football Club in 1994:

Department ............ ............ ........... ............. Amount

Players (salary, travel) ........... ........... ......... $3,008,547

Coaches ............... ............ ........... ............ 478,673

Equipment ............. ............ ........... ............ 169,045

Video ................. ............ ........... ............. 30,708

Trainers (medical supplies) ........ ........... ............ 130,350

Scouting .............. ............ ........... ............. 61,723

Total football expenses ............ ........... .......... 3,879,046

Marketing ............. ............ ........... ......... $1,044,776

Game day operations ... ............ ........... ............ 626,608

Media/community relations .......... ........... ............ 157,340

Ticket operations ..... ............ ........... ............ 583,792

Administration (liability, property insurance;legal fees)

............ ........... .......... ........... .......... 2,759,946

Total office expenses.. ............ ........... .......... 5,172,462

TOTAL EXPENSES ........ ............ ........... .......... 9,051,508

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