Jerold C. Hoffberger, principal owner of the Baltimore Orioles, has rejected an initial contract offer from former Treasury Secretary William E. Simon to buy the club, but called the proposal "a long step forward" in their negotiations.

"There is a piece of paper. It came in the mail," Hofberger said yesterday. "It is not a contract worthy of being signed. It's his version of a contract, not our version of a contract....

"Look, it's the first draft of a contract.First, there are some things in it that must be negotiated," he told the Associated Press.

"It's absolutely not a setback. The fact that we've received a written contract from Simon indicates a step forward."

Simon was unavailable for comment yesterday and his Washington attorney, Robert A. Schulman, declined to characterize the negotiations or speculate on when they may be resumed.

Hoffberger said there was "no way it can be signed in 10 days," and declined further comment until his attorney, Eugene Feinblatt, can study the proposal.

Hoffberger also refused to discuss what issues remain to be negotiated in the contract with Simon, who reportedly is offering $12 million for the franchise and hopes to play some games in Washington this season.

Hoffberger's remarks about the Simon proposal buoyed the spirits of some Baltimore city officials who are attempting to assemble a group to buy the Orioles to keep them in Baltimore.

Mayor William D. Schaefer reportedly has elicited interest from two Detroit businessmen willing to put up $6 million if matching funds can be raised by Baltimoreans, with Hoffberger retaining a small share.

The Detroit men, millionaire industrialist Max Fisher and shopping center developer Alfred Taubman, apparently are interested for tax purposes, the Baltimore Sun said.

Neither man could be reached for comment yesterday.

"Hoffberger said their involvement interested him," Schaefer said. "He knows them and knows they are responsible."

Simon's negotiations with Hoffberger have been low-key in contrast to those of prospective purchasers in the past.

One set of talks involving current Chicago White Sox owner Bill Veeck dragged on for months as the Maryland legislature debated requests to help underwrite a purchase, help Veeck said he did not need.

In the end, Hoffberger changed his mind about selling the club, as he had and has since done when a sale appeared within grasp. Informal talks and formal negotiations always seemed to snag the more frequently Washington was mentioned as the future home of the Baltimore club.