ELI JACOBS WEIGHS SELLING THE ORIOLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP99-01448R000401660033-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: May 22, 2012
• Sequence Number: 33
• Publication Date: June 6, 1991
• Content Type: OPEN SOURCE

Si Declassified in Part - Sanitized Copy Approved for Release 2012/05/23: CIA-RDP99-01448R000401660033-6
F1i Jacobs Weighs
Selling the Orioles
financier Uneasy in Public Eye
By Bill Brubaker
wwwoo. Pat sac wdoa
Eli Jacobs, the New York-
based financier, said this week
he is considering selling the
most publicized and scrutinized
of his 25 companies: the Balti-
more Orioles.
Jacobs said he has informed
Baseball Commissioner Fay Vin-
cent that he would like to re-
sume a lower-profile life and de-
vote more time to his varied
business, civic, government and
philanthropic interests.
"It's become very difficult for
me to do justice to all of my com-
mitments in a 168-hour week,"
said Jacobs, whose companies'
annual revenues exceed $5 bil-
lion 'So, as I look at my time
commitments, I would consider
the possibility of selling the Ori-
oles to the right buyer.
"If I continue owning the Ori-
oles, I'm going to pay a personal
price in terms of my lifestyle. I
haven't taken a vacation in al-
most a year and a half. And I
don't think that's healthy."
Jacobs said he decided to ex-
,.plore a possible sale after two
-'!serious" and "credible" invest-
ors, whom he declined to name,
approached him in January and
February. He said he retained
the J.P. Morgan investment
banloog firm in March to assess
the marketplace and evaluate
potential buyers.
Jacobs's revelation comes at a
time when two of his holdings-
Memorex Telex N.V., a Dutch
computer firm, and Triangle Pa-
cific Corp., a cabinets and floor-
ing company-are experiencing
financial difficulties. Jacobs said
these difficulties have had no
effect on his Orioles business.
The Orioles, troubled with
injuries this season, are in last
place in the American League
East. Still, this could be a favor-
able time for Jacobs to sell the
team. In 1988, he headed a
group that paid $70 million for
the team, and today the Orioles
are believed to be worth upward
of $120 million. The entry fee
for an expansion team in the Na-
tional League is $95 million.
The Orioles' value is enhanced
by a $105 million ballpark-de-
signed in part by Jacobs and fi-
nanced principally by state of
Maryland lottery revenues-
that will open next spring at
Camden Yards, a 10-minute walk
from the Inner Harbor tourist
district and 50-minute drive
from Capitol Hill.
Another incentive for an own-
er to sell now is that baseball
may face economic problems
because of sustained escalation
of player salaries and heavy
losses incurred by television net-
works CBS and ESPN in their
contracts with baaa is
"This process [of considering a
sale] was not initiated by am."
Jacobs said. "I'm reacting to and pon-
dering the possibility initiated by oth-
ers. There's no rush to sell. But peo-
ple have evidenced a high level of
interest. There are people who think
the Baltimore Orioles are a very
strong franchise. But I would only
sell to people of quality and sub-
stance who share my vision of what
baseball in Baltimore is about."
Jacobs, 53, made these com-
ments during a two-hour interview
in New York this week. In the in-
terview-and in an earlier one in
Baltimore-the intensely private
investor discussed a range of topics,
from the Orioles' reluctance to tap
into the free agent player market to
CONTINUED
The Washington Post
The New York Times
The Washington Times
The Wall Street Journal
The Christian Science Monitor
New York Daily News
USA Today
The Chicago Tribune
Date iqqi
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reports-"totally untrue," he called
them-that he has campaigned
against an expansion team being
awarded to Washington.
The son of a Newton, Mass., real
estate investor, Jacobs amassed a
fortune during the 1980s through
leveraged buyouts: using borrowed
money to acquire controlling inter-
ests in companies whose stock is
publicly traded.
While that strategy was popu-
lar-and successful-in the '80s, it
has created credit problems for Ja-
cobs and other investors in the
'90s. Memorex Telex, for example,
expects to default on loan agree-
ments involving about $250 million
in debt.
Jacobs said these credit problems
have had little impact on his overall
financial picture because the affect-
ed companies "represent a small
fraction of my total assets." Jacobs
has a net worth of more than $500
million, according to a source famil-
iar with his portfolio.
