Minor League, Major Troubles

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Minor league, major troubles
By Justin Fenton Permalink

Originally published July 14, 2007
(With reporter Greg Garland)
Two hours before game time, fans were already streaming into Ripken Stadium
for another season of baseball in Aberdeen. Friends and neighbors exchanged
pleasantries as the smell of funnel cakes and the sound of John Mellencamp’s
“Small Town” wafted through the stands. The crowd gasped as fireworks
boomed overhead, then cheered as hometown hero Cal Ripken, smiling
broadly, tossed the first pitch.

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Cal Ripken
For Ripken, the Hall of Fame-bound owner of the minor-league IronBirds, the
Aberdeen project appears to be a resounding success. Every game has been a
sellout since the 6,000-seat stadium opened in 2002. Companies such as Bank
of America have paid to be sponsors. And at an adjacent baseball academy,
youngsters learn the “Ripken Way” on ball fields that include one modeled after
Oriole Park at Camden Yards.
But even on days like this, when the city-owned stadium is packed, Aberdeen
loses money.
The Harford County community owes $6.7 million in stadium-related debt, and
millions in interest, on a payment schedule stretching to 2022. The city’s
stadium fund has posted operating losses that total more than $1 million since
2001, forcing Aberdeen to dip into its treasury.
“People who come to the games don’t realize what we’re dealing with,” said
Betsy Campion, head of the city’s stadium management board, from her seat
behind home plate during the June 19 home opener. “They see the stadium
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full, they buy food at prices in line with big league ballparks, and they think the
city is a part of that.”
The reason the city isn’t sharing more richly in the proceeds is rooted in critical
decisions made over the past seven years. Represented by part-time politicians
and advised by well-meaning businessmen, Aberdeen took on a project as risky
as it was ambitious for a city of just 14,000.
In closed-door negotiations, Aberdeen signed over to the Ripken businesses
most of the money to be made from the baseball games. City officials had
intended to cover the bills in other ways, including fees, taxes and a deal with
Nottingham Properties to develop adjacent land. But the city’s contract with
Nottingham contained no penalty for delay. The land remains mostly acres of
dirt.
Aberdeen officials, who were already struggling to balance the town’s books
and who raised taxes and other fees last year, have in recent weeks tried to
get various Ripken enterprises to pay more toward the costs of the complex.
The city’s mayor has also considered hiring a financial adviser. Earlier this year,
he floated the idea of selling the stadium but found that was not feasible.
Disenchantment
Over the years, city leaders never fully made public the extent of Aberdeen’s
financial strains. However, interviews and a review of thousands of pages of
records reveal that their disenchantment was growing behind the scenes. S.
Fred Simmons, Aberdeen’s mayor, expressed concerns while he was a member
of the board that oversees the stadium.
“What I am about to say may sting a little bit,” Simmons said in a 2005 e-mail
to some of his fellow board members. “But I think it needs to be said.
“We were not present when the original deal, full of winks and nods, was
formulated. … We do not control either the income or the direction of
marketing at the stadium. … We have [a] dysfunctional relationship with our
`partners’ at the stadium.”
Simmons concluded, “Municipalities, especially this one, shouldn’t be in this
type of business.”
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Former Mayor Douglas S. Wilson, who was defeated by Simmons later in 2005,
defends the way the city handled the stadium complex during his tenure. “I still
think we did the right thing. Hindsight is 20-20. The reason the city is so far
behind is [certain elements] just didn’t get built on time.”
Memos and e-mails obtained by The Sun show the city has for years sought
more money from Ripken entities whose payments have fallen short of the
city’s expectations. The two sides have talked periodically but have failed to
resolve differences.
Ripken’s business representatives maintain that the city hasn’t formally
complained and say that its financial difficulties stem from the stalled adjacent
development. Chris Flannery, chief operating officer of Ripken Baseball, said its
various enterprises have met their obligations.
“We’ve done all the things that we said we would do. … To bring this into
Harford County was a coup.”
Neither Flannery nor the attorney for Ripken who helped broker the deals
would discuss the negotiation process or the contracts’ provisions. They also
declined to discuss the organization’s profits from the Aberdeen ventures.
Ripken, who will be inducted into the Hall of Fame in Cooperstown, N.Y., on
July 29, has said little publicly about the project’s troubles. While in Bel Air for
a parade thrown in his honor, on the same day the IronBirds season opened,
he raised the possibility of making some adjustments.
“I know there’s some issues that have been going on for a while,” Ripken said
in response to a question at a news conference. “My general feeling is to try to
help in any ways we can, and we’re exploring those things.”
The negotiating table
Under great pressure, the partnership between the city and the Ripken
organization was finalized over slices of pizza in a community college
conference room in late 2000.
Before that, the city had been working with Peter Kirk, a minor-league baseball
mogul responsible for new ballparks in Frederick, Bowie and Salisbury.

