MD's rich get richer

Daily Record, The (Baltimore), Jun 27, 2003 by Nancy Kercheval

Kenneth Feld made his fortune in tiny clown cars, scantily clad women and macho lion tamers.

But the Potomac resident, who is a self-made man despite the inheritance left by his rock 'n' roll promoter father, has obviously had some tricks of his own when it comes to finances. With a net worth of $775 million, the father of three and owner of Feld Entertainment, climbed the Forbes 400 list to No. 301 in 2002.

At the same time, he and other famous Forbes 400 multimillionaires from Maryland -- such as Willard Marriott Jr., Richard and John Marriott, and Bernard F. Saul II -- have skewed the income levels to give the state its place as the fourth richest state in the United States, based on per capital income, behind only Connecticut, New Jersey and Massachusetts.

The Felds, Marriotts and Sauls are among the 1 percent of the nation's rich who claim a third of the country's wealth. The next 9 percent own another third, while the bottom 90 percent have the last third, according to Arthur B. Kennickell, senior economist and project director of the Federal Reserve Board's Survey of Consumer Finances. The poorest 50 percent hold just 3 percent of the wealth.

The top 20 percent of Marylanders -- earning an average of $180,796 annually -- have 45 percent of the income (excluding capital gains), according to Steve Hill, director of the Maryland Budget and Tax Policy Institute. The poorest 20 percent have 5 percent of the income, earning an average of $20,909.

"The rich in Maryland tend to be richer than the rich in other states," Hill said. "But also, we see the bottom 20 percent have higher incomes than in other states."

While income doesn't necessary indicate one's net worth, financial experts say the two follow parallel paths with the richest having the most money to accumulate possessions that add up to their net worth.

Getting back to Feld and his fellow Forbes 400ers, Kennickell notes that the wealthiest of the wealthy didn't see a substantial shift in their net worth until 1995 to 1999 when the cut-off value for membership in the group rose 69 percent -- to $700 million. Although there was a general downturn into 2002, the total wealth of the Forbes 400 as a proportion of total individual wealth was still 2.3 percent in 2001.

More than half of those on the 2001 list were no where to be seen in 1989.

Feld, for instance, was No. 425 with $650 million in net worth in 1999 before making his debut on the list in 2000 at No. 372 with $775 million in net worth.

Feld's company was No. 377 on the list of the largest private companies in 2001, rising from No. 404 in 2000 but failing to attain its 1999 position of No. 366. Among its entities are the Ringling Bros. circus, which Feld bought for $23 million in 1982 after his father sold it to Mattel in 1971 for $50 million, Disney on Ice, and the Siegfried & Roy show.

Feld, the Marriotts and Saul are among the elite group of 53,000 Maryland residents with a net worth in excess of $1 million, according to 1998 statistics from Internal Revenue Service economists Barry W. Johnson and Lisa M. Schreiber. The group's total net worth exceeds $129 billion, with total assets equaling just over $137 billion and debt of more than $8 billion.

It should be noted, however, that tax records are not always the most accurate indication of wealth since many in the top tier go to great lengths to reduce their income, said Steven Isberg, associate professor of finance at the University of Baltimore Merrick School of Business.

For instance, in its latest report on the 400 individual income tax returns reporting the highest adjusted gross incomes between 1992 to 2000, the IRS reports 3,600 separate returns qualified for the top 400 during that nine-year period. Still, less than 25 percent appeared more than once, and less than 13 percent appeared more than twice.

"The high income taxpayers come and go," said Isberg. "A lot of wealthy bring their income down to below what the top 400 would be. Tax returns measure income, not wealth. Some wealthy people don't have high incomes.

"Wealth also can go as fast as it came. A lot of people may look to be wealthy on paper, but that can change. Look at what happened in the past three years," said Isberg.

"From peak to trough, the market is down 40 percent [in the past three years]," said Mark R. Weigman, vice president and portfolio manager for T. Rowe Price. "Preservation has become more of a priority. In an up market, that tends to take its place on a back burner."

Kennickell notes that the highest 10 percent of the wealthy tends to be heavier into stocks, bonds, business assets and real estate investments, whereas the other 90 percent lists the most important assets as deposit accounts, houses and vehicles.

"From 1989 to 2001, wealth grew broadly across families," Kennickell wrote. "Despite a variety of caveats, the data also support the hypothesis that wealth grew most strongly at the highest level of the wealth distribution.

"Wealth as measured by Forbes," he wrote, "showed both a growth of the share of total family wealthy held by the wealthiest 400 families, as well as an increase in concentration at the top end of that group."