29 November 2023
Thirty-five years after the Orioles announced their arrival in Baltimore, then-Gov. William Donald Schaefer introduced a “distinguished visitor” to mark the end of a meeting that would redefine the MLB team’s relationship with the state of Maryland.
The Oriole Bird came into the conference room and rallied the elected officials and bureaucrats with a chant of “O-R-I-O-L-E-S.”
The occasion — final approval of a state-of-the-art, taxpayer-funded stadium in exchange for the Orioles’ long-term commitment to Baltimore — came on the heels of the painful departure a few years earlier of the NFL’s Colts. The baseball club’s 1988 deal promised a “no-escape” lease and years of economic benefits in exchange for significant financial investment from the state.
Another 35 years have passed and Maryland officials are again on the verge of devoting valuable state resources to lock the team in for another three decades. Negotiations are ongoing for a new Orioles lease for Oriole Park at Camden Yards before the current one expires at the end of December.
Just by signing a lease, the Orioles would unlock a promised $600 million of new state funds for improvements at the ballpark, but the club wants even more, including a new state fund to help it with upkeep and development rights to key parcels around the complex.
The state already has spent hundreds of millions of dollars on the ballpark for the privately owned club, according to state records, including $450 million on construction and financing and $125 million to help maintain the stadium. An estimated $121 million in property taxes also were not collected because Camden Yards is state-owned. And even more money has been spent on capital improvements at Oriole Park, but the Maryland Stadium Authority declined to share that state spending on a state-owned asset.
It all adds up to more than $1.3 billion of state money spent or given up in service of the ballclub — $700 million-plus to date and $600 million more promised, at a minimum, according to an analysis by The Baltimore Sun.
While parameters of the state’s relationship with the Orioles have been outlined in the lease and other public documents, The Sun obtained additional state records through multiple Maryland Public Information Act requests — including data showing the state’s annual loss in operating Oriole Park and economic studies by consultants — over the course of three months to build a fuller picture over the life span of Camden Yards.
The state says the ballpark has generated hundreds of millions of tax dollars — nearly as much as it’s invested — plus additional economic activity, yet some economists have found that the overall benefit from public investment in sports teams rarely pays off.
“The state of Maryland has almost certainly not received an adequate return on its investment in the Orioles in economic terms,” said Brad Humphreys, a West Virginia University economist. “That’s no different from any other professional sports team in the country, but we still continue to subsidize pro sports teams like this.”
As the Orioles and the state negotiate their next lease agreement, Democratic Gov. Wes Moore has said getting a good deal for taxpayers, lifting up local businesses, creating jobs and inspiring a Baltimore “renaissance” are vital.
The overall investment is not atypical for an American professional team. Many states and municipalities build and maintain stadiums for their teams.
The stadium authority sold $220 million in bonds to build M&T Bank Stadium, which opened in 1998 for the NFL’s Ravens, and also promised the football team $600 million for stadium improvements, which it unlocked when renewing its lease earlier this year.
But the Orioles, as outlined in a memorandum of understanding the team signed in September with the Maryland Stadium Authority, are seeking additional resources from the state before inking a final deal. It likely will be up to the General Assembly to decide whether to give them more.
Democrats who control the legislature declined to talk about the memorandum of understanding, which is not legally binding. They said they wanted to see the details of the lease first.
But some Republicans, who supported a 2022 law to provide $600 million for improvements to each of Baltimore’s pro stadiums, are voicing concerns.
“Whether it’s smart or not, you’re in competition with other places,” House Minority Leader Jason Buckel, an Allegany County Republican, said of the incentives and the fear of losing the team. “The question is, ‘How much is too much?’ I think what the MOU is is too much.”
Buckel said “to most Marylanders, a million dollars here or there adds up” — and people in other parts of the state start asking what they’re missing out on.
Humphreys, the economist, said funds that go to the teams could be spent “on education, on improving the health care of residents in Maryland, on policing, on basic social services.”