The $70 million Jacobs's group
paid to the estate of Washington
lawyer Edward Bennett Williams
for the Orioles in 1988 was a record
price for a baseball team. Jacobs
ended up with 87 percent of the
club, putting $35 million cash into
the deal, according to an Orioles
source. The club was acquired by
Williams in 1979 for $12 million.
The Orioles have finished second-
and fifth in the American League
East under Jacobs's ownership.
This season, as they fell to last
place, the Orioles replaced their
popular manager, Hall of Famer
Frank Robinson, with first-base
coach John Oates. In the midst of
this turmoil, Jacobs-a confidant of
senators, high-ranking White House
officials and luminaries from the art
and publishing worlds-has come
under increasing scrutiny.
Around the club's offices, he is
considered by some to be distant
and aloof. Sports columnists in Bal-
timore and Washington have called
him a tightwad, more concerned
with hosting heavy hitters in his sky
boxes-President Bush and Queen
Elizabeth II were recent guests-
than acquiring some for his lineup.
On radio talk shows, fans have
questioned whether he's committed
to the team for the long haul.
CONTINUED
"The long haul? What's the long
haul?' Jacobs said in an interview
May 24, the day after Robinson was
fired. "Will I own the Orioles five or
10 years from now? ... I never
make predictions about futures. We
live each day for that day. And the
future just sort of takes care of itself.
"My commitment today to the
Orioles is 100 percent."
This week, Jacobs spoke of the
impact of his Orioles commitment
on his many and varied activities. In
addition to owning 25 companies
that manufacture everything from
toys to plastics to machinery, he
serves, for example, on the board at
Johns Hopkins University and on
the citizens advisory panel estab-
lished by the Senate Select Com-
mittee on Intelligence. He recently
donated $3 million to Johns Hopkins
for glaucoma research.
"My view is that if one is involved
in activities of these sorts, one
should be a committed, active, en-
gaged participant," he said. "I spend
a great deal of time on the Orioles. I
attend approximately 70 major
league games a year. What I've
found is that there are a number of
other activities in life that give me
great satisfaction."
In addition to the president and
thesL, aco s s guests a
g~ games have included ice
ce
President Dan Quayle.' Defense
r ten I CTA
Director William ester Com-
merce SFcretarX o rt os-
bac er ice o na ement and
Director Richard Dar-
man. Treasury Secretary is to as i
Brady and to House lChiet of
Staff John K. nun .
Federal government contracts
accounted for about 5 percent of
Memorex Telex's sales last year. I
But Jacobs said he does not discuss
business with the government of-
ficials who visit his Memorial Sta-
dium skybox. "We're all here to en-
joy baseball," he said.
Some critics say there's nothing
wrong with the Orioles that a few
high-priced free agents wouldn't
fix. The club has the second-lowest
payroll in the major leagues (the
Houston Astros' is lower) largely
because it has shunned the free
agent market and because many
players on its youthful roster are
ineligible for free agency (six years
of major league service is required).
25
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The Orioles fielded some of base-
ball's finest teams from the mid-
1960s to the early 1980s, when
they on three World Serifs cham-
pionships. During the mid-'80s,
however, their owner, Williams,
invested millions on free agents
who flopped, and they lost a club
record 107 games in 1988.
Jacobs has rebuilt the Orioles, for
the most part, with less costly,
home-grown talent: a blueprint de-
veloped (before Williams's death in
August 1988) by team president and
part owner Larry Lucchino, general
manager Roland Hemond and player
personnel director Doug Melvin. Ac-
cording to Hemond, the Orioles have
increased their scouting and player
development budget by 40 percent
over the last three years.
"No one has established that
there's a correlation between play-
ers' salaries and baseball perform-
ance," Jacobs said. "Perhaps the
best illustration is the Cincinnati
Reds, who had a payroll of approx-
imately $15 million last year. They
beat the Oakland A's, who had a
payroll in the 30 millions of dollars,
in the World Series. And they beat
them in four games.
. "If you look at the empirical data,
and you look at the clubs that spend
large amounts of money-Kansas
City and the Yankees being illustra-
tions-it doesn't necessarily cor-
relate with success."
Jacobs opened his wallet briefly to
sign former Houston Astros slugger
Glenn Davis to a one-year, $3.275
million contract. Robinson said this
spring he would have preferred a
longer term contract for the star first
baseman. Davis has been out most of
the season with a neck injury.
"That's called the breaks of the
gam," Jacobs said. "I think luck is a
factor in most enterprises. Luck has
not been with us."
