Eli Jacobs
Encyclopedia
Eli Solomon Jacobs is an American
financier
and attorney
, member of the National Commission for the Review of the National Reconnaissance Office
and the former owner of the Baltimore Orioles
from 1989 to 1993.
on October 5, 1937, and raised in nearby Newton
. After graduating from Phillips Academy
in Andover
, he attended Yale University
, where he served as managing editor
of the school's Daily News
. Once he completed his undergraduate studies
in 1959, he served a two-year stint in the United States Army
stationed at Fort Holabird in Baltimore, Maryland
. Following the military, he returned to Yale, earning a law degree
in 1964. His career began immediately at the Wall Street
investment banking
establishment White Weld & Co.
, where he became one of its youngest partners
by 1968. After his departure from the firm in 1970, he spent more than a decade as a stock market investor
and venture capital
ist.
During the 1980s, he dove headfirst into the leveraged buyout
boom. After establishing his own firm, Manhattan
-based E.S. Jacobs & Co., in 1986, he began to build up a vast investment portfolio
which included controlling interest
in Memorex
and Triangle Pacific Corp., a maker of cabinet
s and wood flooring
. His biggest coup, executed in December, 1987, was a $900 million acquisition of Telex Corp., which would be merged
with Memorex to form, at the time, the world's second largest manufacturer
of computer
peripheral
s. He also served on the board of directors
of Times Mirror Co.
(a holdover from the previous ownership), Sargent Shriver
and his eldest son Bobby, announced their purchase of the Baltimore Orioles from the estate
of the late Edward Bennett Williams
for $70 million on December 6, 1988. The transaction was unanimously approved by the American League (AL)
franchise
owners
just over four months later on April 18, 1989, two weeks into the new baseball
season. The owner of 87% of the ballclub, Jacobs became the chairman of the board, with Lucchino managing the organization.
In his 1994 book The Baltimore Orioles: Forty Years of Magic from 33rd Street to Camden Yards, Ted Patterson made the following observation of the new majority owner:
In the first year of the Jacobs regime, the Orioles nearly shocked the baseball world by transforming itself from the worst team in Major League Baseball
with a 54–107 record in to one that fell short of winning the AL Eastern Division
title by two games. Unfortunately for the franchise, the tragic neglect of its scouting
department and farm system
, which actually began under Williams, would continue as Jacobs was reluctant to spend any money on improving the operations. On the field, the team seemed to revolve around Cal Ripken, Jr.
and not much else. The only positive was the opening of Oriole Park at Camden Yards
in April, 1992 creating new revenue
streams for the Orioles.
. The first signs of trouble surfaced in 1991 when Jacobs attempted to sell the Orioles for $200 million. He failed to attract any buyers, even after lowering his price to $160 million.
His heavily leveraged financial situation collapsed in 1992. After Memorex Telex emerged from Chapter 11 reorganization
in February, his 35% interest was wiped out. The restructuring
of Triangle Pacific forced him to surrender most of his 97% stake to bondholders
in November. In between, he was sued by four lending
establishments (Mercantile-Safe Deposit & Trust Co. of Baltimore
, Manufacturers & Traders Trust Co.
, The Berkshire Bank of New York City
and Banca Commerciale Italiana of Milan
) for defaulting
on outstanding loan
s totaling about $36.4 million. Even his $2 million home in Owings Mills, Maryland
was seized when he failed to make mortgage
payments.
When seven bank
s filed petition
s to force him into bankruptcy
in March 1993, Jacobs had to relinquish the Orioles. At an auction
held in bankruptcy court
in New York on August 2, 1993, the ballclub was sold for $173 million to a group of Baltimore
investors led by Peter Angelos
. The sale was unanimously approved by the AL club owners two months later on October 4.
, Jacobs is a Washington insider
who has served on various national security
and military intelligence
committee
s for the federal government
. He was a member of the General Advisory Committee of the United States Arms Control and Disarmament Agency
during the Reagan Administration. In January, 2000, he was appointed by then-Speaker of the House
Dennis Hastert
to his current role on the National Commission for the Review of the National Reconnaissance Office.
Jacobs has been a director with the Convera Corporation since February 2002. He is a member of both its executive and compensation committees.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
financier
Financier
Financier is a term for a person who handles typically large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French, and derives from finance or payment...
and attorney
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, member of the National Commission for the Review of the National Reconnaissance Office
National Reconnaissance Office
The National Reconnaissance Office , located in Chantilly, Virginia, is one of the 16 U.S. intelligence agencies. It designs, builds, and operates the spy satellites of the United States government.-Mission:...
and the former owner of the Baltimore Orioles
Baltimore Orioles
The Baltimore Orioles are a professional baseball team based in Baltimore, Maryland in the United States. They are a member of the Eastern Division of Major League Baseball's American League. One of the American League's eight charter franchises in 1901, it spent its first year as a major league...
from 1989 to 1993.
