What Will FAZ Do???

This will be somewhat unusual for me, as generally I am an extremely unapologetic pro-FAZ supporter, and I still am.  But to critically examine any operation, personal biases need to be thrown out, even when it comes to the Dodgers.

 

Sports team owners do not get into the game for short term profits.  The big profits come when the team is sold.  For the Dodgers, the ownership group has seen their $2B investment climb to $3B in 6 years.  That is a pretty good return.  Even with that increase, the operating statements are also positive.  Per an April 2018 Forbes article, here are a few dashboard points from the 2017 financials:

 

Gate Receipts – $188M

Total Revenue – $522M

Player Expenses – $261M

Operating Income – $68M

Debt to Value Ratio – 14%

 

It does not appear that the team is experiencing much of a financial stranglehold even after the horrendous player salaries that FAZ inherited.  FAZ did a great job of getting under the luxury tax.  But that only makes sense if in fact they plan to bid on Bryce Harper.  Signing Kershaw should not be a financial or luxury tax issue.  Kershaw already has a $30M luxury tax hit for the next two years.  So adding another $5M will not take them over the limit.  Will they have to overpay and incur some years where his WAR will not justify the salary?  I am sure, but he is Clayton Kershaw and he deserves to retire as a Dodger. They lose Forsythe and Grandal salaries next year, and Kemp and Hill the year after.  Can they add Harper without going over the luxury tax next year?  Probably not, but so what. With the loss of Kemp and Hill after 2019 they should be able to get back under even with Kershaw and Harper.

 

The Red Sox did not let the luxury tax bother them.  Even with the Pablo and Hanley contracts, they still signed pitchers Rick Porcello and David Price. They are in the middle of an 8 year $110M Dustin Pedroia contract.  They traded for high priced reliever Craig Kimbrel.  This year they signed Mitch Moreland and inked a $100M+ contract for JDM.  Their luxury tax is north of $235M, and I do not get the impression that they care.  Make a mistake?  Okay move on and get somebody else.  They were also NOT worried one bit about moving the overall #1 baseball prospect (Yoan Moncada), their #1 pitching prospect (Michael Kopech), a top ten BoSox CF prospect (Luis Alexander Basabe), and a lottery pick reliever (Victor Diaz) for Chris Sale.  And now they are 13-2 atop the AL East.  After a slow start, JDM is starting to hit and Mitch Moreland now has 4 HR’s.  I like their 2018 chances.

 

The Dodgers were seen as a likely trade partner for Chris Sale at the trade deadline in 2016.  I do not know what or if any players were ever agreed upon, but I do know that the one player the White Sox coveted and was told was not available was Julio Urias. At the 2016 trade deadline, the Dodgers would not let him go.  We will never know whether Bellinger or Verdugo or Alvarez were ever discussed.  But IMO, with Chris Sale the Dodgers do not trade for Rich Hill in 2016, and maybe not Darvish at the 2017 deadline, and I think they win the WS in 2017; maybe 2016.  Could they have made the trade for Sale if Urias was included?  I doubt that we will ever know.

 

The Nationals are over the luxury tax limit at $204M, but will lose Murphy, Gio, and Wieters after this year, and their $35M+ salary.  That should be plenty for them to re-sign Harper and maybe Keuchel to replace Gio.  We know they will not be outbid for Harper.  They are not afraid to spend.  So it will come down to who does Harper want to play for…Cubs, Dodgers, Nats, Giants, or Yankees?  It will undoubtedly be one of those 5.  None of the Cubs, Giants, or Yankees will be shy about spending.  With Pence and McCutchen off payroll, the Giants will definitely be in the hunt for Harper.  With Bryce Harper as his best friend, I am sure that Kris Bryant will be in Theo’s ear to go out and get Bryce.  If the Dodgers draw the proverbial line in the sand with a max price, they will lose out on Harper.

