The Scranton Wilkes-Barre Red Barons are in trouble. Perhaps, big trouble.
The team has mounting baseball related expenses totaling over $650,000. International League statutes stipulate that teams can not carry over routine debts after December 1st of each year. The first deadline in dealing with the debt comes this weekend - October 31 - when the team must officially notify the league of their debt status. If the debt isn't erased - and nobody expects that it will be - the team must then give an accounting of the debt and their plan to repay the full amounts of each debt.
If the financial troubles continue, the league has options on how to deal with the situation. The league has the right to issue a so called "death penalty", denying the franchise the right to operate in the league. That penalty has never been issued, but is a possibility. There are other less severe penalties, including having the league take over operation of the club. Such a scenario unfolded in the Pacific Coast League this past season when the league took over the Portland Beavers, a AAA franchise affiliated with the San Diego Padres.
Baseball related debt is the term used to describe basic operating expenses of a team, such as paying vendors and issuing paychecks to employees.
Randy Mobley, president of the International League is aware of the situation and has urged all involved to find a quick solution to the matter. "It's disappointing that we're in this situation," said Mobley. Two weeks ago, Mobley termed the situation "very serious" in his fax to team officials.
The team has been in the middle of political squabbles for some time. Lackawanna County has been seeking to take over operation of the club for a few months. The Red Barons are currently run by an authority that was set up to operate the franchise, but can not be dissolved by the county without a prior agreement with the league to have the county take over the club. If the authority were to be dissolved, the right to operate the team would revert to the league and they could do what they wish with the rights to the franchise, including selling them to private bidders. The county is interested in taking over the club as part of a county-wide government reorganization, but they have not been given a guarantee from the league that they would be approved to operate the club. To make matters worse, the authority is taking the county to court to fight any takeover.
County Commissioner Robert Cordaro has repeatedly asked authority head William Jenkins to resign, given the bleak financial outlook of the team and its financial situation. Jenkins has repeatedly refused to step down.
Meanwhile, the debt is continuing to accumulate and could reach over $750,000 by the end of the calendar year. Team officials admitted in August that ticket revenue would fall short of the projected $2.96 million for the season, figuring that the final total would come in just under the $2 million mark for the season. The final season revenue has not been announced.
Mobley did emphasize that the dates for the repayment of debts can be adjusted at the discretion of the league, but stressed that there must be a strong plan in place in order for the league to work with the franchise. If the league were to take over the team, the status of their affiliation with the Phillies would not be in jeopardy. However, the long range affiliation may be precarious at best if the financial situation is not quickly resolved and a concrete plan for the future of the club put into place. The Phillies signed a two-year agreement with the club at the end of this past season, binding the two teams through the 2006 season.
One scenario might be to have the team move to Allentown, Pennsylvania after the current affiliation agreement ends. Allentown is in the running for state funds to build a minor league stadium and Reading Phillies owner Craig Stein has secured an agreement to purchase a lower level club to play in the stadium. Those plans could be upgraded to bringing a AAA club to Allentown if the Scranton situation is not resolved. If the league were to take over the club, Stein may be able to work out an agreement to purchase the rights to the franchise and move them to Allentown. The new stadium, if built, is slated to open in 2007, which would be perfect timing for moving the team. Pennsylvania Governor Ed Rendell has not commented on the possible move of the Red Barons to Allentown, preferring to stay neutral in a possible battle between two of Pennsylvania's cities.