Rise to success
Jacobs was born in Cambridge, MassachusettsCambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
on October 5, 1937, and raised in nearby Newton
Newton, Massachusetts
Newton is a city in Middlesex County, Massachusetts, United States bordered to the east by Boston. According to the 2010 U.S. Census, the population of Newton was 85,146, making it the eleventh largest city in the state.-Villages:...
. After graduating from Phillips Academy
Phillips Academy
Phillips Academy is a selective, co-educational independent boarding high school for boarding and day students in grades 9–12, along with a post-graduate year...
in Andover
Andover, Massachusetts
Andover is a town in Essex County, Massachusetts, United States. It was incorporated in 1646 and as of the 2010 census, the population was 33,201...
, he attended Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
, where he served as managing editor
Managing editor
A managing editor is a senior member of a publication's management team.In the United States, a managing editor oversees and coordinates the publication's editorial activities...
of the school's Daily News
Yale Daily News
The Yale Daily News is an independent student newspaper published by Yale University students in New Haven, Connecticut since January 28, 1878...
. Once he completed his undergraduate studies
Undergraduate education
Undergraduate education is an education level taken prior to gaining a first degree . Hence, in many subjects in many educational systems, undergraduate education is post-secondary education up to the level of a bachelor's degree, such as in the United States, where a university entry level is...
in 1959, he served a two-year stint in the United States Army
United States Army
The United States Army is the main branch of the United States Armed Forces responsible for land-based military operations. It is the largest and oldest established branch of the U.S. military, and is one of seven U.S. uniformed services...
stationed at Fort Holabird in Baltimore, Maryland
Baltimore
Baltimore is the largest independent city in the United States and the largest city and cultural center of the US state of Maryland. The city is located in central Maryland along the tidal portion of the Patapsco River, an arm of the Chesapeake Bay. Baltimore is sometimes referred to as Baltimore...
. Following the military, he returned to Yale, earning a law degree
Law degree
A Law degree is an academic degree conferred for studies in law. Such degrees are generally preparation for legal careers; but while their curricula may be reviewed by legal authority, they do not themselves confer a license...
in 1964. His career began immediately at the Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
establishment White Weld & Co.
White Weld & Co.
White Weld & Co. was a Boston-based investment bank, historically managed by Boston Brahmins until its sale to Merrill Lynch in 1978. The Weld family name can be traced back to the founding of Massachusetts in the 1630s.-History:...
, where he became one of its youngest partners
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
by 1968. After his departure from the firm in 1970, he spent more than a decade as a stock market investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
and venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
ist.
During the 1980s, he dove headfirst into the leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
boom. After establishing his own firm, Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
-based E.S. Jacobs & Co., in 1986, he began to build up a vast investment portfolio
Portfolio (finance)
Portfolio is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual.-Definition:The term portfolio refers to any collection of financial assets such as stocks, bonds and cash...
which included controlling interest
Controlling interest
Controlling interest in a corporation means to have control of a large enough block of voting stock shares in a company such that no one stock holder or coalition of stock holders can successfully oppose a motion...
in Memorex
Memorex
Memorex began as a computer tape producer and expanded to become a major IBM plug compatible peripheral supplier. It is now a consumer electronics brand of Imation specializing in disk recordable media for CD and DVD drives, flash memory, computer accessories and other electronics.Established in...
and Triangle Pacific Corp., a maker of cabinet
Cabinet (furniture)
A cabinet is usually a box-shaped piece of furniture with doors or drawers for storing miscellaneous items. Some cabinets stand alone while others are built into a wall or are attached to it like a medicine cabinet. Cabinets are typically made of wood or, now increasingly, of synthetic...
s and wood flooring
Wood flooring
Wood flooring is any product manufactured from timber that is designed for use as flooring, either structural or aesthetic. Bamboo flooring is often considered a wood floor, although it is made from a grass rather than a timber....
. His biggest coup, executed in December, 1987, was a $900 million acquisition of Telex Corp., which would be merged
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
with Memorex to form, at the time, the world's second largest manufacturer
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
of computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
peripheral
Peripheral
A peripheral is a device attached to a host computer, but not part of it, and is more or less dependent on the host. It expands the host's capabilities, but does not form part of the core computer architecture....
s. He also served on the board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
of Times Mirror Co.
