Yesterday Mark commented, “The fact that the Yankees went over the Luxury Tax Threshold does not mean the Dodgers should do the same. That, and the Yankees have no outside shareholders to revolt. Hopefully you can understand that.” Maybe it was or maybe it wasn’t, but I assumed that is directed at me since I brought up NYY exceeding the CBT threshold. I want to be clear. I never said the Dodgers should go above the CBT threshold because NYY has. I asked if he (or anyone else) thought that the threshold should be a de facto salary cap and not be crossed under any circumstance. I am not asking if anyone thinks Guggs does, because as of right now, I believe they will in fact stay under the threshold. What I am asking is, for those of you who are pleased that the team may be standing pat, do any of you believe the team should go over the CBT threshold if the additional payroll made the Dodgers better.
I have already stated on multiple occasions that I believe the CBT is a de facto salary cap and that Todd Boehly is the one behind the pecuniary decisions. Maybe Kasten as well. And while I believe that Friedman is not the one setting the budget, I do believe he was hired for a reason. He has an innate ability to find the best value that will work within a constrained and already bloated budget that he inherited. I am not at all placing any blame on Friedman. Friedman is talented, but he is not omnipotent. While it is my belief that the team budget has been set by ownership and it will not exceed the threshold, I would hope that they would not stand on ceremony and not entertain a trade or FA signing that took the team over $206MM. I would be glad to be wrong.
Some perspective on the revenues.
- The Dodgers are #2 to NYY in revenues, but both spend about 35.5% of their revenues on player salaries. Only the Braves (34.82%), Padres (35.34%), and Pirates (29.84%) spend less as a percentage of revenues than do NYY and LAD.
- Paced by the Nationals (62.7%), there are 11 teams that allocate at least 48.5% of their revenue to player salaries: Rockies (59.4%), Reds (53.91%), Mets (52.68%), Boston (48.58%), Brewers (52.16%), Mariners (51.74%), Cardinals (51.1%), Astros (51.1%), Cubs (48.58%), Angels (48.5%).
- Average allocation percentage of player personnel salaries to revenues is 44.08%.
- The Dodgers have more revenue allocated to non-player salaries than 100% of the full revenue stream for all MLB teams except for; NYY, Cubs, Boston, SFG, Astros.
- Undeterred by how much of their revenue they are spending on player salaries, it was reported today that the Nationals are looking for a way to sign both Harper this year and Rendon next year. They may not sign either, but that they are even looking into the possibility is surprising.
The Dodgers currently sit approximately $20MM below the CBT threshold. Not enough for Bryce Harper, but they could absorb Castellanos or Kluber or Pollock and stay under the threshold. With some maneuvering they could sign Pollock and trade for Castellanos and stay under the threshold. There are certainly other transactions (trades) that the Dodgers could make that will both help the team on the field and keep them below the threshold. It is just Castellanos, Kluber, and Pollock has been the focal point for potential Dodger transactions. The problem of trades is that two teams have to agree, and that it will obviously upset a number of Dodger fans depending as to who is traded. Likely candidates because of their salaries are Hill, Joc, Maeda and Fields.
If the owners were willing to spend the average allocation percentage of player personnel salaries to revenues of 44.08%, their payroll would increase to $230MM. That is $4MM more than the 1st tax surcharge tier, but that could certainly be corrected with some minimal movement. That is $44MM of additional revenues that could be allocated to player salaries.
Let’s assume that the Dodgers were able to acquire Kluber, Castellanos, and Pollock. Per Cots, Kluber has am AAV of $11.7MM, Castellanos has an AAV of $9.95MM, and let’s assume that Pollock can be signed for no more than $15MM AAV. Combined without any AAV lost in the trades, that would increase the CBT salary by $36.95MM. That would bring the CBT payroll to $223.69MM, which is below the first tier. That would cost the team about $3.54MM in luxury tax.