 

FAZ has been brilliant at building teams for the 162 game season and re-building the farm system.  They uncover nuggets like no other front office.  But they just do not seem get that difference maker either by chance or choice.  I am as big of a fan of the Dodger farm system as there is, and I cannot count the number of prospects and non-prospects who become my favorites.  But I am not naïve, and I know that the likelihood of these players wearing LA Dodger Blue are not great.  I like Alex Verdugo, but right now he is blocked.  Will he develop enough power to be a corner OF? What about Henry Ramos?  Andrew Toles?  Both blocked (and not by Joc).  Yusniel Diaz isn’t even on a team right now.  Why?  Are Manny Banuelos and Zach Neal blocking the development of Yadier Alvarez and or Mitchell White?  Is C.C. Lee or Brian Schlitter blocking Josh Sborz?  Do the Dodgers hold on to RHP or OF until their value drops down to Zach Lee and Trayce Thompson levels?  How many utility players do the Dodgers need?  I think my point is, is that FAZ has done a great job of building a diverse team of replaceable players and the resultant depth, but have not yet acquired that big difference maker.  Are the value of some of their excess capable of putting a package together to get that special player?

 

I was pushing for Gerrit Cole at the last trade deadline and during the off-season.  Not everyone agreed.  The Pirates did get some quality players, but the Astros did not have to give up their best, so it is doubtful that Walker Buehler would have been a deal breaker.  Alex Verdugo?  No doubt.  Ross Stripling or Brock Stewart?  Absolutely.  Mitchell White?  Pedro Baez (as a Michael Feliz).  Add a lottery pick.  Would Verdugo, Stripling or Stewart, White, Baez, lottery pick OF be enough to offset, a Joe Musgrove, Colin Moran, Michael Feliz, and Jason Martin offer for Cole?  Cole was not situated in the Astros rotation as their Ace, but he is pitching like one.  He is #3 behind Keuchel and Verlander.

 

But the Cole ship has sailed, and we must move on.  Maybe Sunday’s game will kick off something positive for LAD, and they can get back to the top with the DBacks.  Taijuan Walker just went on the DL and could be a potential TJ surgery candidate with “severe” forearm soreness.  The DBacks just do not have the depth to lose a mid-rotation pitcher like Walker.  Let’s assume that the Dodgers do get back to the top and will need that difference maker in July.  The DBacks will certainly be in on the trade deadline, and they will be looking for that difference maker.  What will FAZ do this time?

 

Posted by Always Compete

This article has 47 Comments

  1. One question: Does the Player Expenses reflect the Luxury Tax Penalty in 2017 which I think was over $50 million?

    1. The article did not directly refer to that distinction. I would have liked to have seen audited financials to answer some of my other questions. But for the sake of argument, let’s say they did not, and the $68M operating profit was reduced to zero. That is still positive from where the contract situation was when FAZ took over. And they should get credit for getting to that point. But FAZ shows an affinity to paying $9M to Logan Forsythe, more than paying $17.7M (luxury tax) to Justin Verlander. The Tigers are paying $8M of the Verlander contract. Verlander may have cost more than Yu Darvish in prospects, and probably at least Yadier Alvarez and Alex Verdugo. Many will argue that the price is to high, and that may be true in 2020. But Justin Verlander probably gives the Dodgers a parade in downtown LA last November.
      .
      I have no problem with not trading for Cole Hamels at the trade deadline in 2015, but I did have a problem not going for Chris Sale at the trade deadline in 2016, and Cole or Verlander in 2017. Or JDM in 2017 when a big RH bat would have been gold for LA.
      .
      IMO, the difference I have with FAZ is that they seem to look at floors of players so that mistakes are minimized. Sometimes you have to take that gamble and look at the ceilings. Trading a Mitchell White, or Alex Verdugo, or Yusniel Diaz, etc. would hurt for the future. But that is only a problem if you do not think that Billy Gasparino and his bevy of amateur player scouts cannot find a capable replacement. Sometimes a team needs to step out of their comfort zone and “Go For It” when they have the shot. A team that plays it safe will contend, but will they win a championship. Last year Darvish had to take FAZ out of their comfort zone, and it almost worked. Verlander would have taken them waaaaay out of their comfort zone, but IMO the gamble would have paid off in a WS championship. This year will they play it safe or Go For It? And I also stipulate what players may be available at the trade deadline will be a big factor.