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Aberdeen had already lined up public funding and broken ground on an $18
million stadium.
But Kirk abruptly dropped out, citing disagreements over strategy with one of
his partners: Cal Ripken.
City officials didn’t publicly acknowledge the crisis. Instead they turned to
Ripken, who agreed to take over Kirk’s leadership role and purchase a team –
assuming that a deal could be struck with the city.
There was a lot at stake for Wilson, who had been elected mayor in 1998 by
just one vote. An accountant based in Aberdeen, he turned to a pair of
associates to negotiate the terms: Peter A. Dacey, the city manager, and
Donald E. Brand, a local attorney with a background in construction and family
law, but not sports business or entertainment.
Across the negotiating table, by contrast, was someone rich in experience in
both specialties. Lonnie Ritzer had helped broker the sale of the Orioles to
Washington attorney Edward Bennett Williams years before and was a tax
lawyer at the Baltimore firm of Ron Shapiro, Ripken’s agent in negotiating his
player contracts.
Participating by cell phone was Ira Rainess, who had negotiated lucrative
endorsements and other arrangements for Ripken. He would later establish a
business doing the same for sports figures including Ravens linebacker Ray
Lewis.
Wilson and Dacey said they were confident that the city’s team could handle its
end of negotiations with no additional expertise.
Others weren’t so sure.
“It was suggested that we hire a `gorilla’” to represent Aberdeen, recalled
former City Councilman Jerry K. Hansen. “We never did that.”
During the negotiations, city officials said they were regularly reminded that
Ripken’s stature and the draw of the baseball team and youth academy would
make the project a “Cooperstown and Disney rolled into one.”
The complex, built a few miles from the house in which Ripken grew up and
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where his mother, Vi, still lives, would serve as a tribute to the late patriarch,
Cal Ripken Sr., with three of his children all playing a role. Cal is president and
CEO of Ripken Baseball Inc., with Bill, a former Oriole infielder, and Elly holding
key positions.
“This was not just a business venture by any means for the Ripken family,”
said John Maroon, a spokesman for Ripken. “This was a project of passion, and
a project of caring.”
As stadium agreements between local governments and minor league baseball
franchises go, Aberdeen’s deal with Ripken is middle of the pack.
“This is, other than a couple of these oddball things, a pretty standard deal and
a pretty good deal for Ripken,” said Martin J. Greenberg, a Milwaukee-based
attorney and nationally recognized sports facility expert.
Spending millions
Ripken’s participation helped persuade state leaders to authorize $6 million
toward construction of the $18 million stadium. Harford County officials, who
were skeptical about the project’s viability, contributed $2 million. Ripken spent
$6 million and also paid $3 million more to bring in a team.
The city, with a general fund budget at the time of just $7.6 million, pledged
$4 million.
Most minor-league stadiums are owned by larger jurisdictions that can spread
the costs over bigger budgets – the situation in Prince George’s County, where
the minor-league stadium is overseen by a multi-jurisdictional authority.
Charles County appears to have safeguards built into its deal for a 4,500-seat
stadium set to open next year in Waldorf. The team owner, Kirk, is working
with former Oriole Brooks Robinson. A copy of the agreement shows the owner
has pledged to make minimum payments of $250,000 and cover major
infrastructure improvements for the next 15 years.
‘Quantum leap’
Aberdeen’s deal lacked such safeguards, and the city shouldered an additional

