9 MLB teams are over the debt limit

Far be it from me to give any credence to nay of Los Angeles Dodgers owner Frank McCourt’s argument that MLB has treated him unfairly. However, Hardballtalk.com is reporting that 9 of 30 MLB teams are in violation o MLB debt rules. Those teams are of course the Los Angeles Dodgers, New York Mets as well as Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Philadelphia Phillies, Texas Rangers, and Washington Nationals.

The basic rule here is MLB franchises are not allowed to have more debt than ten times their annual earnings. It is not clear if earnings means total revenue or profit, but my guess here it is total revenue. Let’s take a moment to spell this out. Say Team A has total revenues of 1 million dollars a season. That means the MLB rules would limit that team to 10 million dollars of total debt. Of course in each of these cases we are talking about much higher figures.

Since the Tigers are my team, I can say that this team took on a lot of debt in cost overruns during the construction of Comerica Park. They have also had a large payroll that has failed to deliver a ton of post season success. The absolute best way to increase revenues is to have multiple deep post season runs. The Tigers have not made the playoffs since 2006.

A couple of the teams on this list surprise me a bit. The Marlins have been notoriously cheap with their payroll so that situation may speak towards mismanagement of other revenue streams. The lack of regular season attendance is surely playing a role there as well. However, we do not know if this is long term debt, short term debt, or any other particulars, but this much debt is not a good thing for the MLB as a whole.