      1. very interesting post above and i’m going to respond more fully below, but I will defend FAZ for the yu darvish deal. that SHOULD have been enough to get us a parade. yu didn’t live up to the hype. we did go for it but failed.

  2. Nice piece AC. You summed up nicely what myself and others have been trying to say in a succinct way. I like FAZ and think they’ve done a good job, but I’ve been vilified on another blog for trying to say what AC just said. FAZ is good but they’ve missed on a few also.

    Some say the Dodgers were one game away from winning it all why not bring back the same team. My answer is look at the Astro’s. They won it all but didn’t rest on their laurels. They moved pieces to get better and acquired Cole. FAZ has been good but just hasn’t made that one trade that seals the deal. Will they this year? We will have to see, lets get back to this one!!

    1. I am not going to vilify you, but I will say that you have to look at how the teams were constructed, because they were constructed very, very differently. Stan Kasten became the President of the LA Dodgers in April 2012 and made a promise to Dodger fans that they would remain competative. They then made the THE TRADE which I was violently opposed to (it still hamstrings the team). When Kasten did that, he was committed to continously putting a winner on the field. And he delivered: The Dodgers won the division the next five years. In fact, they won 473 games in that five year span – an average of almost 95 wins a year.

      Meanwhile, the Astros were tanking. They lost 106 games in 2011 which was when they hired Jeff Luhnow as General Manager and they lost 107 games in 2012 and 111 games in 2013. In 2014, they only lost 92 games and in 2015 and 2016 they were as little over .500, befor winning it all in 2017.

      Look at the salaries, year-by-year at the start of the season:
      2012 : Dodgers $105 Million – Astros $60 Million
      2013: Dodgers $216 Million – Astros $26 Million
      2014: Dodgers $229 Million – Astros $50 Million
      2015: Dodgers $271 Million – Astros $72 Million
      2016: Dodgers $249 Million – Astros $96 Million
      2017: Dodgers $241 Million – Astros $124 Million
      2018: Dodgers $187 Million – Astros $160 Million

      That happens to be REAL money. So, in 2012 to 2016, while the Dodgers were spending $1.07 Billion on Salaries, the Astros spend only $304 million! Now, that does not count the Luxury Tax Penalties which over the past 5 years has been approximately $150 million.

      If the Dodgers did not reset the Luxury Tax Penalty THIS year and Bryce Harper costs $40 million a year, the Dodgers would have had to pay closer to $100 million a year for him because of the luxury tax.

      In my opinion, I would have rather seen the Dodgers tank in 2012 and 2013. Collect prospects and draft picks and build from within. At the start of 2016, the Astros only had obligations with only 5 players past that season. FIVE!

      So, it was easy for the Astros to take on some money and trade prospects from a surplus. They could easily take on Reddick. McCann, Verlander and Cole, but the Dodgers who have been mandated to win now and buold for the future could not easily do that.

      You can’t compare the two programs. Both have been successful, but the Dodgers have remained successful throughout the time the Astro were tanking. In retrospect, what couldFAZ have done if they had tanked? The fact of the matter is that had the Dodgers two STUD PITCHERS (Kershaw and Jansen) delivered in the Series, they would have been sipping the bubbly and we would not be having this conversation. And… don’t even get me started on Yu Darvish. I still say, that FAZ set the Dodgers up to win last year. The fact that they didn’t falls squarely on the shoulders of my favorite player (Clayton), Kenley and Yu!

      The Yankees have been everyone darlings since they traded for Giancarlo Stanton over the winter and then signed Neil Walker and traded for Brandon Drury.  They have been picked by many to win the World Series and yes, they have done better than the Dodgers who are 5-9 this year… and “stood pat” according to many.  So, after 14 games, how has it worked out?

      Well, the second coming of Christ: Giancarlo Stanton is hitting .200 with 25 strikeouts in 59 at-bats (wow, he would have “saved” the Dodgers).  Brandon Drury is hitting .217, Neil Walker is smoking it at .188,  and to top it all off, “Super Power Catcher” (Gary Sanchez) is hitting a strong .140.  I am not telling you this to say the Yankees won’t win it all – I am saying it to show that even the team who made all the changes and did not “stand pat” has not done well… yet.. with all of the changes.

