Thursday, January 31, 2013
The Price of Contention: Long-term concerns
By Mark Saxon
At some point, when the laughing and clinking of glasses ends, somebody's going to bring a bill to the table.
Sam Miller of Baseball Prospectus tweeted this: The Dodgers have $80 million in payroll committed for the 2018 season. The other 14 teams in the National League have commitments that total $118 million.
It won't be long before a bunch of Dodgers players will be earning their best salaries for some of their worst seasons. Should Dodgers fans be worried about this?
Dan Szymborski, who works for ESPN.com and Baseball Think Factory, thinks Dodgers fans should be afraid, very afraid. You have to be an Insider to read Szymborski's piece, but if you're not, you get the gist based on the far-from-ambiguous headline of, "Disaster Looms for Dodgers."
During the 2018 season, Adrian Gonzalez and Andre Ethier both will turn 36. Matt Kemp will turn 34. Zack Greinke will turn 35 that October. If the Dodgers pick up Ethier's 2018 option, he'll make $17.5 million. Together, those four aging players will earn $84.5 million.
Will it drag the Dodgers down or will the TV deal -- which will mean about $280 million in media rights every year -- be a capable buffer against the double whammy: aging players and ballooning contracts? Even if it's not, should Dodgers fans just enjoy it now and let the Dodgers' payroll manager figure it out? Like John Maynard Keynes said: In the long run, we are all dead.
Here's what Symborski thinks:
As modern free-agent dynasties have showed us, once you commit a team into full-scale win-now mode, it's very hard to get cheaper as you go along. The Phillies are a good example of this phenomenon. They got a tremendous bang for the buck from pre-free-agency salaries paid to Chase Utley, Ryan Howard, Jimmy Rollins, Shane Victorino, Jayson Werth and Cole Hamels. This allowed them some financial flexibility to pay top dollar for stars such as Cliff Lee and Roy Halladay. With some of those previous bargains no longer paying dividends, either because they're expensive (oh, that Howard deal!) or they're playing for other teams, the Phillies now have less room to make major free-agent signings.
Even the Yankees have far less flexibility than they used to as a result of this tendency of dynasties to get prohibitively more expensive as their players age. The fun parts of the A-Rod and Mark Teixeira contracts are likely in the rearview mirror, and with the team's stated desire not to pay luxury tax, it has spent money mostly on retaining the players it could rather than play in the Greinke or Josh Hamilton sweepstakes, as past Yankees teams might have done.
You could even take it a step beyond that depressing thought. Both the Yankees and Phillies won a bunch of playoff and World Series games after flooding the market with dollars -- thus the dynasty tag -- while the Dodgers haven't done anything yet on the field. There's no Winter World Series trophy.
Two factors could determine whether this Dodgers' strategy works in the long run. First, will the ownership group stay committed to spending as the years go by and the cost of doing business rises further? It's fairly common for a new owner, excited to be in the club, to throw a bunch of money around. Remember Tom Hicks' record-setting A-Rod contract? Remember Arte Moreno's first winter, when he signed four of the top free agents on the market?
As time moves along, are the Dodgers owners going to look to streamline their business to make it more profitable? The principal owners, Guggenheim Partners, state on their Web site that their "singular mission" is to "serve as superior stewards of capital and trusted advisors to our partners and clients." They have more than $170 billion under their supervision.
The obligation of Mark Walter and his partners is to maximize the wealth of their investors, not to maximize the happiness of Dodgers fans. To keep the money flowing out of fans' bank accounts and into their business, the Dodgers at some point are going to have to win -- that word again.
At some point, they're also going to have to do the bulk of their building from the ground floor. The Dodgers aren't going to swing a $260 million trade and sign $200 million worth of pitching every year (we think). Quietly, they've also begun pumping more modest dollars into international signings, scouting and player development. Think about the great Dodgers teams from the 1960s through 1980s. The players came up, step by step, through an organization that schooled them in the team's philosophies.
Not only does developing your own players give you a coherent, controllable message, it builds the foundation, with free agency and trades the finishing touches. If you've got three promising rookies every winter, you don't need to be in the middle of every free-agent rumor.
The stakes, then, are high for 2013. They're high for 2014, etc. As each of the next few seasons comes and goes, the Dodgers will hear a ticking sound coming from a very expensive clock.