The Big Picture about Big Money

Are the days of Dodger fans discussing the cost of contracts over?  They should be.

There is quite a stir that was caused by the Brandon League signing yesterday.  It isn’t over the fact that the Dodgers signed him for three years.  The complaints being bandied about are over the $22 million that will be paid to him.

Here’s the thing.  Why should we care what the Guggenheim group paid League anyway?  This ownership group has gobs of money, as evidenced by the July and August grabs this past year.  What’s another $22 million anyway?    After years and years of fiscal restraint, these guys toss around money like it’s growing on trees.  After doing a bit of number crunching, I can see why.  The Dodgers revenue stream has extremely healthy prospects.

New Dodgers owners Robert L. Patton, Jr., Stan Kasten, Mark Walter, Earvin “Magic” Johnson, Peter Guber, and Todd Boehly. (Photo credit – Lucy Nicholson )

Let’s look at Dodger expenditures since the ownership change.  This is possibly subject to some errors and even an unintentional omission or two.  My point is that money is no object with this group:

  • April, 2012 – Guggenheim Partners purchase the Dodgers for an American sports franchise record $2.15 billion.
  • June 12, 2012 – Andre Ethier’s contract is extended through 2018 when he’ll be 36 years old.  Ethier is to receive $100 million with a $2.5 million buyout option following his final season.
  • June 29, 2012 – the Dodgers secure the winning bid for Cuban Outfielder Yasiel Puig in a 7 year deal for $42 million.
  • July 25, 2012 – Ned Colletti deals with the Florida Marlins and receives Hanley Ramirez and the remainder of his $46.5 million dollar contract in exchange for Nathan Eovaldi (making the major league minimum) and minor leaguer Scott McGough.  Randy Choate was also part of the deal, so the Dodgers took on the remainder of his $1.5 million salary.
  • July 30, 2012 – Brandon League and the remainder of his $5 million contract come over from the Seattle Mariners.  The Dodgers are on the hook for about $2 million of it.
  • July 31, 2012 – Shane Victorino is acquired.  The pro-rated amount owed him for the remainder of the season is about $4.5 million.
  • August 25, 2012 – in a blockbuster deal the Dodgers acquire Adrian Gonzalez, Nick Punto, Carl Crawford and Josh Beckett.  In the process they take on $262 million in salary.
  • October 30, 2012 – the Dodgers ink free agent closer Brandon League to a three year deal for $22.5 million.

So looking at the numbers in long form, the running totals are as such:

  • Original purchase price:                                   $2,150,000,000
  • plus Ethier’s contract                                        $2,252,500,000
  • plus Puig’s contract                                          $2,294,500,000
  • plus Hanley and Choate                                   $2,342,500,000
  • plus Brandon League Seattle contract             $2,344,500,000
  • plus Victorino’s pro-rated contract                    $2,349,000,000
  • plus 4 contracts from Boston                            $2,611,000,000
  • plus Brandon Leagues new deal                      $2,633,500,000

Deducting that original ball club purchase price, the Guggenheim group has taken on $483.5 million in salary in a matter of six months.  This isn’t even calculating the contracts they inherited from the McCourt regime, (i.e. Kemp’s $180 million and money sill owed to Manny Ramirez and Andruw Jones).    Combine all that with Stadium renovation costs that haven’t been made public, but could possibly run over $100 million this off-season, (with many more to come).  The ownership has probably spent in the neighborhood of $2.75 billion dollars on the Dodgers since taking over in May of this year.

It makes you wonder why fans would snipe over a piddly $22 million dollar deal to lock up one of the game’s best closers for three years.  The Brandon League contract makes up roughly 0.8 % of what they have spent this year so far in 2012.  It’s not a drop in the ocean.  More like a pint of water in a 22 gallon drum.  We aren’t the Oakland A’s folks.  This team has a lot of money to spend, and the revenue streams aren’t coming from ticket sales.  TV revenues will be the driving force.

