Tuesday, April 20, 2004
MLB Clubs' Debt Concern Eases
Jonathan Mariner, MLB's chief financial officer, tells Street & Smith's SportsBusiness Journal that only five clubs are at risk of not satisfying MLB's new debt rules, which will take effect after the 2005 season. The new rules will limit clubs to carrying debt of no more than 10 times their earnings before interest, taxes, depreciation and amortization (EBITDA), or 15 times EBITDA if the club moved into a new stadium within the past 10 years. Mariner wouldn't identify the teams at risk.
Since clubs will have to maintain a positive cash flow in order to comply with the rule -- if the club has zero or negative earnings, the required ratio can't be satisfied -- this means that MLB expects at least 25 of the 30 clubs to operate in the black by 2005, one year before the current CBA expires. Does this mean the owners won't still be crying poverty at the bargaining table? Don't bet on it...
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Jonathan Mariner, MLB's chief financial officer, tells Street & Smith's SportsBusiness Journal that only five clubs are at risk of not satisfying MLB's new debt rules, which will take effect after the 2005 season. The new rules will limit clubs to carrying debt of no more than 10 times their earnings before interest, taxes, depreciation and amortization (EBITDA), or 15 times EBITDA if the club moved into a new stadium within the past 10 years. Mariner wouldn't identify the teams at risk.
Since clubs will have to maintain a positive cash flow in order to comply with the rule -- if the club has zero or negative earnings, the required ratio can't be satisfied -- this means that MLB expects at least 25 of the 30 clubs to operate in the black by 2005, one year before the current CBA expires. Does this mean the owners won't still be crying poverty at the bargaining table? Don't bet on it...
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