[Baltimore Sun] The Orioles have operated as a small-market team. Will that change under new owner David Rubenstein?

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The question cut to the heart of what Orioles fans yearn to know from their club’s new owner, David Rubenstein.

How do you balance winning on the field and profiting off of it, Rubenstein’s interviewer asked at a recent question and answer session for the Economic Club of Washington.

“It’s not easy to figure out how much money put in,” replied Rubenstein, who built his estimated $3.8 billion fortune in the private equity world. “As all of you know, does money buy you happiness? Not necessarily. It doesn’t necessarily buy you success. The same is true in baseball. Money doesn’t always mean you’re going to have the best team, the best players, the best morale. It’s a complicated mixture of things that have to come together.”

A careful answer from a man who, moments earlier, acknowledged that he’s “feeling my way” into an industry with different economic customs and different competitive pressures than the business world he’s accustomed to.

The issue is not so complicated for Orioles fans, who desperately want Rubenstein to open his checkbook to sign young stars such as shortstop Gunnar Henderson and catcher Adley Rutschman to lucrative contract extensions. They remind the new owner of this urgent feeling anytime they reply to his social media posts about the club.

Previous owner John Angelos earned fans’ enmity last August when he told The New York Times that if the Orioles were to dole out $150 million and $200 million deals, they “would be so financially underwater that you’d have to raise the prices massively.”

That quote was part of the reason Baltimoreans were so euphoric in late January when Rubenstein announced that he would buy a controlling interest in the team at a valuation of $1.725 billion. He has spoken of the “civic obligation” of stewarding a franchise that stands as a “symbol of the city.”

He has said he will entrust the baseball decisions to general manager Mike Elias, who has raised the Orioles from the dregs to the top of the AL East on one of the smallest payrolls in the sport. But will Rubenstein back Elias’ acumen with greater economic muscle?

“Determining how much to spend involves a complicated mix of factors,” said Rubenstein’s longtime spokesman Chris Ullman, who answered questions via email. “Over time, the new ownership group will make spending decisions they believe to be in the best interest of our team, players, and city.”

Forbes’ annual valuations of baseball’s 30 clubs, which in 2023 nailed the sale price of the Orioles, paint a picture of a franchise that spent less on players than all but a few others in recent years but led all of baseball in operating income because of lucrative payouts from revenue sharing and competitive balance (or luxury) taxes levied on clubs that spend beyond a set threshold.

According to Forbes’ latest numbers released in late March, the Orioles ranked 18th in value and 17th in revenue at $328 million but first in operating income at $99 million. Their estimated $101 million spent on players was less than half the sums spent by division rivals Toronto and Boston and about 35% of the total spent by the New York Yankees.

The Orioles, like other privately held teams, don’t make their financial data public.

The one point everyone agrees on is that the Orioles operated as a small-market franchise in recent years with John Angelos as their chairman and CEO.

Forbes writer Mike Ozanian, who helps develop the franchise valuations, said he would cut the Orioles some slack.

“From a baseball perspective, and probably from a business perspective too, I think they’ve done a really good rebuild,” he said. “It’s not easy to make a call. Is a team owner simply being cheap, or is he doing the right thing by not spending a lot on high-priced veterans and free agents while rebuilding from the farm system and the draft? I wouldn’t be quick to say the prior ownership group was being too cheap.”

Others take a more skeptical view of the club’s spending in recent years.

“You’re going to make the big money when you cash in, so my criticism of teams like the Orioles has been that they’re sitting on an asset that’s been appreciating in value for years and they’re also making a lot of money even if they’re not particularly good,” said Rob Mains, who writes about the business of the sport for Baseball Prospectus.

Perhaps more importantly, these analysts are bullish on the Orioles’ future because of the club’s on-field success and because of $600 million in planned state-funded improvements at Camden Yards that could boost revenue. That doesn’t even touch on Rubenstein’s hope to develop the area around the ballpark into a thriving entertainment and shopping district, perhaps similar to the one that has bolstered the Atlanta Braves.

“I think Rubenstein stepped into a great position,” Ozanian said. “He bought a good, young club. He’s getting hundreds of millions of dollars on the public side to renovate the ballpark. That will really help on the revenue side, especially as the team keeps getting better, which it likely will.”

The club has already seen revenue benefits from its recent success. T.J. Brightman, the Orioles’ senior vice president and chief revenue officer, pointed to a 35% year-over-year increase in season-ticket purchases and a 20-25% year-over-year increase in corporate sponsorships. The club expects to sign a sponsorship deal for a jersey patch by the end of the year and Rubenstein has said he will look at the possibility of a deal for naming rights to Camden Yards.

“I also anticipate that, as we look to renovate the ballpark, we’re going to create these new areas that will further drive revenue,” Brightman said. “That’s not only from a fan perspective, but also for corporate partners looking to activate their brands and realizing that Orioles baseball is a good place for them to reach their customers and their stakeholders.”