The Angels 17 year TV deal with Fox Sports pays them $2.5 billion, which explains why they could shell out $317.5 million for Albert Pujols and C.J. Wilson.  Estimates are that the Dodgers might even fetch up twice that of the Fox deal.  Throw a good chunk of $5 billion into the Dodgers coffers and we are talking about money not being an object for the remainder of my years as a fan.  Another factor that I haven’t even thrown into the equation is Guggenheim’s interest in purchasing the Anschutz Entertainment Group (AEG), the largest and most profitable sports and entertainment company in the world.

Because of the 17-year / $2.5 billion TV deal that the Angels signed with Fox Sports, Albert Pulojs’ $240 million contract will be completely paid for in less than 2 years. (Photo credit – Stephen Dunn)

My point in all this folks:  don’t sweat the small stuff.  A $22 million/3 year deal for a closer is seriously “small stuff.”  Heck, with this group, a $300 million dollar deal for a superstar is relatively small in the grand scheme of things.  While Larry Baer, President of the World Series winning Giants is giddy about additional revenue streams his club got from the extra playoff games and the concerts that will be held this off-season at AT&T Park, the Dodgers will never have to worry about creating such additional revenue to pay the bills.  It’s a good position to be in and very few fans understand the enormity of riches this ball club has.

If I were a fan of the Giants, I’d be seriously concerned at the Dodgers and their financial state.  There is no possible way that things will continue as they are.  The Dodgers are simply too strong fiscally.

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11 Responses to “The Big Picture about Big Money”

  1. Ron Cervenka says:

    Another great thought-provoking post, Evan, thanks!

    I cannot even begin to tell you how tired I am of hearing about how much money these guys make. Granted, not all of these guys deserve to be making what they are, but IT AIN’T YOUR MONEY!

    When you consider how much money motion picture and television people make, how the hell can anyone complain about how much professional athletes make (and not just baseball players). They are entertainers just like the movie and TV people are.

    I honestly believe that we as common folks simply cannot comprehend anyone making that kind of money – especially to play kids games, but the bottom line is that professional athletes (and TV and movie celebrities) are in an entirely different realm.

  2. Evan Bladh says:

    The money that MLB makes is mind boggling. We, as fans, don’t comprehend the enormity of it. When a closer like League get $22 million and that is considered almost nothing, it gives us an idea how much money they have.

    Now here’s a mid blower for you. Completely off the subject, but on a lot of people’s minds because of the election. When you consider the U.S. National Debt is $16 trillion dollars, that is the equivalent of buying 8,000 Dodger Teams at the $2 billion price.

  3. lindav says:

    Good article and puts things in perspective. On that same other subject – be interesting to know how many Dodger teams the political candidates could have purchased with what they spent on TV advertising.

  4. funkyjam says:

    WOW! That really does put things into perspective. All we can do now is hope for the best of the best.

  5. Bluenose Dodger says:

    Nothing ventured, nothing gained. As you might have already guessed I have a minority report on Dodger spending. I understand that it is not my money so perhaps, it is none of my business and I shouldn’t have or express an opinion regarding spending. At the same time the team, the players, are not mine,so does the same apply that I should have no opinion regarding the player transactions with the Dodgers? It is now a business, not just a kid’s game, and it is quite difficult to separate the $$$$ and the players. The small market teams most likely find that to be true. Whenever a player is signed he is now a $33M third baseman or a $40M starter.

    First, I agree we should have signed Brandon League because: Kenley Jansen’s health is still uncertain going into the future, Javy Guerra’s health is also a concern and I believe his role when healthy is not as a closer, Shawn Tolleson is not yet ready to assume a closer role, Ronald Belisario seems better suited to a set up role and other concerns mean we couldn’t go ahead with only Ronald as a closer.

