The Dodgers are “hundreds of millions” of dollars in debt, according to The LA Times (a long, but very worthwhile read), and will need to continue slashing costs to not be subject to debt service punishments from Major League Baseball. The richest team in baseball has not turned a profit on the business since Guggenheim Partners purchased them in 2012, and have set player payroll records every year since.
Ever since Guggenheim Partners made that purchase, they’ve been publicly vocal about cutting payroll to become a more sustainable business, without sacrificing competitiveness. So far, they’ve fared brilliantly: four division titles, deep playoff runs, a top-ranked minor league system, and annually leading MLB in home attendance.
It’s a dream situation for any sports organization — maintaining success while filling the pipeline with young talent, cutting payroll costs and bringing in massive ticket revenues. Yet, the team is still looking at huge debts that need to continue to be alleviated to avoid punishment from MLB Commissioner Rob Manfred, who, to his credit, does believe the Dodgers “have always had a plan that would give them financial stability over the long haul.”
An endorsement like that from the man in charge makes the debt service rule news much milder than many might perceive it to be, but it’s spot-on. Ever since the declaration that creating a flexible, sustainable, affordable business model would be the organization’s top priority, Guggenheim Partners and the Dodgers’ front office has held true to it.
Current president of baseball operations Andrew Friedman and general manager Farhan Zaidi haven’t spent more than $48 million on a free agent, and much of the team’s future looks like it will come through the minor league pipeline. That said, the Dodgers can’t completely ignore free agency or trade candidates if they want to remain competitive.
Two of the team’s most valuable players are first-time free agents and will command top dollar this winter. The Dodgers have expressed interest in bringing both closer Kenley Jansen and third baseman Justin Turner back, and they should have the flexibility to do so, especially if they back-load the deals so that more money comes on the books after 2018, when only Clayton Kershaw, Kenta Maeda and Yaisel Sierra will be under contract.
As currently constructed, the team is still very strong and a certain contender, even if Turner and/or Jansen sign elsewhere. Credit for that is due to the team’s front office and scouting department, which have put an emphasis on signing international players and dominating the amateur draft.
But, the team has holes.
For instance, incumbent second baseman Chase Utley is a free agent and his backup, Howie Kendrick, was already traded to the Phillies. If Turner walks, third base becomes an immediate weakness. If Jansen does, the bullpen — the strength of last year’s team — takes a significant hit and will need a new ninth-inning man. The outfield is full of uncertainties, and the starting rotation is more brittle than eggshells.
If the Dodgers are to operate under a mandate of lowering costs, but want to defend their division crown with a win-now squad on the field, they will need to make some savvy, cost-saving moves to do so. For instance, as previously mentioned, signing players to extensions or free agents to contracts should ideally be back-loaded beyond 2018. The team becomes much more financially flexible after that season, and can afford to bump the payroll again.
Of course, Friedman and Zaidi are best-known for their creativity in trades, so expect that to be the main way for them to upgrade the team at a low cost. Already this offseason, the Dodgers have been linked to second basemen Brian Dozier, Logan Forsythe and Ian Kinsler, outfielder J.D. Martinez and starters Chris Archer, Chris Sale and Justin Verlander.
Every name on that list would fill a weakness the Dodgers have, whether it be positional or in terms of performance (all the hitters are known for their ability to hit lefties, something the Dodgers were historically bad at in 2016). If the Dodgers were to acquire any of them, it would take a bounty from their deep cache of prospects, an area they’ve been loathe to touch in recent seasons.
Friedman and Zaidi very wisely held on to Corey Seager and Julio Urias in past offseasons, even as star names were dangled in return. Now, it’s Jose De Leon, Alex Verdugo, Willie Calhoun and Cody Bellinger who command the eyes of opposing GM’s, and we’ll see if the Dodgers are willing to part with any of them. Youngsters like Gavin Lux and Jordan Sheffield will likely also have their suitors, but the Dodgers just invested early-round draft picks on them.
Unless the team is content with its current roster — Jansen and Turner pending — they will likely have to dip into that pool of prospects to fill the need at second base and in the starting rotation. Where they might benefit, surprisingly, is in past busts of signings.
For example, Brandon McCarthy, who has spent his first two seasons of a four-year, $48 million deal mostly on the DL, might be an enticing project for another team willing to take on money in a trade. Likewise, Hyun-Jin Ryu could be had for almost nothing at this point, and Yasiel Puig could try his talents elsewhere.
The Dodgers could pair any veteran like that on a decent-sized contract with a couple of prospects to net a return of an everyday second baseman, a middle-of-the-rotation starter or a lefty-mashing outfielder. Regardless, the team will want to bring back somewhat affordable, quality players who fill a need (Forsythe and Martinez are the poster boys for this type of player).
Whatever Friedman and Zaidi end up doing this winter, they will do so with an eye on the team’s financial situation, as they have since they were hired in 2014. The Dodgers will likely move a couple more veterans like they did Kendrick, and finally gamble away a couple of top prospects to bring back cost-conscious players who can still upgrade the overall talent level of the team.
For a team fighting for its first World Series title in 28 years, the Dodgers will stop at nothing to maintain their on-field success. They’ll just have to continue doing so under the shadow of the debt service rule, which only accelerates their existing vision for a cheap, competitive, manageable business.