Ullman offered a similar response when asked where Rubenstein sees the most growth potential, saying “that starts with winning games and with a great fan experience” and that “working with the Maryland Stadium Authority, we have a rare opportunity to modernize Oriole Park and to develop the land around Camden Yards, creating additional economic opportunities for the team and our community.”

There are more difficult aspects of the Orioles’ financial picture. Forbes reported that the Mid-Atlantic Sports Network (MASN), of which the Orioles own 77%, was assigned no value in Rubenstein’s purchase from the Angelos family. Forbes noted that rights fees currently eat up all of the network’s cash flow. MASN also owes the Orioles and the Washington Nationals $305 million each in rights fees covering the period from 2017 and 2021, according to a settlement reached last December.

Ozanian said he does not see the network as a future albatross, because the Orioles’ media rights are still valuable, but MASN might not serve as the great economic ballast it was thought to be upon creation.

“Resolving the MASN issue is a priority, and David is working on it,” Ullman said.

So much of the club’s future economic stance will come back to Rubenstein, who has launched a charm offensive — labeling his ownership “The Next Chapter,” inviting fans to watch games from the owner’s box at Camden Yards, spraying delighted patrons as he subbed for “Mr. Splash” and releasing advertisements that depict him looking on bemusedly as minority owner Cal Ripken Jr. sets up a desk at his old shortstop position.

“Obviously, David is a brilliant businessman and generous philanthropist, but it’s rare to see someone in his position so naturally able to bridge from the owner’s suite to the splash zone and to do so in such an authentic way,” said Alan Rifkin, longtime legal adviser to the team. “In many ways, he reminds me of former Gov. William Donald Schaefer, who had the same extraordinary gift of relatability.”

The new owner’s embrace of Ripken, who now watches many games from a front-row seat behind home plate and who appeared with Rubenstein at the Economic Club of Washington Club event, has been an early point of emphasis.

“I’ve known David probably close to 20 years now,” Ripken said. “We’re all settling into the ownership because it’s still new. But David’s going to want to help Baltimore in any way he can. … If you ever want to know what David’s thinking, just ask. He’s direct. But he’s going to be in the community, he’s going to care about the community. This ownership group is going to guide the Orioles franchise toward how Baltimore really feels about their Orioles.”

Club officials have lauded the new owner’s eagerness to hear their ideas for pushing the Orioles forward. He has won them over at the same time he has wooed fans, creating belief that he will do everything he can to bolster the team’s business and baseball fortunes.

“The first meetings we had with David, Michael Arougheti, his partners, they basically asked us what they could do to help,” Brightman said. “So, that’s super refreshing, because we all want the same thing. We want to continue to build our fan base. We want to drive more people to downtown Baltimore, feed the local economy and then ultimately bring a World Series back to Baltimore.”

None of that, however, tips Rubenstein’s hand on spending decisions related to the on-field operation. By all accounts, he’s developing his philosophy deliberately.

“David is committed to investing in all aspects of the organization,” said Ullman, his longtime spokesman. “David will have extensive discussions with general manager Mike Elias and his team to determine what is best for the organization, now and in the future.”

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There’s no indication Rubenstein plans to splurge on big-ticket free agents as hedge fund billionaire Steve Cohen did after he bought the New York Mets in 2020. But several people familiar with Rubenstein’s thinking since he bought the Orioles believe he will give the club a better chance to retain stars such as Rutschman and Henderson — the club’s top young players aren’t due to start reaching free agency until after the 2027 season — or to add a significant player as the team pursues a championship this season. He plans to lean on Elias, who has lauded the “really exciting energy” brought by his new boss, to determine the right times to strike.

The owner’s spokesman said he had no comment on John Angelos’ remarks from last summer about the need to raise prices to cover lucrative extensions.

Rubenstein has portrayed himself as a baseball neophyte, still learning the ropes from Elias and others who have built the club. He told the Economic Club of Washington he sees purchasing the Orioles as a way to reinvigorate the city where he played Little League baseball and received a terrific public education as a 1966 alumnus of Baltimore City College. Part of that mission, he said, is creating a team that will entice star players to stick around.

But will that lead Rubenstein to take a more liberal view on spending than John Angelos, whose economic pessimism put a damper on an otherwise thrilling summer of 2023?

“Rubenstein to date has at least been saying the right words,” said Mains, the Baseball Prospectus writer. “He hasn’t used buzzwords like ‘financial flexibility.’ He’s talked about putting a good team on the field. For better or for worse, Orioles fans will get a pretty good chance to find out how much he means it in the next few years.

“Everybody’s young now, but we’re going to see all these stars soon enough go through arbitration and then approach free agency. We’ll see his appetite for signing extensions.”

Baltimore Sun reporter Matt Weyrich contributed to this article.

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