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It was a scorching day in Manhattan outside the U.S. bankruptcy court, but the bidding war inside was even hotter.
As temperatures climbed to nearly 100 degrees, an audience of attorneys and onlookers crowded into the courtroom on Aug. 3, 1993, to watch Peter G. Angelos square off against a New York art dealer. For 16 rounds, the two sides slugged it out, offering higher and higher sums.
The prize? The Baltimore Orioles. The cost? An unprecedented $173 million.
When the art dealer relented, the audience broke into applause, cheering Angelos, The Baltimore Sun reported, but others “murmured their disbelief at the price.” No one had ever paid that much (about $366 million in inflation-adjusted dollars) for any professional sports team in American history, and even Angelos was surprised he had paid that much.
Now, three decades later, the Angelos family has agreed to sell a controlling stake in the Orioles that values the organization at $1.725 billion.
In today’s sports world — where teams such as the New York Yankees and Los Angeles Lakers are valued at several billion dollars — the valuation of the Orioles might seem like a stale box of Cracker Jack. But financial experts say buying the team in 1993, 2024 or pretty much any year is a shrewd financial decision. That’s because professional sports teams are a limited investment class that generate annual profits and elevate their owners to an exclusive aristocracy.
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The Orioles last came up for sale after the team’s former owner, Eli S. Jacobs, declared bankruptcy in 1993. The New York businessman bought the team four years prior for just $70 million. Prospective owners from across the country began stalking the Orioles in bankruptcy court, compelling Angelos to act.
Angelos, who made his fortune representing victims of asbestos poisoning, didn’t buy the Orioles alone. He assembled a 25-person ownership group that included tennis player Pam Shriver and filmmaker Barry Levinson, according to a 1993 profile in The Baltimore Sun. Angelos’ stake — at least $40 million — was the biggest share, putting him in charge.
The Washington Post reported that Angelos and his partners borrowed more than $100 million from a bank to close the deal.
That’s key, explained Jeffrey Hooke, a former investment banker who lectures at the Johns Hopkins Carey Business School. Borrowing money for a deal is called leverage, Hooke said, and leverage means a far greater rate of return for investors like Angelos.
Yes, the investors still need to pay back the bank loan, Hooke said, but the values of professional sports teams rise relatively fast, creating a lot of equity for their owners.
And it’s not as though Angelos bought a brick of gold to sit in a safety deposit box. The Baltimore Orioles franchise is a business, Hooke said, and most professional sports teams generate income.
“I’m sure the [Angelos] family did extremely well,” he said.
The year Angelos bought the team, the club posted a $22 million profit, The Sun reported, or nearly $47 million in inflation-adjusted dollars.
“Winning that title is always the goal,” Angelos said when asked about his investment goals. “Profit margins are secondary.”
Novelist Tom Clancy, who bought the second-biggest stake, had a different answer: “I expect them to make money.”
Under the leadership of Angelos, the Orioles never made a World Series appearance but Clancy, who died in 2013, got his wish. Forbes estimated the franchise had profits of $83 million and $67 million in 2021 and 2022, respectively.
Perhaps the greatest value in owning a professional sports team is that there’s a finite number of them, noted Jason Cherubini, the executive in residence at Loyola’s Sellinger School of Business.
Buying a professional sports team is the American equivalent of knighthood, Cherubini said, instantly placing a person in elite company of wealth and power. There’s also a neat benefit called revenue sharing, he said.
McDonald’s doesn’t send money to Wendy’s when no one is buying Baconators, but that is sort of what happens in professional sports. In Major League Baseball and other pro sports leagues, there is a certain amount of revenue to which each team is entitled.
“You could have the worst team across the board, and you’re still going to be bringing in a fair amount of money and value,” Cherubini said. “A big chunk of your value is owning that one limited piece of the overall pie.”
Peter Angelos, 94, is in failing health. His son John Angelos is the “controlling person” of the franchise. Thanks to his father’s bravado in 1993, John Angelos could soon see a hefty payday if Major League Baseball approves the sale of the Orioles to a group of investors led by David Rubenstein.
But John Angelos might be a far richer man today if his father had been a fan of Texas football.
Before the bidding war inside a sweaty Manhattan courtroom in 1993, the highest sales price of a professional sports team was in 1989, when Jerry Jones bought the Dallas Cowboys for $140 million.
Today, Forbes values the franchise at $9 billion.
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Giacomo "Jack" Bologna covers business and development at The Baltimore Banner.
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