Phillies in Violation of MLB's Debt Service Rules
Whoa, what? The Phillies are broke? No, no they're not.
According to a report in the LA Times today, the Phillies are one of nine teams in violation of MLB's debt service rules. The guidelines, which are in place to prevent another Mets or Dodgers situation, say that teams taking on debt 10 times their annual earnings can face a myriad penalties. The Phillies, however, are probably safe. [LA Times via Hardball Talk]
"To take a snapshot of the number of non-compliant clubs at a point in time can be very misleading," Manfred said. "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.
"We are not concerned about the overall economic condition of the industry."
The chief executive of one National League club called the number of teams out of compliance "a hiccup" and said the commissioner's office has worked to correct the situation before lenders could become reluctant to extend financing within MLB.
It's not clear how much outstanding debt the Phillies have, but as explained above, it's unfair to take a snapshot at any one point in time. It's also entirely possible that the Phillies are in the midst of paying back loans taken out to improve the team (read: Lee, Clifton Phifer). Although, there are probably a number of other less glorious expenses that we don't see.
The other teams on the list include the Dodgers (obvi), Mets (LOL), Orioles, Cubs, Tigers, Marlins, Rangers and Nationals (Werth). – does quick math – That leaves only the Braves in the NL East without high debt.
Bud Selig can take up to 16 possible actions, depending on the severity of the debt, against the teams on the list. The penalties range from forcing teams to raise equity to having MLB approve all expenses.
This is most likely a non-story as it relates to the Phillies. The Mets, however… well, their allowance has already been cut off. We can still make fun of them.