With a playoff spot in the bag, the Orioles’ rebuild is paying dividends on the field and seemingly in the team’s finances.
Earlier this year, before the O’s remarkable 2023 season began, Forbes magazine valued the Baltimore MLB franchise at $1.7 billion, up 24% from a year earlier.
According to , Baltimore’s ballclub generated about $150 million in operating income during the prior two seasons. That’s a significant improvement from the years before the coronavirus pandemic when the O’s often lost money.
As part of the rebuild, the Orioles focused on developing younger, inexpensive talent, shrinking its player payroll by shedding more expensive players that acted as a drag on its finances. According to Forbes, the Orioles went from spending more than $160 million a year on players in the 2016, 2017 and 2018 seasons to spending $66 million in 2021 and $83 million last year.
Instead, the club has focused spending on more sustainable efforts, like . Those efforts bore fruit this season, as the youthful Orioles boast the second-best record in the major leagues.
While the Orioles are now on much sounder financial footing, Orioles Chairman and CEO John Angelos recently said that the O’s — which he categorizes as a small-market franchise — may not be able to afford to offer long-term contracts to several of their young star players unless they raise prices “massively” for tickets, concessions and other items that fans buy.
The Orioles’ spending on players remains the third lowest in MLB, yet their operating income — their revenue minus expenses before things like taxes, interest and depreciation — was the fourth highest in the league last year, according to Forbes.
Revenue from tickets and other items, which bottomed out at $20 million in the 2021 season as the team posted the league’s worst record, has started to increase as the Orioles pile up wins. Gate receipts at Camden Yards more than doubled to $45 million in 2022 but remained below the $60 million earned in 2014 when the club last finished first in its division.
The Orioles’ business ledger has improved, in part, by managing player costs. And the team’s value, like that of other pro teams, has “absolutely” increased in recent years, said Dennis Coates, a sports economist at the University of Maryland, Baltimore County.
If the Orioles do decide to sign their young stars — like Adley Rutschman, Gunnar Henderson and Grayson Rodriguez — to long-term, nine-figure contracts, the team’s profits likely will go down “because costs are going up and unless they get a big infusion in revenue, the gap gets smaller, for sure,” Coates said.
The Orioles referred an interview request for this article to a spokesperson for Angelos, who declined to comment.
The club’s player payroll — including salaries, benefits and bonuses — averaged $74.5 million over the past two years after averaging $140 million during the seven years before the pandemic-affected year of 2020, according to Forbes. The club’s operating income averaged $75 million over the past two years after averaging $9 million in the same years before the pandemic.
The team’s finances have taken a front-row seat this summer as the Orioles play their best baseball in years.
Orioles and state officials currently face a Dec. 31 deadline to sign a long-term lease to continue playing at the state-owned Oriole Park at Camden Yards, which opened in 1992 after being built with public money by the Maryland Stadium Authority. State taxpayers will provide at least $600 million more in upgrades if the Orioles sign the lease and commit the team to Baltimore for at least several more decades.
But Angelos has held out from signing a lease as he works to reach .
Coates, the economist, said that Angelos suggesting the Orioles could not afford to sign top talent to long-term deals without raising prices could be “part of a campaign for bigger subsidies.”
“If you can convince the state and voters of the state that they should give you their hard-earned money to be even richer than you already are, then I guess, more power to you,” he said.
And while Angelos has said the Orioles will play in Baltimore as long as Fort McHenry stands watch over the harbor, members of the Angelos family have considered selling the team. The team’s incapacitated owner — John Angelos’ 94-year-old father, Peter Angelos — wants the family to sell the Orioles after his death, according to court documents filed on behalf of Peter Angelos’ wife, Georgia, and their younger son, Louis.
The documents show the family hired an investment banker in recent years to solicit bids for the team. The Angelos family owns 70% of the shares, John Angelos said in January. Sources have told The Baltimore Sun that if the Orioles are indeed for sale.
Peter Angelos, an attorney who made his fortune on asbestos-related lawsuits, purchased the team with several partners in 1993 for a then-record $173 million, about one-tenth of the franchise’s present-day valuation. Accounting for inflation, that’s nearly $1.2 billion.