      It’s early and I am as impatient as anyone, but… it’s early! The Yankees made the biggest trades in baseball and yet they are barely ahead of the “stand pat” Dodgers.  The Pirates, Mets and D-Bags are in first place in their respective divisions. So are the Red Sox, Angels and Twins. Does anyone want to bet that even 30% of those team will in their divisions? I’ll take that bet!

    2. I totally agree with your’s and AC’s assessment. Nothing more frustrating than to sit and watch players that make perfect sense for the Dodgers go off the board to some other team we could have easily bested. Its still April, but I hope that FAZ will get a 1A RHP for this year.

  3. Great article! Did the financials show the Dodgers as profitable? If Total Revenue was $522M, what were their Total Expenses (part of which you told us were Player Expenses of $261M)?

    I am still mad FAZ did not find a way to bring us Stanton, and just below that was not offering Morrow enough to stay. It would have cost us trading Grandal to stay under the cap, but I could live with that.

    1. According to the Forbes article, the organization had a $68M operating income. Mark had a question as to whether that operating income included luxury tax costs, and as I indicated above, there was no information to confirm or refute that. Maybe the $68M is reduced substantially, but not enough to minimize the impact of the increase in the organization value and the resultant 14% debt to value ratio. With the reduction of player costs in 2018, there should no longer be any question as to the financial strength of the LA Dodgers. What the ownership group will allow FAZ to do with that will be telling.

  4. Good job AC. My take is that the Dodgers had the missing piece in 2017, maybe before, but he didn’t get it done. No, I don’t mean Yu Darvish. I mean CK who some have compared to Sandy Koufax. Not a bad comparison for sure but Clayton has failed to show up in the post-season like Sandy did. FAZ can’t be blamed for both Clayton and Kenley coming up short. They surely would think as we did they both would be significant cogs in the WS run. Both at the top of their mid-season game and the Dodgers win walking away.

    FAZ now does have a decision to make when the train gets back on the track. They need someone to take the ball and run with it as back up if Clayton can’t overcome his post-season blues.

    1. Cannot disagree with you about CK and Kenley. I made the argument in 2016 when fans were ripping FAZ for the Rich Hill trade, stating that you cannot blame Hill when CK couldn’t get him the ball for Game 7 after his Game 6 start. If Hill gets the ball in Game 7 and gets beat, okay it would be tough to argue. For me, FAZ plays it safe by looking at the floors of the players instead of really going out of their comfort zone and getting that player who has a high ceiling even if it is a loooow floor. WAR is important, but not for Championship runs.
      .
      I also agree with you…let’s see what they do this year, because it is going to be a much harder road through the NL West and the National League. Just like the Dodgers are not the same without JT, I do not think the Nats are the same without D. Murphy.

  5. I still strongly suspect that FAZ is looking at future free agent markets and preparing to make an impact on them. That makes this season well, expendable, for lack of another word. We all know they are looking 10 or 12 moves ahead. 3 dimensional chess vs candyland. IDK. Maybe I’m giving them too much credit.

  6. Personally, I think Buehler should be brought up NOW. He’s 24 – not 19 or 20. Let’s see what he’s got!

    Hopefully, Urias will also be up later in the year and it should not be lost on us how good he can be if he is healthy.

    Maybe it’s time to turn Alvarez into a reliever?

  7. AC

    Good job!

    What do you think about what the Yankees have done, to go from an old line up, to a young line up, in the last four, or five years?

    I think the Yankees are more comparable to us, because they didn’t have to rebuild, and the Dodgers are only second in value, to the Yankees.

    I do think that because our front office came from teams, that never had the financial resources the Dodgers have, they are still Leary when it comes to making big deals, whether that is trading a top prospect or paying out, for a top player.

    They are much more about low risk, high reward players, because there is not much risk there, and because the cost is not that much, whether it be money, or prospects.