The road to $1.3 billion
The state’s investment in the Camden Yards-era Orioles began with about $225 million in bonds — for land acquisition and construction costs — that paid for the ballpark. The debt service on those ultimately cost taxpayers roughly $450 million over 30 years.
The Orioles pay annual rent to their landlord, the stadium authority, which in turn pays for the ballpark’s maintenance, operation and capital expenses. That arrangement has favored the Orioles every year from 1993 to 2022, according to financial information provided by the stadium authority. The state paid a total of $310 million for Oriole Park upkeep while collecting $185 million in rent, a difference of more than $125 million.
The amount of state spending is actually greater: The Sun asked for information about annual capital expenses, but the stadium authority declined to provide it or say why it wouldn’t.
The Ravens don’t pay rent but cover their stadium operation costs, so have not received this benefit.
Under the proposed new lease, the Orioles would pay for the ballpark’s operation and maintenance instead of paying rent. The state would give the team, as part of that agreement, $3.3 million annually in a “safety and repair fund.”
Then, there is the matter of property taxes. Because the Orioles play on publicly owned land, they — unlike the average homeowner, for example — are exempt from paying Baltimore’s 2.2% real property tax. That’s a benefit enjoyed by most, but not all, American pro sports teams.
Geoffrey Propheter, a University of Colorado Denver professor who wrote the 2022 book “Major League Sports and the Property Tax,” estimated that had the Orioles paid property taxes all those years, they would have amounted to at least $121 million. (The Ravens would have paid $176 million, he found.)
Adding these benefits together, plus the soon-to-be-received $600 million, the Orioles will have received roughly $1.3 billion in benefits since Camden Yards was built. That figure does not factor in inflation, any past capital expenses, or the interest on bonds that would be issued for the upcoming capital renovations.
It’s a large sum for a privately owned business controlled by a single family, that of majority owner Peter Angelos.
However, state leaders and passionate fans of the beloved team contend that the Orioles aren’t just any business. They’re a hometown institution that captures the zeitgeist of the city more than any retail chain, manufacturer or other private firm (outside the Ravens themselves). When the Orioles are as successful as during their 101-win 2023 campaign, they bring tens of thousands of people together at a buzzing ballpark.
Playing politics
Though many economists argue substantial public investment in pro teams is a poor decision, political leaders often support clubs financially to appeal to voters who adore their teams — and to keep those clubs in their jurisdictions.
The possibility of a team relocating — like MLB’s Athletics’ recent decision to leave Oakland, California, for Las Vegas — weighs on decision-makers. If the Orioles moved, something Orioles CEO and President John Angelos has said won’t happen, it would devastate the city.
In the 2022 bill supported by then-Gov. Larry Hogan and the General Assembly, the state agreed to earmark $1.2 billion in bonds paid for by state lottery proceeds to renovate the stadiums — provided the teams committed to stay in the city.
In January, the Ravens agreed to extend their lease by 10 years to 2037 (with options for two five-year extensions) and accessed their $600 million of those funds. The football team also has invested its own money in the stadium, including $120 million recently for new videoboards, suites, escalators and elevators, and other improvements.
The Orioles, whose lease expires Dec. 31, agreed in their recent memorandum of understanding to stay much longer: 30 years, plus two five-year options. Their negotiations with members of Moore’s team and the stadium authority continue.
The state has described the memorandum’s terms as cost-saving, noting the Orioles would pay for the ballpark’s operation and maintenance, instead of paying rent. David Turner, a senior adviser and communications director for Moore, said the new arrangement would save the state millions each year.
“The Orioles are taking on financial responsibility, which will save the state money and reduce risk,” Turner said. “The state contribution will remain flat over 30 years as annual costs increase steadily.”
The Orioles, who declined to comment for this story, have said taking over upkeep of the ballpark is consistent with how other teams operate.
In 30 years of rent payments starting in 1993, the team has paid more than $6 million in rent per year. The state has used that money — plus an average of $4 million in state funds annually — to operate the stadium.
Former stadium authority Chair Thomas Kelso has cautioned against the arrangement outlined in the memorandum, because the state would no longer have oversight of the stadium, which could result in the team spending less than it should on maintenance.
