Phils looking to bring debt within MLB compliance

PITTSBURGH - The Phillies are one of nine teams not compliant with Major League Baseball's debt-service rules, which call for a limit of a team's debt to be no more than 15 times its annual earnings.

It's but another sign the team could be hamstrung to add significant payroll this season, something general manager Ruben Amaro Jr. has frequently stated.

"In recent years, the Phillies have been compliant under the debt-service rule," Phillies president David Montgomery said in a statement. "Our last submission for 2011 indicated that we are currently not compliant. As a result, we met with the commissioner's office and are working on ways to remedy our current situation."

Two Phillies officials with knowledge of the financial situation said they do not believe the issue to be serious. A baseball source said the Phillies are not in danger of a long-term debt problem.

The Phillies have a franchise-record payroll that is slightly above $170 million, and nearing MLB's luxury-tax threshold of $178 million. (They would pay a tax of 22.5 percent for every dollar over that limit.) Payments on the loan to build Citizens Bank Park continue. The Phillies footed $172 million of the total $458 million construction bill in 2004.

A club cannot hold a debt more than 10 times its annual earnings unless it has built a new stadium within the previous 10 seasons. In that case, the multiplier is 15 times its annual earnings. The Times reported commissioner Bud Selig had "wide latitude" to enforce the rules.

No long-term penalties are likely to be levied on the Phillies, but short-term flexibility could be hampered.

"I don't think Selig is worried about a team like the Phillies," said Andrew Zimbalist, a sports economist at Smith College. "If the team is using the debt productively, the commissioner's office is fine with it."

The other teams not in compliance are the New York Mets, Los Angeles Dodgers, Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Texas Rangers, and Washington Nationals, according to anonymous sources cited by the Times.