Sunday, May 08, 2005

In 2002 major league baseball agreed to new economic rules designed to improve baseball's financial viability. One of these new rules, called the debt service rule, "ties the amount of debt a team is allowed to carry to its cash flow." As this Washington Post article explains "whether intentional not, the debt service rule has had another effect: Since player payroll is by far a team's largest expense, many debt-ridden teams found the best way to get in compliance with the rule was to shed payroll and limit spending." The debt service rule is reining in the free spending of the New York Yankees.