The idea of bubbles bursting and letting a lot of people fall on their economic asses is an idea we've seen first hand: the dotcom bubble, the housing bubble, the dubble bubble. But what about baseball? Today a report on the financial health of MLB's 30 squads revealed that nine are outside of the rules set forth on debt-to-income. Currently the rule states a club cannot have a debt 10 times greater than it's annual revenue yet some recognizable clubs find themselves out of compliance. Aside from the Dodgers and Mets who are well-document debtors, the Phillies, Cubs, Rangers, Orioles, Tigers, Nationals, and Marlins all find themselves on the list of too much debt. Major League Baseball claims they are not worried and that most of these clubs will be back within the parameters shortly but what remains is a bigger question. Despite MLB doubling it's revenue to seven billion dollars in eight years, when clubs begin to outspend their means shades of the housing bubble come into play. Now, I'm not saying teams will collapse and players will be holding out their hats on street corners. What I am saying though is teams need to show fiscal restraint to ensure the long-term financial health of their club and the league as a whole.
The fine folks over at Phillies Nation did a great job using the available information on how and where exactly the Phillies went awry financially. It's a solid and concise read that explains not only Philly's situation but most other club's as well, aside from the Mets and Dodgers.
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