The More Leveraged Teams in Baseball
From SABR member Brian Borawski at The Hardball Times on June 8:
I’ve written ad nauseum about the troubles behind the Los Angeles Dodgers and the New York Mets the past couple of months. The Dodgers have had a hard time paying their bills because, depending on who you believe, either Frank McCourt doesn’t have any money because of his divorce; or because MLB isn’t letting him sign a television deal with Fox. The Mets are in trouble because the trustee in the Bernie Madoff scandal is after the team’s owners to the tune of a billion dollars because they should have known that the ponzi scheme was actually a ponzi scheme. The Mets found someone to buy a stake in their team to help out with their monetary issues, while the league took over the Dodgers to deal with their troubles. As it turns out, these aren’t the only two teams that are currently in violation of MLB’s debt service rules.
A product of the 2002 labor agreement, teams are limited in the amount of debt they can hold to 10 times the team’s annual earnings. That’s the general rule though, because the commissioner basically gets to decide whether it’s enforced or not. This has become an issue because Frank McCourt is fighting over the league taking over his team and one of his claims is, why he’s been singled out when other teams have a similar problem. The other seven teams that aren’t in compliance are the Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Philadelphia Phillies, Texas Rangers and the Washington Nationals.
Read the full article here: http://www.hardballtimes.com/main/article/bob-a-look-at-the-more-leveraged-teams/
Originally published: June 9, 2011. Last Updated: June 9, 2011.