Tribune Company
The Tribune Company is a large American multimedia corporation based in Chicago, Illinois. It is the nation's second-largest newspaper publisher, with ten daily newspapers and commuter tabloids including Chicago Tribune, Los Angeles Times, Hartford Courant, Orlando Sentinel, South Florida...
Baltimore Orioles
Jacobs, along with Larry LucchinoLarry Lucchino
Lawrence Lucchino, is the current President and CEO of the Boston Red Sox, and a member of John W...
(a holdover from the previous ownership), Sargent Shriver
Sargent Shriver
Robert Sargent Shriver, Jr., known as Sargent Shriver, R. Sargent Shriver, or, from childhood, Sarge, was an American statesman and activist. As the husband of Eunice Kennedy Shriver, he was part of the Kennedy family, serving in the Kennedy and Johnson administrations...
and his eldest son Bobby, announced their purchase of the Baltimore Orioles from the estate
Estate (law)
An estate is the net worth of a person at any point in time. It is the sum of a person's assets - legal rights, interests and entitlements to property of any kind - less all liabilities at that time. The issue is of special legal significance on a question of bankruptcy and death of the person...
of the late Edward Bennett Williams
Edward Bennett Williams
Edward Bennett Williams was a Washington, D.C. trial attorney who founded the law firm of Williams & Connolly and owned several professional sports teams...
for $70 million on December 6, 1988. The transaction was unanimously approved by the American League (AL)
American League
The American League of Professional Baseball Clubs, or simply the American League , is one of two leagues that make up Major League Baseball in the United States and Canada. It developed from the Western League, a minor league based in the Great Lakes states, which eventually aspired to major...
franchise
Professional sports league organization
Professional sports leagues are organized in numerous ways. The two most significant types are a European model, characterised by a tiered structure using promotion and relegation to determine participation in a hierarchy of leagues or divisions and a North American model characterized by its use...
owners
Ownership
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties. The concept of ownership has...
just over four months later on April 18, 1989, two weeks into the new baseball
Baseball
Baseball is a bat-and-ball sport played between two teams of nine players each. The aim is to score runs by hitting a thrown ball with a bat and touching a series of four bases arranged at the corners of a ninety-foot diamond...
season. The owner of 87% of the ballclub, Jacobs became the chairman of the board, with Lucchino managing the organization.
In his 1994 book The Baltimore Orioles: Forty Years of Magic from 33rd Street to Camden Yards, Ted Patterson made the following observation of the new majority owner:
In the first year of the Jacobs regime, the Orioles nearly shocked the baseball world by transforming itself from the worst team in Major League Baseball
Major League Baseball
Major League Baseball is the highest level of professional baseball in the United States and Canada, consisting of teams that play in the National League and the American League...
with a 54–107 record in to one that fell short of winning the AL Eastern Division
American League East
The American League Eastern Division is one of Major League Baseball's six divisions . This division was created before the start of the 1969 season along with the Western Division...
title by two games. Unfortunately for the franchise, the tragic neglect of its scouting
Scout (sport)
In professional sports, scouts are trained talent evaluators who travel extensively for the purposes of watching athletes play their chosen sports and determining whether their set of skills and talents represent what is needed by the scout's organization...
department and farm system
Farm team
In sports, a farm team, farm system, feeder team or nursery club, is generally a team or club whose role is to provide experience and training for young players, with an agreement that any successful players can move on to a higher level at a given point...
, which actually began under Williams, would continue as Jacobs was reluctant to spend any money on improving the operations. On the field, the team seemed to revolve around Cal Ripken, Jr.
Cal Ripken, Jr.
Calvin Edwin "Cal" Ripken, Jr. , nicknamed "Iron Man", is a former Major League Baseball shortstop and third baseman. He played his entire 21-year baseball career for the Baltimore Orioles ....
and not much else. The only positive was the opening of Oriole Park at Camden Yards
Oriole Park at Camden Yards
Oriole Park at Camden Yards is a Major League Baseball ballpark located in Baltimore, Maryland. Home field of the Baltimore Orioles, it is the first of the "retro" major league ballparks constructed during the 1990s and early 2000s, and remains one of the most highly praised. The park was...
in April, 1992 creating new revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
streams for the Orioles.
Bankruptcy
Even before the gates to Camden Yards opened for business, Jacobs found his investment empire drowning in debtDebt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
. The first signs of trouble surfaced in 1991 when Jacobs attempted to sell the Orioles for $200 million. He failed to attract any buyers, even after lowering his price to $160 million.