Jacobs fell silent when asked last
month if he would like to re-sign
Davis when he becomes a free
agent next season. Five seconds
passed. Ten seconds. Twenty. Fi-
nally, Jacobs said, "I'd like to see
how Glenn Davis does this year."
Buttoned-down and bottom-line,
Eli Solomon Jacobs has been an un-
likely baseball owner: in a business
that attracts immense public inter-
est, he shuns the spotlight. Al-
though he was managing editor of
the Yale Daily News and is on the
Times-Mirror publishing company's
board of directors, Jacobs seems
wary of the media and goes out of
his way to avoid publicity.
In the late '70s, Jacobs took the
unusual step of hiring a public rela-
tions agency, Kekst and Co., to keep
him out of the newspapers. "I've al-
ways been a private person for as
long as I can remember," he said.
"Now you're about to ask: Then why
did I buy the Baltimore Orioles?"
The bespectacled, 6-foot-3, 220-
pound investor said he bought the
club because of a lifelong interest in
baseball-he was a Boston Red Sox
fan as a child-and because the Ori-
oles are among "the best franchises
in all of sports."
As a new baseball owner Jacobs,
whose name rarely had appeared in
the press, was courted immediately
by sports and business. writers.
When reporters called, he typically
referred baseball questions to Luc-
chino, who owns 9 percent of the
club. (The remaining 4 percent is
held by R. Sargent Shriver, a law-
yer who was founding director of
the Peace Corps, and his son, Bobby
Shriver, a venture capitalist.)
"I greatly underestimated the
amount of public attention that at-
taches to owning a major league
baseball team," Jacobs said this
week. "There are some people who
don't enjoy having high profiles.
And there are some who do. I would
prefer that I live a normal, ordinary
life. It's very hard to live a normal,
ordinary life when you own a major
sports franchise."
Several newspapers have re-
ported in recent weeks that Jacobs
tried to discourage other baseball
owners from permitting an expan-
sion team in Washington, a market
in which the Orioles sell about 25
percent of their game tickets.
Washington is one of six cities vying
CONTINUED
2G
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for two National League teams
scheduled to be awarded this year.
"I don't know where the rumors
come from but they are totally un-
true," Jacobs said. " . . . The Orioles
have no position on baseball in
Washington, other than the position
that if our vote were required we
would vote for baseball in Washing-
ton.... We would not want to be
the reason why baseball didn't come
to Washington."
As Orioles owner, Jacobs leaves
most of the day-to-day business to
Lucchino, but he has played a direct
role in big-money decisions such as
Davis's contract and in the new
46,500-seat ballpark, which he calls
my pride and joy."
With the exception of Lucchino,
with whom he speaks virtually every
day, Jacobs has had little personal
contact with club emolovees. He flies
to see the team play in one of his two
private jets and is uncomfortable
schmoozing with club officials and
slapping players on their backs. In an
interview this spring, Robinson, the
former manager, said he'd had only
"three or four" private conversations
with Jacobs in two seasons.
Much of Hemond's interaction
with Jacobs has been in the owner's
skybox. "He'll say, 'Roland, can you
come over ... and answer ques-
tions [that Jacobs and his guests
have] about the players or things
that have transpired on. the field?' "
Hemond said.
Lucchino, who was the Orioles'
vice president and general counsel
during Williams's ownership, said it
took "some time" to become accus-
tomed to Jacobs's style.
"Ed Williams was not a person
who believed in long-winded, ram-
bling telephone conversations,"
Lucchino said. "But even as quick
and brief to the point as Ed's con-
versations were, my conversations
with Eli are even more so. You
know. Bang! Get to the point.
Boom! Let's move on.... This is
the way Eli operates."
Jacobs, who is divorced, owns
houses in Owings Mills, Md., and
Los Angeles and resides at the Ho-
tel Pierre when he's in New York. If
he sells the team, he said he'll keep
his Maryland house, have a skybox
in the new stadium and continue
rooting for the Orioles.
"Do I like the idea of selling? No,"
Jacobs said. "I'm a committed base-
ball fan."
Still, on some summer nights, in-
stead of catching a doubleheader,
Jacobs said he may prefer choosing
a book from his 10,000-volume li-
brary and returning to the world he
cherishes: anonymity.
"Before I bought the Orioles, I
was able to read two or three se-
rious books a week," he said. "Now
my reading has dropped to one book
every two or three weeks. I'd like
to go back to reading two or three
serious books a week. At the mo-
ment, that's impossible."
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