    Although I don’t care if they want to continue to find that proverbial needle in the haystack, I also think they need to also take more advantage of the many resources the Dodgers have too, because we haven’t seen, much of that.

    And that is why I think some people get frustrated with the front office, because the Dodgers are the second richest team in all of baseball, and you don’t see the Yankees and these other large market teams, so worried about money, or the luxury tax, like the Dodgers.

    I totally agree with you about Kershaw, signing Kershaw shouldn’t be considered the Dodger’s big purchase of free agency next year, or their big move of the off season, next year.

    Because that is not making the Dodgers any stronger, or better, then they currently are, right now.

    Like I already said, the Dodgers are the second richest team in all of baseball, and because of this, there should be more concern about making the team stronger, then worrying about the luxury tax, and the many resources, the Dodgers have, especially after the team made it all the way, to game seven, in the World Series, just last year.

    It is upsetting to many people, that the Dodgers didn’t do much of anything in the off season, to make this team better, while almost every other team that went to the post season last year, did make moves, to make their teams stronger.

    What good is it, to be the second richest team in all of baseball, if you are going to worry more about the luxury tax, then making the team stronger, especially after how far the team went last year.

    1. I predict a major trade well before the deadline this year. I wrote a long piece on this but it disappeared on me 🙁

    2. The Yankees got under the luxury tax this year AND made the team stronger… maybe.

      But I think it’s felony stupid to be paying the luxury tax going into next season. If the Dodgers were paying the luxury tax in 2018, it would be at 50% of the payroll over $197 Million. By resetting the tax THIS year, if they go over next year (which is $206 Million) they only have to pay 20%.

      Just for the sake of comparison, let’s say they sign Harper next year for $40 million and they re-sign Kershaw. They have a lot of contracts coming off the books then, but someone will have to take the place of the players coming off the books. If the Dodgers are $40 million over the luxury tax threshold this year and next year, they would have to pay an additional $20 Million in Tax (50%), while if they only are over nexty year, that becomes $8 million (20%). Theoretically, you can buy a very good player for that $12 million you spend on the luxury tax.

      Yes, the Dodgers are the second richest team in baseball and you said you don’t see the Yankees and these other large market teams, so worried about money, or the luxury tax, like the Dodgers.

      Really? Since 2013, the Dodgers have OUTSPENT every other team in baseball, including the Yankees by $150 million dollars!

      It would be really, really dumb to continue to pay the luxury tax and it is a win now and lose later scenerio.

  8. prospects
    *
    untouchables: buehler, ruiz
    *
    really don’t want to trade: peters, may, smith
    *
    would likely be included in impact trade: d. Santana, white, diaz
    *
    probably not as much value as we think: alvarez, rios, sheffield
    *
    guys I hope we don’t part with at this point because it’s too early: wong, Kendal, furgeson, jimenez, heredia

    1. edit: put Verdugo in the middle grouping

      also fwiw, fangraphs just released its top tampa bay prospects and Deleon was ranked #20. B U S T

      1. Deleon still has a present and future value 60 change-up. That alone, coupled with a return to his pre-surgery velocity of sitting low 90s, suggests he is not yet a bust. While he may be 26 by the time he throws his next major league pitch, it is too early to label him a “bust,” especially with his return (Logan Forsythe) showing signs of being a flash in the pan himself. As for your prospect ranking, I agree with the untouchables, although Buehler makes sense if the return is a top shelf arm with multiple years of control remaining [there are very few of those guys anyway]. I think you severely underestimate Verdugo, who could be a legit ROY candidate if he played everyday and could be a cheap productive starting LF as soon as next year. I’d rather trade Kendall while he still has the first round aura about him as well as a few MLB-ready tools. If his swing sucks, it will always suck. I’ve seen him in person and he looks small. What are the odds he becomes a first division starting CF in the bigs? Because that’s the only position he can play.

    1. I got rid of satellite tv about three months ago and have no ragrets. I actually watched about a quarter and half of yesterday’s game and was very impressed with indy. best part was trying to read LeBron’s mind when he would pass to green and watch him brick. I usually don’t watch the nba but i’d love to see some new blood. go pacers!

