The Dodgers and New York Mets might rank as the biggest financial headaches for Major League Baseball, but they are not the only ones.
Nine of the 30 teams are in violation of the MLB debt service rules, according to information presented in a confidential briefing at the owners’ meetings last month and confirmed to The Times by three people familiar with the presentation.
In addition to the Dodgers and Mets, the teams out of compliance are the Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Philadelphia Phillies, Texas Rangers and Washington Nationals, according to the people, none of whom were authorized to disclose the information.
Commissioner Bud Selig declined to comment for this story. His predecessor, Fay Vincent, said he would consider the number of teams in violation of the sport’s debt rules to be “troublesome.”
McCourt says the Dodgers are in compliance with the debt service rules. According to a person familiar with the matter, McCourt received a waiver from the commissioner’s office last year permitting the Dodgers to hold debt more than 10 times annual earnings.
That waiver is currently under dispute, according to a person familiar with Selig’s view of the matter.
Tripon
Posted: June 03, 2011 at 03:11 AM |
15 comment(s)
Login to Bookmark
Tags:
business,
cubs,
dodgers,
mets,
miami,
nationals,
orioles,
phillies,
rangers,
tigers
Reader Comments and Retorts
Go to end of page
Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.
1. CFBF Hates Hyphens Posted: June 03, 2011 at 03:32 AM (#3843971)They may not be able to compete for certain free agents (I'm told that there can be tax advantages for players to have a deal structured as a bonus and salary. Teams with cash flow issues simply can't do this) and they may not be able to insure major contracts (or so one of Ozanian's sources claimed in his article)
Ozanian's thesis was that it wasn't a critical problem at that time but it wasn't too far removed from being an issue. But then I think Forbes is pre-disposed to be unhappy about debt.
Is that still true today? I remember this being brought up a few years ago, but thought that the law was changing, preventing that from being the case.
Ahh, hell, try this instead of my crappy memory:
I like to describe that era leading up to the 2002 Collective Bargaining Agreement as a time when we were financing player compensation and whatever growth we were realizing through debt. There was a lot of available debt, very cheaply priced. We put in place the most critical element of that CBA, a debt-service rule. The debt rule said that what used to be balance sheet, ratio-based debt would become EBITDA-based debt. It also said the debt cannot exceed more than ten times EBITDA.
Most people say, "ten times EBITDA, that's a pretty big leverage factor." But not if you consider that most clubs didn't even have positive EBITDA. We had a lot of work to do. But putting that rule in place basically forced clubs to focus on earnings and, as a result, slowed the pace of payroll growth. Payroll has still gone up every year for the most part, but the pace of growth is more in line with revenue growth.
Aren't players traded for cash all the time?
I believe that any cash over $1 million needs commissioner approval.
I believe that any cash over $1 million needs commissioner approval.
Yes, the Bowie Kuhn Rule, imposed following Charlie Finley's attempted sale of -- who was it, Fingers, Blue, and Rudi?
You must be Registered and Logged In to post comments.
<< Back to main