His heavily leveraged financial situation collapsed in 1992. After Memorex Telex emerged from Chapter 11 reorganization
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
in February, his 35% interest was wiped out. The restructuring
Restructuring
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs...
of Triangle Pacific forced him to surrender most of his 97% stake to bondholders
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
in November. In between, he was sued by four lending
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
establishments (Mercantile-Safe Deposit & Trust Co. of Baltimore
PNC Financial Services
PNC Financial Services Group, Inc. is a U.S.-based financial services corporation, with assets of approximately $264.3 billion...
, Manufacturers & Traders Trust Co.
M&T Bank
M&T Bank is an American commercial bank that was founded in 1856 in western New York, and today remains headquartered in Buffalo at One M & T Plaza...
, The Berkshire Bank of New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and Banca Commerciale Italiana of Milan
Milan
Milan is the second-largest city in Italy and the capital city of the region of Lombardy and of the province of Milan. The city proper has a population of about 1.3 million, while its urban area, roughly coinciding with its administrative province and the bordering Province of Monza and Brianza ,...
) for defaulting
Default (finance)
In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either...
on outstanding loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s totaling about $36.4 million. Even his $2 million home in Owings Mills, Maryland
Owings Mills, Maryland
Owings Mills is an unincorporated community and a census-designated place in Baltimore County, Maryland, United States. It is a suburb of Baltimore. The population was 20,193 at the 2000 census. Owings Mills is home to the northern terminus for the Baltimore Metro Subway and to Owings Mills Mall....
was seized when he failed to make mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
payments.
When seven bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s filed petition
Petition
A petition is a request to do something, most commonly addressed to a government official or public entity. Petitions to a deity are a form of prayer....
s to force him into bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
in March 1993, Jacobs had to relinquish the Orioles. At an auction
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
held in bankruptcy court
United States bankruptcy court
United States bankruptcy courts are courts created under Article I of the United States Constitution. They function as units of the district courts and have subject-matter jurisdiction over bankruptcy cases. The federal district courts have original and exclusive jurisdiction over all cases arising...
in New York on August 2, 1993, the ballclub was sold for $173 million to a group of Baltimore
Baltimore
Baltimore is the largest independent city in the United States and the largest city and cultural center of the US state of Maryland. The city is located in central Maryland along the tidal portion of the Patapsco River, an arm of the Chesapeake Bay. Baltimore is sometimes referred to as Baltimore...
investors led by Peter Angelos
Peter Angelos
Peter G. Angelos , is an American trial lawyer.Angelos is also the majority owner of the Baltimore Orioles, a baseball team in the American League East Division.-Career:...
. The sale was unanimously approved by the AL club owners two months later on October 4.
Later years
Affiliated with the Republican PartyRepublican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
, Jacobs is a Washington insider
Insider
An insider is a member of any group of people of limited number and generally restricted access. The term is used in the context of secret, privileged, hidden or otherwise esoteric information or knowledge: an insider is a "member of the gang" and as such knows things only people in the gang...
who has served on various national security
National security
National security is the requirement to maintain the survival of the state through the use of economic, diplomacy, power projection and political power. The concept developed mostly in the United States of America after World War II...
and military intelligence
Military intelligence
Military intelligence is a military discipline that exploits a number of information collection and analysis approaches to provide guidance and direction to commanders in support of their decisions....
committee
Committee
A committee is a type of small deliberative assembly that is usually intended to remain subordinate to another, larger deliberative assembly—which when organized so that action on committee requires a vote by all its entitled members, is called the "Committee of the Whole"...
s for the federal government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
. He was a member of the General Advisory Committee of the United States Arms Control and Disarmament Agency
Arms Control and Disarmament Agency
The U.S. Arms Control and Disarmament Agency was established as an independent agency of the United States government by the Arms Control and Disarmament Act , September 26, 1961, a bill drafted by presidential adviser John J. McCloy. Its predecessor was the U.S. Disarmament Administration, part...
during the Reagan Administration. In January, 2000, he was appointed by then-Speaker of the House
Speaker of the United States House of Representatives
The Speaker of the United States House of Representatives, or Speaker of the House, is the presiding officer of the United States House of Representatives...
Dennis Hastert
Dennis Hastert
John Dennis "Denny" Hastert was the 59th Speaker of the House serving from 1999 to 2007. He represented as a Republican for twenty years, 1987 to 2007.He is the longest-serving Republican Speaker in history...
to his current role on the National Commission for the Review of the National Reconnaissance Office.
Jacobs has been a director with the Convera Corporation since February 2002. He is a member of both its executive and compensation committees.