  9. Lots of good stuff from AC, and I probably agree with most of it. Maybe I’m wrong, but I get the impression AC, that your preference in next years free agent market is Bryce Harper. And no doubt, Harper would be a welcome addition. But if I had a preference it would be Manny Machado, given the depth in outfielders the Dodgers have in their system. Machado can play 3B, SS, and probably 2B as well. Given that Justin Turner isn’t getting any younger, and the fact that 2B will require a new body next year, I would think that Machado represents a more immediate need. Of course lots can change between now and next year, but as things stand now, my choice would be Machado if the Dodgers decide to become a bidder next year.

    1. Actually I use the Harper example because he is the most talked about and would certainly create a luxury tax problem. IMO he will not be a Dodger because that would absolutely be contrary to the FAZ way of thinking. I think the Dodgers will pay Kershaw above their comfort level, but will not offer another player multi $100M contract, which would rule out Harper/Machado/Donaldson/Keuchel. I know many want Harper or Machado, but IMO a more likely FA choice will be DJ LeMahieu. The Dodgers will need a 2B, and one who has a slash line from 2015 thru today of .319/.383/.436/.819.

  10. Brooklyn, you stole my thunder… Machado would be that force in the order that we are looking for and definitely an L.A. kind of guy…
    Lets just get to .500 and go from there…
    Indiana??? Coach Knight, Reggie Miller and Hoosiers… As J.D. would say “Good night Mrs. Calabash wherever you are”…

    1. I don’t think I’ll ever understand Roberts choice of line-ups, but I’m always willing to be proven wrong.

  11. Good piece A.C. To use Mark’s words, I think it would be felony stupid to worry about going over the luxury tax threshold by a few million dollars this year and then not bring in a Harper or another impact player. The Dodgers had Stanton, Darvish, and Morrow all wanting to become Dodgers. I’m sure there were others too. I know Darvish is disliked by many after his World Series flop and it was a flop, but he’s been a top 20 pitcher in his career. Signing any of them would have put the Dodgers over by an insignificant amount. So, if being under is priority #1 then they better make a big splash next off-season.
    ~
    I would say for the most part I’m pro-FAZ, but I’m not afraid to point out that the Dodgers rued the day they signed Scott Kazmir and Brandon McCarthy. Borrowing Mark’s words again. In the end, those signings had a much bigger negative impact than Gonzalez and Crawford. If they only had one bad deal to move or had moved all of those guys to Atlanta sooner they could have been in on Stanton like the Yankees were. Like most, they misread the market this year. If they had known how bad it was for players this year, they may have declined Forsythe’s option. Based on his career production, $9 million seemed reasonable, maybe a tad bit high, but reasonable and moveable. After seeing the off-season’s market, it is too high.
    ~
    I found it interesting that some article popped up this week that the Dodgers had inquired about Machado.

    1. Re-signing Forsythe was certainly a mistake. They should have let him walk, but who knew the market would tank? They could have signed Moustakus for less and moved Turner to 2B. WOW!

      1. since when does turner play 2b?

        moving one of your best players doesn’t seem like the smartest baseball moves

  12. A/C D/C,
    Who is Emmanual De Leon? Faced 4 batters today and gave up 3 hits and a BB for Tulsa (and almost gave up the game). 47.25 ERA.

  13. Great pitching in Tulsa today, aside from the 27 year old. Santana had 10 k, and Sborz with another save. I like this!!

    Oh, and our big league team has scored a few runs today as well.

    1. I Joc is a defensive replacement, wait until after the at bat. Didn’t make sense to me either

  14. Ryu continues to be good against everyone but Colorado and AZ. At some point Buehler has to force Maeda to the pen. Maeda has said that his contract shouldn’t be a factor. If Buehler has 150 innings scheduled this year, how many should be used up in AAA if he’s throwing well? 20-30?
    ~
    I’m with whoever suggested Liberatoe up and Alexander down.

  15. Grandal performing well in his contract year.

    There are many worse #5s than Ryu in MLB.

Comments are closed.