O's one of nine teams in violation of MLB debt service rules

[Moose Milligan]

Well while we are at it, who shot JFK?

Hank Scorpio.

[SilentJames]

It is no surprise that the Rangers, Phillies and Tigers are on that list. Nor is it the Cubs and Marlins. The Orioles however, is a bit of a surprise to me. I guess the question is how old is the debt and what does this mean going forward?

[Nigel Tufnel]

Anybody know what "annual earnings" means? Is it gross revenue, or net profit? Gross revenue would be troubling, but if it's net profit, then wouldn't any team operating at a loss be in violation, even if they had little or no debt?

Bill James says the secret service agent in the car with JFK accidentally shot him.

[Gurgi]

I picture you with a tin-foil hat, storing cans in your shelter.

Whats wrong with storing cans in your shelter? Get some water and a couple of rifles. Get some flashlights and batteries. A scout is always prepared!

Skip the tinfoil and get a surplus helmet.

[paulcoates]

After Angelos pays himself a $50 million year salary, I can see how

I would think they are cooking the books

[Frobby]

Lots of businesses fix their books to make it appear they are taking a loss. I'm sure the Orioles aren't any different.

The Yankees take much more profit in than you see in those Forbes reports.

Yeah, I'm sure Angelos fixed his books that he provides to MLB so that he would appear to be violating MLB's debt service rules -- that's wise.

Look, Trea, these teams aren't on the "honor system." You can bet your bottom dollar that MLB has the right to audit any team's books, and does so regularly. They have to do it, for several reasons. Most importantly, baseball has revenue sharing, and to enforce that, they can't just rely on each team's say-so about what they are making. Second of all, they have these debt service rules, which are designed to keep teams from getting overly leveraged with their banks and suddenly becoming unstable. And again, they can't just rely on what the team says in order to enforce that.

We're not talking about Forbes here. I have no idea what information these teams give to Forbes, or how reliable it is. But you can be pretty sure that when the teams report their finances to MLB, they are all operating under the same accounting rules, and that there is probably an entire staff in the Commissioner's office whose job it is to look the team's reports over with a magnifying glass.

[Frobby]

Anybody know what "annual earnings" means? Is it gross revenue, or net profit? Gross revenue would be troubling, but if it's net profit, then wouldn't any team operating at a loss be in violation, even if they had little or no debt?

Bill James says the secret service agent in the car with JFK accidentally shot him.

Here's the answer:

Under its debt-service rule, club borrowing was curbed to ten times the amount of each club's earnings before interest, taxes, depreciation, and amortization (EBITDA).

http://www.cfo.com/article.cfm/13362431?f=related

So, that is net profit, excluding certain types of expenses. EBITDA is a commonly used measure when valuing a company.

[Moose Milligan]

Yeah, I'm sure Angelos fixed his books that he provides to MLB so that he would appear to be violating MLB's debt service rules -- that's wise.

Look, Trea, these teams aren't on the "honor system." You can bet your bottom dollar that MLB has the right to audit any team's books, and does so regularly. They have to do it, for several reasons. Most importantly, baseball has revenue sharing, and to enforce that, they can't just rely on each team's say-so about what they are making. Second of all, they have these debt service rules, which are designed to keep teams from getting overly leveraged with their banks and suddenly becoming unstable. And again, they can't just rely on what the team says in order to enforce that.

We're not talking about Forbes here. I have no idea what information these teams give to Forbes, or how reliable it is. But you can be pretty sure that when the teams report their finances to MLB, they are all operating under the same accounting rules, and that there is probably an entire staff in the Commissioner's office whose job it is to look the team's reports over with a magnifying glass.

Great post. Considering the intended target, it'll either be completely ignored or twisted and contorted to fit his views.

[ledzepp8]

Or Peter Angelos is fixing the books so it appears that way...

What's it like on your planet? Is it warm?

[Sports Guy]

Yeah, I'm sure Angelos fixed his books that he provides to MLB so that he would appear to be violating MLB's debt service rules -- that's wise.

Look, Trea, these teams aren't on the "honor system." You can bet your bottom dollar that MLB has the right to audit any team's books, and does so regularly. They have to do it, for several reasons. Most importantly, baseball has revenue sharing, and to enforce that, they can't just rely on each team's say-so about what they are making. Second of all, they have these debt service rules, which are designed to keep teams from getting overly leveraged with their banks and suddenly becoming unstable. And again, they can't just rely on what the team says in order to enforce that.

We're not talking about Forbes here. I have no idea what information these teams give to Forbes, or how reliable it is. But you can be pretty sure that when the teams report their finances to MLB, they are all operating under the same accounting rules, and that there is probably an entire staff in the Commissioner's office whose job it is to look the team's reports over with a magnifying glass.

Yep...I think the Forbes lists are generally bs...Perhaps they are discussion worthy and can be used as a guide but I don't think it really reflects what a team makes.

This is something different...you can't compare the 2.

[ledzepp8]

Yeah, I'm sure Angelos fixed his books that he provides to MLB so that he would appear to be violating MLB's debt service rules -- that's wise.

Look, Trea, these teams aren't on the "honor system." You can bet your bottom dollar that MLB has the right to audit any team's books, and does so regularly. They have to do it, for several reasons. Most importantly, baseball has revenue sharing, and to enforce that, they can't just rely on each team's say-so about what they are making. Second of all, they have these debt service rules, which are designed to keep teams from getting overly leveraged with their banks and suddenly becoming unstable. And again, they can't just rely on what the team says in order to enforce that.

We're not talking about Forbes here. I have no idea what information these teams give to Forbes, or how reliable it is. But you can be pretty sure that when the teams report their finances to MLB, they are all operating under the same accounting rules, and that there is probably an entire staff in the Commissioner's office whose job it is to look the team's reports over with a magnifying glass.

This is a well thought out post that doesn't jive with his preconcieved agenda and will therefore be ignored.

[notfast]

This is all Bobby Bonilla's fault

[OrioleMagic]

I would kind of suspect that the TV networks might be separate from the baseball organizations as far as the books are concerned... I really am only speculating though.

[pacman59]

With what he paid for the team, $173,000,000 it looks like Peter has been borrowing against that asset.

Not hard to do when MLB is guaranteeing a minimum selling price.

The question is do the O's have enough cash flow to manage the debt?

This may not be good news.

There is a long history in sports of owners who leverage their teams into ruin.

[Nigel Tufnel]

With what he paid for the team, $173,000,000 it looks like Peter has been borrowing against that asset.

Not hard to do when MLB is guaranteeing a minimum selling price.

The question is do the O's have enough cash flow to manage the debt?

This may not be good news.

There is a long history in sports of owners who leverage their teams into ruin.

This may or may not be true, because we don't know what the O's profit was. If they made, say, a $1 million profit, then anything over $10 million in debt would put them on the list, even though $10 million is insignificant to the O's and Angelos.