The settlement, which must be approved by the state Board of Public Works to take effect, also modifies the team’s lease, ensuring the authority will see revenue from the advertising located behind home plate in Oriole Park at Camden Yards in coming years, though less than the authority believed it was owed.
“I really think this is the best deal we can get,” said authority Executive Director Michael Frenz. “I think this is a very good deal given the Orioles’ feelings on the matter.”
Members of the authority’s board had questioned whether the deal with the Orioles could affect its lease agreement with the Baltimore Ravens, but approved the settlement after receiving advice from their counsel in a short session closed to the public.
In a statement distributed by the club, attorney Alan Rifkin called the deal “a fair and equitable resolution.”
At issue were advertising boards installed by the team on the wall behind home plate. The Orioles argued that because the ads are directed at the television audience, they were not covered under the team’s lease. The team website calls the space “the most valuable advertising real estate in baseball.”
The Orioles pay rent to the authority for use of the state-owned sports complex based on stadium revenues, including 25 percent of the in-stadium advertising dollars.
Under the agreement approved Tuesday, the team will pay the state 12.5 percent of future revenue from the home plate advertising.
The ads behind home plate have been a source of conflict for the Orioles and the authority since the team installed the boards in 2004. The authority had pursued a cut of the revenue from the first three years of the ad boards were in use, but gave that up as part of a 2007 agreement on how to pay for new video boards at the park.
For 2007 and 2008, a state audit reported, the state’s 25 percent share of that advertising would have been about $812,000. And in 2009, the state should have seen another $400,000, according to the authority.
Frenz said the $913,000 payment was likely better than what the state would have gotten if the issue had gone to arbitration.
The settlement does not cover the potential for the team to replace the physical ads with virtual ones added to game broadcasts by computer, an option that could leave the authority without any ability to collect a share of the revenue and one the team has repeatedly referenced in the dispute.
“The rapid evolution of video technology and computer-generated graphics was completely unforeseen in the lease agreement, which was entered into over 18 years ago,” Rifkin said.