Tuesday, June 14, 2011

A Bit Confusing?

Breaking Down How Nine of MLB's 30 Clubs are Violation of Debt Rules

The Biz of Baseball breaks down the nine teams currently in violation of MLB's debt service rule.

Here's the description for the Nationals:

This is one that gets a bit confusing. The $611 million Nationals Park was funded entirely by the public and player payroll has been some of the lowest in the league. The Lerners, who own the Nationals, are also one of the most-wealthy in all the league (technically the richest after the death of Twins owner Carl Pohlad). Ted Lerner has a net worth of $3 billion. So, what’s the catch? At first, we thought it was due to in-stadium revenues needing to be a certain level to assist in paying down construction bonds, but that’s money that District absorbs. Stadium lease payments? The Werth deal? If there was a place where the Nationals might be getting bit, it's at the gate. With the Nats currently ranking 21st in average attedance (21,402), and never being able to galvinize the fan base since Nationals Park opened, it's the one spot that you might point to.

One spot you might point to? That's It.

It is that unclear. Why exactly are the Nationals in debt at all? The Lerner's didn't have to borrow to buy the club, they didn't have to borrow to build the stadium. Where's the debt coming from?

One absolutely uninformed and unsourced speculation would be the Lerner's agreed to take on debt from the prior owners (MLB) as part of the purchase agreement. I'm sure in limbo Expos/Nationals were not huge money makers. I'm guessing they had less than lucrative local TV and radio rights. (I think I even remember no one bidding on the Expos radio rights during their final season in Montreal).

It would make sense to structure the deal this way. If they had simply split the Nat's purchase price up 29 ways there would be lots of questions about how that's being spent and why. From a practical standpoint, eliminating debt is the same as cutting a check only without any public recriminations.

It almost impossible to determine the price of a major league franchise. Rarely are these deals only for the franchise itself, it almost always includes cable outlets or stadium ownership. As such, its not really worth it to compare any final sticker price. So, I'm sure we'll never know exactly where this debt came from and if the price the Lerner's paid was market.

For the fans perspective, its only important if it has dogged the team's ability to operate. Perhaps the gap between the low payroll and the market's ability to support a much higher payroll is debt service.

I can't say with certainty that has happened. There are sound reasons payroll has been low and it would have made little sense to overpay free agents who are mediocre at best when you have no foundation.

But it could explain why they are so hesitant to bid internationally. I'd imagine IFA's are about the lowest priority in the expenditure chain.

The Lerner's have no obligation to satisfy my curiosity about this debt. It seems to me that from their perspective it would be helpful to them to say Look we took on a lot of obligations you don't know about to get this deal done. We're trying to get rid of those obligations as fast as we can but until then it seriously limits what we can do. That would be understandable and give a logical reason for the payroll to be so absurdly low.

Of course, they might be concerned about fostering a "we're not trying to win now because of this crippling debt" and there would be no way to create the impression they were trying to contend right now and trying to win. Maybe that would hurt attendance even more.

I guess as an engaged fan I'd rather hear the truth than have the smoke blown up my ass.

On other matters, I have to give a tip 'o the cap to Jim Riggleman for putting Jayson Werth into the leadoff spot. I wrote a while back that right now Werth should be considered as the leadoff hitter but that we'd never see it. We'll now we have but more in the mad scientist experimental vein than defended as a sound baseball move. Theoretically, Werth is one of your best hitters and getting him more AB's is a good thing. As is having him on base in front of your other best hitters. Some strong out of the box thinking from an old baseball man.

Trade Jason MArquis NOW. Don't hesitate, don't wait another second. Get him on the acela to the Bronx tonight. He'd be the Yanks second best starter right now! Think they don't know that. Think they aren't concerned they won't make the postseason this time around because of that fact? Of course they are and its time to force the H & H Steinbrenner combo to panic and make a bad deal. The way Marquis is pitching right now you could see him in a post season rotation. Can you see Ivan Nova? Bartolo Colon? Freddie Garcia? TBD???

I'd even try to cash in on Tyler Clippard. Maybe someone out there panics and really pays through the nose. Deal 'em a year too early rather than a year too late.

No comments:

Post a Comment