Phillies not compliant with MLB debt-service rule
News blogs, sports blogs, entertainment blogs, and more from Philly.com, The Philadelphia Inquirer and the Philadelphia Daily News.
Phillies not compliant with MLB debt-service rule
Matt Gelb, Inquirer Staff Writer
PITTSBURGH -- The Phillies confirmed they are one of nine teams not compliant under Major League Baseball's debt service rule.
A report in the Los Angeles Times identified the Phillies along the Los Angeles Dodgers, New York Mets, Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Texas Rangers and Washington Nationals as the teams out of compliance.
The rules were put in place following the 2002 collective bargaining agreement and are in place to ensure team's financial resources are stable. The general limit to a team's debt is 10 times its annual earnings, but the Times reported Comissioner Bud Selig has "wide latitude to enforce those rules."
A 2011 Forbes Magazine evaluation of the Phillies detailed their revenue (net of stadium revenues used for debt payments) as $239 million.
"In recent years, the Phillies have been compliant under the debt-service rule," Phillies president David Montgomery said in a statement. "Our last submission for 2011 indicated that we are currently not compliant. As a result, we met with the Commissioner’s office and are working on ways to remedy our current situation."
The Dodgers and Mets have notable cases of financial troubles, but this report shows there are even more problems.
"To take a snapshot of the number of non-compliant clubs at a point in time can be very misleading," Rob Manfred, baseball's executive vice president of labor relations, told the Times. "With one or two exceptions, we see how teams are going to be compliant again in the short term, so we're not worried about them."
More to come.
Have a question? Send it to Matt Gelb's Mailbag.
Download our NEW iPhone/Android app for easy access to all of our Phillies coverage, plus app-exclusive videos and analysis. Get it here.
So the Phils problem is short term?— sdcaphil- Raise ticket prices since you won't get your own TV network. Notice the Red Sox are not on the list despite a higher payroll and a smaller market than Philly...If the sellouts keep coming, raise the prices.— ronin32
- MONTY MUST GO!— Dr. Michael
- I'm waiting for the details. The LA Times story and that being picked up by ESPN/FOX etc. is pretty weak. What ever happened to real journalism (i.e. why are these teams non-compliant vs. just saying they are non-compliant). Not all of the teams are in the same boat. For example, the Mets (Madoff scam), Dodgers (nasty divorce + original over-leveraged purchase), Marlins (no fans, old stadium), Rangers (just emerged from bankruptcy reorganization) etc. are different than I suspect the Phils situation (still paying on new stadium + dramatic short-term increase to payroll). Hopefully Murph fills in the blanks.— DennyP
- Why would they have such high debt? The Stadium is most likely in a separate company so the mortgage wouldn't be included. Their revenues should be high with all the sellouts, even without their own TV station. Kind of surprising. I wonder if this leaked out in time for union negotiations.— Ballgame
- I mentioned this elsewhere; this is a serious issue with potentially serious ramifications, as MLB has the right to name someone to oversee expenditures of noncompliant teams. Sellouts are nice, but real revenues come from owning a cable network and having greater control over advertising revenue. Not sure about the precise nature of the relationship between the Phillies and the Gods of All Media, Comcast. This issue will also hamstring Ruben Amaro, Jr. in trying to add payroll to help the stagnant offense. Montgomery has never struck me as someone who likes spending big bucks and this might cause he and the other remaining shadow owners to rein in spending dramatically.— chuckw
- Because of attention to the Dodgers, and Mets financial issues. Sounds like this thing happens from time to time, also Manfred specifically cites "one or two" exceptions (Dodgers, Mets) of teams returning to compliance in the short term. Also, the story breaking from Los Angeles.— road515
- I'm sure this is not unexpected given the Cliff Lee signing. Like Manfred said, a single snapshot at one point in time is misleading. "With one or two exceptions, we see how teams are going to be compliant again in the short term." You know who those exceptions are and they aren't the team that's going to sell out 81 home games this season.— thefadd
- I didn't know Ackerman ran the Phillies, too.— krammar
- Gotta win NOW. This team is getting old and as their skills shrink, their massive contracts don't. The financial situation will only get worse as team success declines.— n62
- Much ado about nothing— southernmostfan
- Toldja they were run like the Republicans run the government. They destroy the economy and blame it on African-Americans. Just notice how when they are struggling they blame the nearest African-American, Dom Brown (threatening to send him to the minors after a rough 4 or 5 at-bats, Ben Francisco, Jimmy Rollins, John Mayberry, and of course, Ryna Howard, acting like he isn't the NL RBI leader and at the top of the HR charts once again. Obama knows how they feel. Ibanez gets a free pass. Amaro and Manuel are Hispanic just like Ibanez, yet I can't figure out for the life of me why Raul hasn't been released. Michael Martinez too, who flat out stinks. The Bush, Cheney, and Sarah Plain mentality have overrun this team, and no one cares as long as we have the darkies to blame.— eldiablodelsol2009
- Are you kidding me? Survey Says....CLUELESS!! — Texflyer76
- How can you dispute such a rational argument that is expressed so clearly? That Hispanic manager really burns me up, too.
— COskier - This is not terribly surprising. What is surprising to me is that the debt limit is tied to net earnings. I wonder if this is an alternative measure of earnings like EBITDA? Regardless, if the Phillies current payroll in the $160MM range is not supported by revenues, sounds like they need to raise some capital from the ownership group to retire debt to the point where they can support the debt load.— kdavis2172
