- The Washington Times - Tuesday, May 11, 2004

Baltimore Orioles owner Peter Angelos asked some of his department heads to propose budget cuts that could reduce spending by as much as 20 percent, The Washington Times has learned.

The request comes at a time when Major League Baseball is near a decision on the relocation of the Montreal Expos. Washington, of course, is a possible destination for the Expos, something Angelos has fought, claiming a team in Washington would cut into his team’s market. It’s possible the Orioles’ owner may be positioning himself to sell the team, though the budget cuts also could be a business decision in a volatile economy.

Club spokesman Bill Stetka said he could not comment, and neither chief operating officer Joe Foss nor John Angelos, the owner’s son and the Orioles’ executive vice president, could be reached for comment.

Mark Ganis, president of Chicago-based Sportscorp Ltd., a sports business consulting firm, said he has heard a number of major league clubs have gone through similar reviews recently.

“A number of teams have been doing a comprehensive evaluation of operations with the premise that teams are overstaffed right now,” Ganis said. “Baseball has the highest operating costs of the four major sports, though part of that is the number of games they play and also playing in outdoor facilities.”

And one high-ranking major league official said the club simply could be cutting costs after a first-quarter budget review.

Robert Caporale, chairman of Game Plan LLC, a Boston-based investment bank that has consulted on the sale and refinancing of many pro teams, said he thought the review was unusual.

“This is not the norm. It’s not something I have seen a lot of lately,” he said. “But it certainly is smart business, holding your department heads accountable. It’s very easy for your spending to get out of control, particularly in sports.”

Earlier this year Peter Angelos told the Baltimore Sun the team was not for sale and said his election to the owners Executive Council in January was a sign he was not intending to leave baseball.

“I could see if I had run for the job and not gotten it, people could guess that I might [be planning to leave] but not now. Especially not now,” he told the Baltimore Sun.

Regardless of the reasons, Angelos wants proposals to cut costs.

In a memo dated April 29 and sent by John Angelos, the department heads were asked to consider the cuts. The memo was sent out a week after the department heads met with the owner.

“Pursuant to meetings last week with Mr. Angelos regarding current forecasts of the Club’s financial statements, Mr. Angelos would like each of you to immediately review all of your respective cost center budgets,” the memo states.

The memo comes after baseball commissioner Bud Selig’s public comments that Peter Angelos will not block a move by the Expos to Washington. Also, District officials, who met with baseball’s relocation committee last week, were assured by the committee that Angelos “should not be a factor” in the decision to move the Expos. The Expos are owned by the 29 existing major league owners.

The relocation committee is considering a number of possible relocation sites, including the District; Northern Virginia; Norfolk; Portland, Ore.; Las Vegas; Monterrey, Mexico; and San Juan, Puerto Rico, where the Expos are playing part of their so-called home games. The committee is scheduled to make a presentation to the full MLB ownership May 19 and 20 in New York and could make a decision on relocation by the All-Star Game in July.

The memo asks club officials to “review expenses for both goods and services, as well as for full and part-time staffing,” and asks for recommended changes that would reduce overall expenses by “10-20 percent.” The departments ordered to conduct the review were business/administration, communications, corporate sales and sponsorship, sales and fan services and ballpark operations.

The memo also says all “pending expenditures should be frozen until this exercise is completed.” It went on to ask all department heads to comment on the “benefits or detriments of cutting, or not cutting.”

Ironically, the Orioles increased spending in marketing in the offseason — as much as $1 million in the Washington area — and also in their team payroll commitment. Peter Angelos doled out an estimated $100 million in contracts to sign high-profile free agents Miguel Tejada, Javy Lopez and Rafael Palmeiro. However, the Orioles’ payroll is ranked in the bottom half of baseball’s 30 clubs at an estimated $52 million. In fact, it is less than last year’s $74 million payroll, which was burdened with the final years of the Albert Belle and Scott Erickson contracts, some of which was covered by insurance.

The proposed cuts come in a season when the club raised tickets prices anywhere from 9 to 22 percent. Attendance is up this season by an average of 5,124 fans a game.

It has been rumored for several years that Peter Angelos has considered selling the franchise he purchased at a bankruptcy auction for $173 million more than 10 years ago. There have been reports minority owner Stephen Geppi would lead a group to purchase the team, as well as reports Raymond A. “Chip” Mason, chairman and CEO of Legg Mason Wood Walker Inc., has expressed interest in buying the team. One theory is that Angelos is in line to receive some sort of payment for the Expos coming to the Washington area — an estimated $50 million or more — and then would turn around and sell the franchise.

Staff writer Eric Fisher contributed to this article.

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