    I have already stated I agree we should have signed Brandon. I suppose he might not have signed a shorter contract, but please forgive my concern with three year contracts. Our experience with three year contracts has not been a good one. Yes, I believe we overpaid for Brandon, as in my opinion he has not yet earned the title of elite closer. He has one and one half years of success as a closer, having lost his job in that role with the Mariners. Give him a couple of more years performing as he did in the last part of the 2012 season and he can join the upper echelon of closers, in my opinion. Brandon’s stats with the Dodgers did not match Kenley’s: ERA 2.30 to 2.35, WHIP of 1.134 to 0.846, 2/1 K/BB ratio to 4.5/1. That is not to diminish Brandon’s late season success. He was very good. Now he has to demonstrate consistency to be mentioned in the same breath as the game’s best closers. I don’t consider $22B to be piddly. If it was, Brandon would not have signed for that amount. It is a significant amount, one quarter of some team’s budgets.

    It isn’t even the amount of money we are spending that bothers me. Well, yes it is, although it is more so the process we have entered, apparently with the expectation that money cures all. That is, that we can buy a championship. If we have learned anything since 1988, $1B later on free agents, money doesn’t cure all. I am pleased to be out of the McCourt era and Ned mispending ample budgets, but throwing money around while making it known the money pit is endless does truly make us the Yankees of the west. When we do that, we affect the whole game, driving up the price of free agents, and making it more difficult for small market teams to compete. We railed against the Yankees when they continuously spent wildly, paying a luxury or competitive balance tax. Now we are applauding doing the same thing. Is that the new Dodger way?

    You could make me more comfortable by assuring me this is an initial burst to try to become instantly competitive and that our longer term plan is to return to the Dodger way and winning regularly. OK – fire away.

    • Ron Cervenka says:

      Like it or not, Harold, 3-year contracts are here to stay and if the Dodgers (or any other team for that matter) refuse to offer them, players will simply go elsewhere – and free agency is to blame. It has changed the game entirely. The game today is, as they say, all about the money – period.

      If you honestly expect “The Dodger Way” to return, you are kidding yourself. I came to this sad realization after reading Don Drysdale’s autobiography – which was written in 1989. Even then, Drysdale realized that it was gone forever. Sure, we hear talk that new ownership wants to return to The Dodger Way, but you know what? They don’t even know what the hell it is. They can read about it all they want and try to emulate it, but they don’t have a clue as to what it really is. The Dodger Way will never return, not ever; free agency won’t allow it to.

      You didn’t like the League signing when it happened and it seems that you are still skeptical of it (and him), whereas I immediately liked the signing (and Brandon) and I like him even more now. I have spoken with him one-on-one on a couple of occasions and he is a really a great guy with a great attitude. Sure, he struggled in his first few outings, but Rick Honeycutt and (more so) Kenny Howell spotted a mechanical flaw in his delivery and Brandon corrected it and was lights out after that. I think that if you were to take this into consideration when you look at his stats, he was far better than his stats indicate. As you well know (or at least you should know), a few bad outings can trash a reliever’s stats. Take another look at Brandon’s stats AFTER his first three or four outings.

      Brandon’s struggles in Seattle earlier in 2012 were most likely because of the mechanical flaw, something that the Mariners pitching coaches didn’t see, but apparently you are forgetting that Kenley Jansen also had a mechanical flaw back in 2011 that caused him to be sent back down to Triple-A where (fortunately) he found out what it was and fixed it.

      Exactly who are the elite closers out there, Harold? The only real elite closer that comes to my mind is Mariano Rivera and his career is most likely over. I certainly don’t think Sergio Romo is an elite closer and I believe that League is every bit as good (or better) than Romo. There aren’t too many closers out there that don’t go through rough stretches, as League did in Seattle earlier this season, but he sure as hell was pretty good in 2011 and again during the final 6 weeks of 2012, wouldn’t you say?

      Kenley Jansen might very well work his way back into the closer role, especially now that he discovered and corrected yet another mechanical flaw. But until he does, I am perfectly happy with Brandon League as the Dodgers closer and believe that (perhaps) one day you will realize exactly how good (or filthy, as Mattingly put it) he really is.

