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Nine of 30 teams in violation of MLB’s debt rules

Jun 3, 2011, 8:25 AM EDT

MLB Commissioner Bud Selig speaks during a news conference in New York

On the one hand, this sounds alarming: Bill Shaikin of the L.A. Times reports that nine of baseball’s 30 teams are in violation baseball’s debt service rules. The teams: Dodgers and Mets — duh — as well as the Orioles, Cubs, Tigers, Marlins, Phillies, Rangers and Nationals.

On the other hand, it’s hard to say what this truly means. Sure, former commissioner Fay Vincent calls this “troublesome,” but he thinks everything that has happened since he left office is troublesome.  What we don’t know, however, is how any of these teams outside the Dodgers, really, arrived at their currently-reported out-of compliance status and if it’s really a serious thing.

Is it short term debt or long term debt? A temporary blip of being-out-of-compliance, or something chronic?  Generally, the rules limit a team’s debt to 10 times its annual earnings.  How badly out of whack are, say, the Tigers, compared to where the Dodgers are? Doesn’t it matter that the Tigers owner has more money than Croesus, while the Dodgers’ owner does not?

Finally, Frank McCourt claims that he was given exemptions on his debt limit at times. If that’s the case (i.e. the game’s most train wreck of a financial case can be in technical compliance) doesn’t that render the concept of compliance a rather fluid one?

I don’t like that so many ownership groups are leveraged and baseball needs to be sure that the Frank McCourt/Tom Hicks examples are exceptions and not the rule.  But I’m not sure that this report, in and of itself, tells us much.

  1. sparty99 - Jun 3, 2011 at 8:47 AM

    I’m not sure how great of a measure he debt service calculator is considering some teams operate at a loss while others are at a small income. The Tigers have operated at a loss for years, so theoretically they should be allowed no debt and instead should have a cash surplus.

    • Detroit Michael - Jun 3, 2011 at 9:06 AM

      We don’t know that the Tigers have operated at a loss for years. There isn’t any public information on this. The Forbes estimates have been shown to be pretty inaccurate.

  2. Panda Claus - Jun 3, 2011 at 8:55 AM

    I see that Camden Yards isn’t exactly bursting with fans, but how can Angelos and the Orioles be in this group?

    The man himself has got to be worth billions (think “Mr. Asbestos” lawyer), his team plays in a paid-off, 100% publicly funded stadium and he owns the larger portion of the local MASN television network (shared unevenly with the Nationals as part of the “buy-out” for Angelos to agree to their permanent move to DC).

    This is clearly a case of creative accounting if I’ve ever seen it. Though I guess the Dodgers and Mets probably share the copyright for that honor.

  3. yankeesfanlen - Jun 3, 2011 at 8:56 AM

    What kind of accounting school did MLB go to? Prima facia this means the Metropolitansw are worth NEGATIVE $750M this year.
    And I’m sure that there are many very profitable teams that would rather carry debt so they could pay friendly bankers rather than hostile taxing agencies in a perfectly legal way.
    Ilitch (or the Steinbrenners) could write a check today and wipe out most or all of their teams debt but it probably wouldn’;t make sense to do so.

  4. Detroit Michael - Jun 3, 2011 at 9:07 AM

    If there is no effort to enforce it, it’s not much of a rule.

  5. rebarratige - Jun 3, 2011 at 9:17 AM

    The Braves are the only team in the NL East not in violation of MLB’s debt rules?

    Eh, I’ll take it.

  6. Jonny 5 - Jun 3, 2011 at 9:43 AM

    I don’t know what constitutes the violations but here’s a look at debt to value ratios and revenue income etc….. This is from last year. It must be something that has nothing to do with Debt/ income or value after looking at the numbers. It must be something much less obvious for the Phills.

    http://www.forbes.com/lists/2010/33/baseball-valuations-10_The-Business-Of-Baseball_DOV.html

  7. dirtyharry1971 - Jun 3, 2011 at 10:24 AM

    Glad to see the phillies on that list, whatever it is i hope its real bad for them long term, hate that city, hate the fans

    • Utley's Hair - Jun 3, 2011 at 11:15 AM

      Right back at you, troll.

      • natstowngreg - Jun 3, 2011 at 11:00 PM

        Hate it when I have to agree with a Phillies’ fan. Makes me feel, well, unclean.

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