“How do the state and the taxpayers of Maryland make sure the team is doing everything it needs to be doing?” he asked.
As outlined in the memorandum, the state would establish a $3.3 million-a-year fund (totaling $100 million over 30 years) to help pay ballpark operating costs.
If the General Assembly agrees to such a fund, it’s possible the Ravens, citing a parity clause in the teams’ leases, could seek a similar fund. The Ravens declined to comment on whether they’d exercise that option.
The memorandum also would lease the B&O Warehouse and other land near the ballpark to the Orioles for an average of $950,000 a year for 99 years in a redevelopment deal that economists have said is favorable to the club.
Such public investment in sports teams is not unique to Baltimore: About three-quarters of the money spent over the past 50 years to build Canadian and American pro stadiums came from public coffers, per a 2022 study. That is not the case in Europe, where soccer stadiums are generally privately funded. And more than two-thirds of MLB, NFL, NBA and NHL teams do not pay any real property taxes, according to Propheter’s research.
Politicians often align themselves with teams, which serve as both a unifying force — providing a sense of community, belonging and national relevance to a region — and a boost to their political agendas. During their respective terms, Hogan and Moore visited Ravens practices, drank beer at Pickles Pub before Orioles’ openers, and invited political and business leaders to join them in their stadium suites.
The value of money
Another key argument for government officials is that teams boost the local economy.
In an annual budget briefing to state legislators in 2022, the stadium authority said there had been $15.9 billion in total spending at the Camden Yards Sports Complex, which includes Oriole Park and M&T Bank Stadium, since 1992 — $9.2 billion of which was related to the Orioles. It estimated $600 million in overall state tax revenues were generated by the Orioles and $400 million from the Ravens, who first played at their stadium in 1998.
According to seven economic impact studies the stadium authority commissioned between the 2014 and 2021 seasons (which The Sun obtained using the Public Information Act), the Orioles generated an average of $311 million per season in direct or indirect spending. Between personal and corporate income taxes and sales taxes, the state revenue averaged $15.6 million per season, according to the estimates by Crossroads Consulting Services.
That does not include admissions taxes on tickets to games, which the state shares with the city. The stadium authority reports combined admissions tax revenue from all events at the Camden Yards stadiums — about $9.8 million annually over a recent five-year period; it withholds tax information specific to each team, citing confidentiality.
However, several of the documents provided to The Sun in response to its records request mistakenly contained total amounts for annual state tax revenue, while that figure was redacted for other years. That helped reveal some information about admission tax revenues. In 2017, when total paid attendance at Oriole Park was 2 million, the state collected $5.2 million in admissions taxes. In 2019, when attendance dropped to 1.3 million, admissions taxes amounted to $3.2 million.
Additionally, the reports of the consultants hired by the stadium authority claim that an average of about 2,300 full- and part-time jobs annually were “supported by operations of the Baltimore Orioles and Oriole Park.” The jobs are in many sectors, they said, but were not broken down by employer.
While the state hopes the ballclub’s development of the area around Oriole Park would add to those benefits, economists argue the economic impact of pro teams is misleading. In particular, they explain that if fans did not attend games, they’d likely spend some of their dollars on other entertainment that would generate tax revenue and economic impact.
Talks on a new lease agreement appear to be gathering steam as the end of the current one looms. It would need approval by the state Board of Public Works, the three-person spending panel that consists of Moore as chairmanand includes two fellow Democrats: State Comptroller Brooke Lierman and State Treasurer Dereck Davis.
The parties also could agree to a short extension of the current lease, as they did in 2021, while details of a longer one are worked out.
Any new lease giving the Orioles additional funds would require further action by the General Assembly.
“The Orioles are a big part of the state of Maryland. They’re a big part of the city of Baltimore,” said Buckel, the Republican legislator. “Obviously we don’t want to lose them. But they’ve got to probably live with the same deal that the Ravens seem to be able to live with. We gave them $1.2 billion — $600 million each — to improve their stadiums, to enhance their revenue opportunities within the stadiums. That’s an awful lot of money.”
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