As baseball moves toward the World Series, the Orioles are mere spectators again after completing a 10th straight losing season and finishing with the second-worst average attendance in their 16 years at Camden Yards.
But if you think those failures on the field and at the box office have diminished the franchise's value, think again.
Because of the excellent fiscal health of Major League Baseball, the creation of the Mid-Atlantic Sports Network by Orioles owner Peter Angelos and the league, and the continuing adoration for Camden Yards, the Orioles are worth more than ever before, investment bankers and financial analysts say.
The team is valued at about $400 million, says John A. Moag, president of Moag and Co., a Baltimore-based investment banking firm that specializes in sports transactions. And MASN, which is 90 percent owned by the team, is worth at least another $400 million, he said.
That's a far cry from the $173 million (about $240 million in today's dollars) that Angelos and his partners paid for the Orioles in 1993.
Angelos has said he has no plans to sell the Orioles and wants to turn the club around. Still, Moag and other financial experts base their estimates of the team's value on what a prospective buyer would be likely to pay.
"I think you have some people out there who would regard the Orioles as a real turnaround opportunity," said Moag, who was chairman of the Maryland Stadium Authority in the 1990s. "I don't think anyone believes for a minute that there are no more baseball fans in Baltimore."
Declining attendance and poor on-field performance aren't good for the value of the team, said Stephen D. Greenberg, managing director of Allen and Co., a New York investment banking firm that specializes in sports.
"But a buyer would look and ask if you could reasonably get back to where it was," Greenberg said. "If that's the case, and I think it probably is with the Orioles, they would tend to look past that snapshot of bad performance."
Selling points
The Orioles have a great legacy in Baltimore, play in a pre-eminent ballpark and control a potentially lucrative cable network, Greenberg said. "If you have those three facts, you can overcome the short-term perception of the team," he said.
Greg Bader, a spokesman for the Orioles and Angelos, said he could not discuss the financial state of the team.
In trying to determine the Orioles' worth, it's easy to come up with a starting point: at least $360 million. When Angelos expressed concerns about the Montreal Expos' moving into the Baltimore-Washington market, Major League Baseball guaranteed that his franchise would sell for no less than that.
That guaranteed minimum price might prove irrelevant, though, because teams sell for more and more each year, Greenberg said. The Washington Nationals, a club with no history entering a similar but richer market, sold for $450 million last year. The Chicago Cubs, a team steeped in tradition in one of the country's largest markets, are expected to sell for $1 billion or more in the near future.
The most-quoted valuations in sports come from Forbes, and analysts agree that the magazine's figures represent good estimates.
"They do a good job of situating the teams relative to one another, and I'd say they usually come within 10 percent on the dollar figure," Greenberg said.
Forbes estimated the Orioles' value at $395 million this year, up from $359 million in 2006 and $296 million in 2004. Over the past 10 years, the Orioles have ranked between 12th and 14th in value among the 30 major league clubs. The New York Yankees topped the magazine's 2007 list at $1.2 billion.
"Under Angelos, the organization has been plagued by terribly low morale in the front office, shoddy play on the diamond and falling attendance," the magazine said this spring. But Forbes went on to note Angelos' acumen in negotiating compensation for the Expos' move.
Tuned in to market
The creation of MASN was Angelos' master stroke in guaranteeing the value of his franchise. Faced with the Expos' move, he persuaded baseball officials to compensate him with majority control of a network that would broadcast the games of both the Orioles and the Nationals.
As the Yankees and Boston Red Sox have demonstrated with the YES network and NESN, respectively, team-owned regional networks can produce enormous revenues. In many cases, the cable channels end up being valued higher than the teams. By Moag's estimate, the Yankees are worth $1.5 billion, but YES might be worth more.
MASN's value isn't as established, but Moag and Greenberg agreed that any network broadcasting two major league teams in a wealthy market can't help but be a valuable property. Moag said the network probably is already worth as much as the Orioles, based only on its earning potential.
John Mansell, a Kagan Research analyst who specializes in regional sports networks, agreed that MASN could be worth as much as or more than the Orioles. He noted that when the Red Sox sold for $700 million in 2002, the club's 80 percent stake in NESN was thought to account for half the value of that deal.
He said the values of regional networks are on an upward trend, especially when those networks are owned by the teams they broadcast and thus have leverage over cable carriers such as Comcast.
In addition, baseball is the sport of choice for regional networks because it offers so many game dates and faces little competition in the summer. Better still, MASN holds the rights not only to the Orioles but also to the team's chief regional competitor, the Nationals. That sets the network apart from similar channels in two-team markets such as New York and Chicago. "It's a tremendous boon for the team," Mansell said.
Angelos and his advisers have said revenue from the network would help the Orioles compete with the Yankees and the Red Sox, teams that pump cable money into player payrolls. But it's not clear how willing Angelos would be to use MASN to cover baseball expenses.
Projections of the Orioles' value shouldn't be taken as gospel, Greenberg said, because business conditions at the time of a sale would determine the precise figure.
How many local bidders, who are favored under Major League Baseball policy, would surface? Would a wealthy out-of-towner, desperate to own a team, swoop in as others did in Milwaukee, Cincinnati and Atlanta? Will the sport still be in a boom period?
"If you're trying to sell a rare piece of art, and there are three billionaires in town who want it, it's a lot more valuable than it would be otherwise," Greenberg said. "A baseball team is a rare item, so at the end of the day, it doesn't matter what Forbes says it's worth. It comes down to a meeting of the minds between seller and buyer."
childs.walker@baltsun.com