      I encourage you keep a very close eye on MLB Trade Rumors this off-season to see how many free agents sign for fewer than 3 years. My guess is that it will only be those who are at the end of their career or those coming back from a serious injury.

      Fire away.

  6. Bluenose Dodger says:

    Elite might not be the correct word. Evan referred to Brandon as one of the best closers in the game. I think Brandon still has yet to earn that title. That’s just my opinion. Elite closers – Kimbrel, Chapman, Hanrahan, Papelbon, Nathan would come to mind.

    You keep saying I don’t like Brandon League. I stated twice I agree with the signing. I just don’t like three year contracts, whether they are a reality or not – Uribe, Lilly, Guerrier. I am fully aware of the length of contracts. I watch MLB Rumors every day. That doesn’t mean I have to like them. Many simply turn out to be mistakes with many teams, especially in the last years, even with three year contracts. I don’t dislike Brandon at all. You must somehow infer that as I have never stated that. Not liking a contract doesn’t mean I have something personal about a player. I watched Brandon for several years in Toronto. I have watched him pitch much more than you guys have. I knew and know his stuff was/is filthy. I wrote about the mechanical flaw in the blog article about Rick Honeycutt. I simply want to see him replicate his last few games with the Dodgers before I rank him as one of the best closers in the game. I hope I do that next year.

    If I have to take it only one way, it is now and not last year. The deferred money was a mistake and not usual for almost all MLB teams. What’s to like about it? I didn’t like the way the Yankees spent money for years yielding one championship in the last twelve years. I am just uncomfortable with the way the Dodgers are tossing money around. I want the Dodgers to be respected, not reviled as the Yankees are because of the way they spend.

    Having said all that, I am encouraged by the Dodger signings of talented men to spear head scouting in Latin America and the far east.
    Bob Engle has been hired as vice president of international scouting and Patrick Guerrero as Latin American coordinator.

    Besides, if you didn’t have me annoying everyone, how dull would the blog or forum be?

  7. Ron Cervenka says:

    “You keep saying I don’t like Brandon League. I stated twice I agree with the signing.”

    I’m confused then, because this is what you posted when they signed him on July 31:

    Not necessarily excited about this trade. I am not sure why we need League. He lost his job as a closer with the Mariners. I saw him pitch with the Jays – inconsistent comes to mind.

    Brandon was inconsistent when I saw him as a Jay and an underachiever. Sounds like some of our guys, eh. Not saying he can’t be a useful piece in a bullpen but I am not not too excited. Last year was a great year for Brandon. This year, Brandon lost his closer’s role. Had a great year in 2011. This year ERA 3.63, 0-5, 1.50 WHIP, 9 saves, 5 blown saves, 27 K’s, 19 BB. The regression concerns me after one good year.

    You are not annoying at all, Harold. If it weren’t for you, I wouldn’t have anybody to talk to. 🙂

    BTW – Kenley blew 7 saves in 2012 and Brandon blew 6 (but saved all 6 SVO as a Dodger) – I’m just sayin’.

    PS: Did I mention that Kenley gave up 6 home runs and Brandon only one, but none as a Dodger?

  8. Bluenose Dodger says:

    How is that confusing? That was then, an inconsistent Brandon coming out of Seattle having lost his closer role. As Friday would say, “Just the facts ma’am.” What was there to be excited about in them? This is now and we need someone to close as I explained in my initial post. Brandon deserves a shot with his hot finish. I just have to see him do it again, to demonstrate consistency, which has been an issue for him during his career. That’s the facts. If he does, then Evan will be right that Brandon is one of the better closers in the game. We can’t change our mind. Tell that to Linda. lol.

    Need I remind you someone wrote: “I think you will be pleasantly surprised by Juan Uribe.” Then later on something like, “PUribe sucks!”
    Things change. I got sucked in by the Manny Ramirez thing against my better judgement even after stating it wouldn’t end well. Things change.

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