Cub debt

[Ted]

 

  http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0603-mlb-cubs-chicago--20110602,0,344709.story 

  Cubs on list in violation of MLB debt service rules

It's unclear what or how severe compliance problem is


By Bill Shaikin and Phil Rogers,
Tribune newspapers
11:46 p.m. CDT, June 2, 2011

   Long one of baseball's most financially solid franchises, the Cubs find themselves on a list of teams on the wrong side of Major League Baseball's debt rules.

  They are one of nine franchises in violation of MLB's debt service rules, according to information presented in a confidential briefing at the owners meetings last month and confirmed to the Los Angeles Times by three people familiar with the presentation.

  The Dodgers and Mets have been in headlines for their troubles and find themselves among the nine with the Cubs. Those three are joined by the Orioles, Tigers, Marlins, Phillies, Rangers and Nationals as teams out of compliance with MLB's rules, according to sources, none of whom was authorized to disclose the information.


  With only $120.4 million in guaranteed salaries on the books beyond 2011, the Cubs' debt issues would not appear to be tied to their roster. By comparison, the Yankees owe $469.3 million to players under contract. The White Sox owe $207.8 million to players.

  More likely, the Cubs' appearance on the list is the result of the financing stipulations between Tom Ricketts and his family and Tribune Co. to assume control of the team in October 2009. The $845 million deal included Wrigley Field and part of Comcast SportsNet Chicago.

Cubs spokesman Peter Chase said the club would defer comment to MLB on the issue because it "is a topic involving many teams."

Debt service rules emerged during labor negotiations in 2002 after overall club debt soared from $600 million in 1993 to $2.1 billion in 1999 and $3.1 billion in 2001. Since then, baseball revenues have jumped from $3.6 billion in 2002 — the last year seriously threatened by a strike or lockout — to $7 billion in 2010.

The rules, intended to ensure clubs have the resources to support their financial obligations, generally limit a team's debt to 10 times its annual earnings, although Commissioner Bud Selig has wide latitude to enforce those rules. Selig declined to comment for this story.

A prominent sports investment banker said his industry is "somewhat concerned" about MLB's ability to ensure its teams remain on solid economic footing.

Rob Manfred, baseball's executive vice president of labor relations, would not confirm the number of teams in violation or identify them.

"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."

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.

In October, as the Cubs were announcing a new premium ticket tier that included a 12 percent average increase for games against the Yankees, White Sox and Cardinals, the club said overall prices would be "essentially flat" this season.

However, Team Marketing Report said the Cubs had the highest average ticket in baseball in 2010 at $52.56. Cubs President Crane Kenney disputed the ranking, saying the Cubs were fourth.

In December, the Cubs pitched a plan to use tax dollars to finance more than $200 million in improvements to Wrigley Field. The proposal failed to get any steam behind it.

The Mets announced last week they had agreed to sell a minority share in the team for $200 million. Dodgers owner Frank McCourt has said he is not interested in selling a share of his team.

McCourt last year asked for approval of a $200 million loan from Fox. Selig rejected the deal, in part because the Dodgers' debt load would have increased from $525 million to $725 million.

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Cubs can sell shares like the Wisconsin football team... although I would never buy shares if I don't get to participate in the profit, I'm sure a lot of faithful cubbie fans will dole out their hard earned cash for such a "privilege"

A fool and his money will soon depart.