Monday, December 17, 2012

Dodgers' Profligate Spending, Justified

As a Dodger fan, the Guggenheim Group's rampant spending over the past six months has been exhilarating. But like BASE jumping, another exhilarating activity, there's a slight emotion of fear as we pick up speed here (hopefully not resulting in a splatter on the ground).

But fear not, say the pundits! Everything is going to be okay, says Bill Shaikin of the LAT (in a front-page column one piece):

Guggenheim Baseball bought the Dodgers this year for $2 billion, more than twice the amount ever spent on a baseball team. The new owners have not stopped spending.

Just last weekend, the team committed more than $200 million to two pitchers, one of whom never has thrown a pitch in a major league game. The projected player payroll next year stands at about $225 million, which means the Dodgers would dethrone the New York Yankees as the biggest spenders in baseball history.

In all, the Dodgers' new owners have invested close to $1 billion in player contracts, stadium renovations and the purchase of controlling interest in the stadium parking lots.

Is this the folly of novice owners, or a shrewd business model?

Sports business analysts run the numbers, and they see red. Marc Ganis, a sports business consultant, said the Dodgers have to keep the payroll in line, attract more fans and corporate sponsors, and get them to pay more.

"They need a lot of things to happen right," Ganis said.

Todd Boehly, one of the owners, said he has no doubt that Guggenheim will profit from the Dodgers. The ownership is poised to negotiate a record-setting local television contract that could bring three times what Guggenheim paid for the team.

When the local television windfall is added to the team's share of the league's national broadcast and Internet sales revenue, the Dodgers might be able to cover much of their payroll — perhaps all of it — without selling a single ticket, hot dog or beer.

Not that the Dodgers will give up selling beer, I hope! But Mark Saxon of ESPN agrees, citing Ned Colletti in saying that the spending isn't "reckless":

The excess, Colletti argued, is a result of artificially low payrolls in the final seasons under Frank McCourt, the previous owner.

"Our payroll a year ago was $90 [million]," Colletti said in an interview on ESPNLA 710. "We're up over $200 [million] now. If you added it all up, it might be up over 300 [million] over two years. Had we been at 150 last year and 150 this year, nobody would be saying a word, right?

"If we were at $180 [million] last year, which is probably more conducive to our market size and how many people we draw, and we were at $210 [million] or $215 million this year, are people going to say, 'My goodness?' No. What has jostled the whole situation is we were coming from so far below the $100 million mark that it's startling to see all the changes, but that's the mindset of our owners."

Colletti said the team should have enough money left over to keep homegrown pitching star Clayton Kershaw, who will be a free agent after the 2014 season. Colletti hopes to sit down with Kershaw's agent, who also represents Greinke, shortly after New Year's Day.

To be fair, Saxon had just posted three days prior the counter-argument, "What if it doesn't work? But let's not be thinking about that scenario right now, right? No reason to pull the ripcord just yet.


Jason said...

I think Jamie got the Dodger ripcord in the divorce.

And that should be my last McCourt divorce joke, ever.

Franklin Stubbs said...

So soon, Jason?

Hideo Nomo said...
This comment has been removed by the author.
Hideo Nomo said...

Don't lean on me, man,
'Cause you can't afford some tickets,
After profligate spending.

Franklin Stubbs said...

I really needed that to be a Haiku, Gnomes.

Hideo Nomo said...

Not sure I could haiku that and still maintain its song parody integrity.

Fred's Brim said...

I am having a really hard time enjoying this. None of it feels right to me, ever since the trade with Boston. My brain is all for it but I really hope I can turn my heart around on this by next spring

Hideo Nomo said...

FB, does it help at all knowing that they're also using all this money to buy time to rebuild the McCourt-decimated farm system?

Fred's Brim said...

@Gnomes - it does, yes

Franklin Stubbs said...

Maybe I'm just groping for meaning where none exists, but the history of teams who have "bought" the league, in various sports, is what troubles me. The trend seems to be that wins trail a few seasons beyond the aforementioned profligate spending spree.

Franklin Stubbs said...


It troubles me the the individual directly responsible for said decimating is in charge of fixing it, but that's a whole other animal.

Franklin Stubbs said...

*Gropes Sax for meaning*

karen said...

I agree. When you are used to having your team pieced together with minor leaguers, McCourt spit, and at the end of their carrers veterans (I'm still trying to figure you out Andru Jones and don't EVEN get me started on Uribe, after all it's Christmas so I must behave myself or Santa won't comea calling)> I think I'm going to go with the glass half full and say God Bless Us Everyone.

Steve Sax said...

(Sax jumps like this guy)