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burden by agreeing to provide land for the academy and an entertainment
center.
“This is a quantum leap by a community” of that size, Greenberg said.
The plan, conceived by local businessman John S. Karas, called for the city to
buy and annex 110 acres of farmland. The stadium and Ripken’s youth
academy – collectively, a $31 million undertaking – would each occupy about
30 acres.
The remaining 50 acres would be sold to a developer for a planned movie
theater and shops. The idea was for the city to use the proceeds to pay off
some of its debt and then reap $800,000 a year in tax revenue.
At a Nov. 13, 2000, council meeting, Dacey, the city manager, outlined the
project in a slide presentation that, unlike the deal, was quick and simple.
Members were assured that they wouldn’t have to dip into the general fund.
They weren’t provided the contract documents, which would be finalized and
signed three weeks later. According to minutes, there was little discussion.
One resident asked Bill Ripken, vice president of Ripken Baseball, whether the
plans had the approval of his mother.
“Mr. Ripken stated yes,” the minutes show.
The council – Hansen, Myra Fender, Franklin “Mac” Bradley and Macon Tucker
– asked no questions, according to minutes. They approved the project
unanimously. Two months later the council authorized millions in two state
bond issues, backed by the full faith and credit of Aberdeen. The documents
specify that the city will raise taxes, if necessary, to make its payments.
Oversight board
A stadium management board was set up to oversee operations. The city
appointed four members and Harford County one.
Tufton Professional Baseball LLC, the Ripken entity leasing the stadium for
baseball games, selected two: Bill Ripken and Ritzer. The board’s first chairman
– a city appointee – was Karas, who had helped gain political and financial
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backing for the stadium and had been actively involved with the city’s Ripken
Museum.
Aberdeen’s share of the project eventually grew to $11 million, including the
extension of sewer and other services. Even though the sale of adjacent land
brought in $4.2 million, it became apparent that revenues would not cover the
mounting debt.
The city was counting on a ticket tax and the potential for parking fees,
advertising on a billboard and non-baseball events. The tax raised about
$140,000 the first season, but the city had little success attracting concerts,
banquets or similar functions. In 2002, those events brought in only $2,000.
“We were too disjointed to make it work right,” said Karas, referring to the
board members’ responsibility for events. That’s why they decided to hire an
outside firm and chose Ripken’s group, Tufton, to book and stage events. The
board agreed to split the revenue in an agreement that would be reworked
twice in later years.
Parking fees could have raised money for the city, which has an “exclusive
right” to charge up to $2 per car at baseball events. But the contract requires
getting permission from Tufton, which has been opposed.
Even the billboard idea had to be scrapped when the placement was found to
violate federal guidelines for ads alongside interstate highways.
A crucial vote
In the summer of 2003, the city prepared to close on a deal it had counted on
to provide a steady source of additional revenue – the proposal by Nottingham
Properties Inc. for a retail and entertainment center bordering the stadium.
When City Council member Hansen questioned whether the deal had a penalty
provision if the developer failed to deliver, Brand, the city’s special projects
lawyer, said none was needed.
“Mr. Brand advised the council to sign the contract stating that this was
Nottingham’s last offer,” according to minutes of the council’s July 14 meeting.
The deal was approved 4-1, with Hansen voting against it.

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A lawsuit from a rival developer delayed the sale for two years, and the
property remains largely dormant. J. Joseph Credit, the former Nottingham
chief executive officer, said this week that construction of the retail
development is not likely to begin until next spring.
“We still have a long way to go. That doesn’t mean we’re not committed to
moving hard,” said Credit, who continues to manage properties acquired by
Nottingham before a recent series of transactions that split up much of its
holdings among several firms.
He noted that a residential component near the stadium is under way. But the
rest might not be completed until 2009 at the earliest. City officials’ cash flow
concerns, meanwhile, are “their business,” he said.
Aberdeen’s foray into the role of developer was also mixed in regard to land for
the academy. For one thing, the city’s agreements postponed lease payments
until operations began in 2003, so scant revenue flowed from the various
Ripken entities to pay down debt that had been incurred. In addition,
infrastructure cost twice what had been projected to improve the academy’s
land. From the outset, records show, lease payments have fallen short of what
was needed to cover the city’s costs.
Dacey said in a January 2004 memo that he was shifting money from different
funds so the city would not default on its bonds. The next month, the city’s
finance department estimated that the stadium fund would run deficits every
year until 2022.
Later that year, the stadium board sought help. It hired Massachusetts-based
consultant Beacon Sports Capital Partners over the objections of board member
Bill Ripken, who said the unique arrangements would be difficult for an
outsider to assess.
In a 2005 report, Beacon wrote that Tufton refused to provide certain financial
information that the board needed to fulfill its “fiduciary responsibility” to
citizens. From the limited information provided, Beacon determined that
Tufton’s revenue from booking non-baseball events was likely “one of the
highest in the minor league baseball industry.”
The consultant, among other things, advised renegotiating the agreement with
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Tufton to get more money out of events at the stadium. But Beacon’s advice
went mostly unheeded.
Latest amenities
While the city struggled, the Ripken group has continued to make the most of
profit-making opportunities granted by the city. It used its right to sell
advertising inside and outside of the stadium. One large ad for financial
services company MBNA is displayed on the back of the scoreboard overlooking
Interstate 95 – near where the city envisioned a billboard.
(Among the team’s sponsors is the Baltimore Sun Co., which also has other
business arrangements with Ripken and his companies. Ripken writes a weekly
column for the newspaper on youth sports.)
This season, Tufton added a party deck in right field and a video scoreboard in
left-center field. A local BMW dealership also signed a multiyear sponsorship
deal for naming rights in the swanky tier now known as the “BMW of Bel Air
Club Level.”
“I guess we’re getting a little more sophisticated in our sixth year,” Cal Ripken
said of the upgrades.
A $22 million hotel opened in April on land leased from the city. The original
plan submitted by a Ripken entity called for an office building resembling the
B&O Warehouse. Later, the plan changed, and Ripken struck a deal with
Baltimore-based H&S Properties to erect a Marriott as the warehouse replica.
“You start with one thing, and it changes to another,” said former Mayor
Wilson, referring to the fluidity of the process.
He and the other officials most directly involved in negotiating the stadium
project agreements have all moved on. Simmons defeated Wilson in the 2005
election, and Dacey resigned for reasons unrelated to the stadium.
Brand, the attorney who oversaw the city’s contracts at $150 an hour,
according to invoices, is now a building engineer for Baltimore County. Citing
attorney-client privilege, he would not comment for this article.