Still, the Orioles’ $1.7 billion value ranks 18th in MLB, according to Forbes, with the average club being worth $2.3 billion. The New York Yankees, a fellow member of the AL East, topped the rankings at $7.1 billion, with the Boston Red Sox in third at $4.5 billion.
With the exception of the pandemic-struck 2020 season, the Orioles have generated annual revenue of a little more than $250 million dating back to the 2016 season.
After losing money in 2016, 2017 and 2018 — when the club annually paid several players, including Chris Davis, more than $10 million and player payroll averaged about $169 million — the Orioles returned to profitability in 2019 after trading away star third baseman Manny Machado and others during the previous season. The team made $57 million in operating income that year as player expenses dropped to $103 million, according to Forbes.
The team then lost money in 2020, according to Forbes, during the COVID-19 shortened season. But the seeds of the rebuild were germinating.
John Angelos, who has been the club’s since 2020, has said he doesn’t like to “run losses” or operate in the red.
Angelos has yet to follow through on , leaving the Forbes data as one of the only sources to consider as Angelos warns he would have to raise prices at Camden Yards to keep the team’s young stars.
Forbes conducts its annual analysis using season revenue and a variety of sources such as public records and interviews with executives and experts. While the magazine’s analysis includes TV rights fees, it does not include any ownership of local baseball networks such as Mid-Atlantic Sports Network, which is majority-owned and controlled by the Orioles.
“Let’s say we sat down and showed you the financials for the Orioles,” Angelos told a New York Times reporter last month. “You will quickly see that when people talk about giving this player $200 million, that player $150 million, we would be so financially underwater that you’d have to raise the prices massively.”
Many of the players who may deserve large extensions are early in their careers and don’t yet command the larger salaries often provided to veterans. For example, the Orioles will pay Rutschman and Henderson less than $1 million this year, despite their productivity.
But it’s become common practice around the majors for teams to secure their young stars with long-term contracts before they reach that stage of their careers. Those two players in particular, Baltimore’s first selections in the 2019 MLB draft, have fueled a turnaround that has the Orioles holding the best record in the American League as the playoffs approach.
There are 15 active players who signed a contract for at least five years while 25 years old — Rutschman’s age — or younger, . Five of those contracts exceeded $150 million in salary over the lifetime of the contract, with those payments spread over 10 seasons in each of those cases.
Orioles’ ticket prices (an average of $30, per Forbes) are relatively affordable, but concession costs at the ballpark have not been cheap. The highest average ticket for any team was $65, for the Chicago Cubs, and the lowest was $22, for the Arizona Diamondbacks, according to Forbes.
A found the 33 cents per ounce cost of soda at Camden Yards was tied for the fifth-highest in MLB, the 28 cents per ounce cost of water was tied for 10th highest and the $8 for nachos with cheese was tied for sixth highest.
O’s fans are, however, allowed to bring in food and nonalcoholic beverages to the park. Additionally, in an effort to provide more budget options, Camden Yards has a $4.10 concession stand offering sodas and basic food options at the price point chosen as a nod to the Baltimore area code.
Angelos often in his efforts to justify the organization’s spending habits in recent years.
He told The New York Times in August that the deck is stacked against small-market clubs like the Orioles and in February, he said the Orioles probably would not have the payroll of the New York Mets, Los Angeles Dodgers or Red Sox — and certainly not the Yankees.
During spring training, Angelos said he hoped the Orioles could emulate the Milwaukee Brewers, Cleveland Guardians and Tampa Bay Rays. Those three teams are consistent contenders despite generally having payrolls ranked in the lower half of the majors. But it has been 75 years since one of those teams won a World Series. The Orioles last won the title in 1983.
“Could payroll be double or triple what it is? Or could it be over 100 million? Yeah,” Angelos said. “We’re not there yet. We have a very young team that’s overachieved and overperformed because of the great work of our baseball folks. It’s not my job to predict payroll.”
As the Orioles continue their magical season and appear set up to win in the coming years, focus in Baltimore remains on the playoff-bound 2023 Orioles. But if fans cast an eye toward the future, there is no guarantee the young players who rebuilt the Baltimore club will stick around: Angelos is telling fans they’ll have to foot the bill if they hope to keep these popular players — and their success — in Baltimore.
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