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Wilson and Dacey say they negotiated the best deal they could, working from a
template left over from the Kirk agreement. The former city manager said this
week, “There was nothing in writing that would protect us from annual losses,
but there was nothing that protected Ripken from annual losses either.”
In an earlier interview, Dacey expressed optimism that the city “can weather
these tough times. We’ve got a substantial operation up there that is just going
to get better and better.” Asked whether the Ripken entities should pay more,
he said, “Probably, but a deal’s a deal.”
After taking office, Simmons hired accountant Stephen M. Wright to review the
city’s finances – particularly the shortfalls arising from the Ripken Stadium
contracts. Wright says he tried unsuccessfully to persuade Ripken’s
representatives to relax their strict reading of the terms.
“There were discussions that the `spirit’ of the agreement with the Ripken
entities was that the City of Aberdeen would not have to cover any excess
losses, but, these provisions were not made a part of the written contracts
executed by the previous Mayor Doug Wilson,” Wright told The Sun in a
statement.
Aberdeen remains at odds with Ripken entities on two key fronts related to
contract language: its share of revenues from non-baseball events and its
recovery of the expense of buying and improving academy land. The city
notified Ripken Baseball Inc. last month that the payment for 2006
non-baseball events was about half the $92,000 expected. And it has
complained for years that lease payments are insufficient, falling short by
about $90,000 in the fiscal year ended June 30.
A spokesman for Ripken’s companies says they have paid more than the
contract required for non-baseball events and the exact amount required by
the leases.
Cash-poor Aberdeen has been unable to set aside the $50,000 a year that is
needed for the capital maintenance the city is obligated to pay for. One
consultant’s report estimates that the city will have to cover $2 million in
projects in the next five to 10 years.
Those problems aside, Aberdeen does have something to show for its money:
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a baseball complex that is a source of civic pride and has become an
international draw. The Babe Ruth League 12-and-under championship is
played at the academy’s Cal Senior’s Yard each year.
Among those cheering on the IronBirds during their 12-1 opening night victory
was Wilson, wearing an IronBirds cap and seated in his front-row seats on the
first base side. Ritzer briefly visited his spot behind home plate before settling
in on the club level.
“The Ripken family has put Aberdeen on the map,” said Wilson, after rattling
off the names of major leaguers such as Orioles right fielder Nick Markakis who
have passed through Aberdeen. “To create that in a small government, to be
able to have a minor-league baseball team, I mean, it’s pretty phenomenal.”
Simmons, who attended the next night, remains critical of the stadium deal,
though he said he was impressed with what he saw on his trip to watch the
IronBirds play. He said in a recent e-mail that he would like to renegotiate the
city’s deals but might have to settle for a longer look at other ways to make
money:
“I tried to put all that shook-up Coke back into the bottle but was unable.”
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