In addition, let’s assume that Friedman was not going to leverage the team on a massive overpay in the trades for Kluber and Castellanos. Yes, that would place them $17.69MM north of the CBT threshold. Would the team be better with Kluber, Castellanos, and Pollock? However, for 2020, the Dodgers will lose the salaries of Hill ($16.0MM), Ryu ($17.9MM), Bailey ($17.5MM), Kemp ($10.5MM), Freese ($4.5MM) and Castellanos ($9.95MM) but would incur a $5MM option buyout for Bailey. That will be a CBT payroll reduction of $71.35MM, leaving them $40MM below the threshold next year. Certainly, enough to replace Castellanos’ bat with Nolan Arenado.
Or let’s make a less drastic assumption. Let’s assume that the Dodgers and NYY can somehow pull of a trade whereby Hill and Stanton are the primary players in the trade. That is about a $6MM increase in AAV. They could even assume all of Stanton and not include Hill and still only be slightly over the threshold.
One final assumption. What if the rumor of the Dodgers interest in Harper at lesser years but for a higher AAV were indeed accurate. If the Dodgers signed him for $35MM AAV, and that was all of the additional salary the team would incur, that would increase the CBT payroll to about $221MM or about $15MM above the threshold. It would be apparent that LAD would trade Joc and his $5MM for prospects, dropping the excess to about $10MM, leaving them about $10MM under the 1st tier of the CBT. With the reduction of payrolls indicated above for Hill, Ryu, Bailey, Freese, and Kemp, that would leave the team well under the $208 CBT payroll threshold for 2020.
There is a plethora of alternatives that the Dodgers could do if they were willing to slightly exceed the CBT threshold for one year, and one year only. If they chose to spend dollars on FA like Pollock or Harper, they would not need to include prospects for trades. However, both Pollock and Harper would cost the Dodgers the 31st pick in the draft. To some that is too much of a loss. But all of this jibber-jabber is meaningless if the ownership is steadfast against going above the threshold for any reason. They do not owe me or anyone else not connected to the organization an explanation, but I would sure like to know what their intentions are. I also do not think they are going to explain their reasoning thus giving away internal strategies.
Dodgerpatch was absolutely correct when saying that there are two ways to attack profit: by increasing revenues or by decreasing costs. Perhaps the Dodgers’ ownership believes that their revenues are maxed out. There really is not much more in attendance they could expect. Any significant cost increases for tickets, parking, food, and concessions could drive down attendance negating any potential increase in revenues in those segments. I am sure that the financial wizards have satisfied themselves as to where that cost barrier is, but I would surmise that they are reaching a max revenue point. Thereby, the other component is by reducing costs, and the largest of those operating expenses is player personnel salaries. The one other variable to be considered is what would an investment in Bryce Harper do for attendance and merchandise. I do believe there would be at least a short-term increase. That increase could be sustained if it resulted in a WS victory.
So we sit and wait to see if there will be a next shoe to drop. If they choose to do nothing and remain $20MM under the threshold, many of us will continue to wonder about the Farmer trade, and others of us will continue to be skeptical as to the overall financial viability of the operations for the Dodgers. It sure does not seem as if there is any reason whatsoever for them to be as concerned about payroll as they seemingly are unless there is a self-imposed salary cap. The only reason for the valuation of the Los Angeles Dodgers to be reported as $3B is if the current ownership is willing to sell the team. If the ownership is not willing to sell the team, the valuation is a nothing but a footnote comparison with other teams, but it does not allow for any additional operating expenses such as player personnel payroll.
Some may be satisfied with continued contention that will result in the playoffs. I would not be satisfied. I want a WS championship, and if a short-sighted strategy to keep payroll down is implemented, I would think that the masses could begin to stop going to the stadium as they did under McCourt. If there are no additional personnel changes, and the Dodgers somehow win the WS, I will be the first to come on and say I was wrong.
Discussion (57)
Disagree, not disagreeable
It maybe to late but here’s my ?. Why couldn’t we get machado and move seager to 2nd?
Source: #WhiteSox are discussing a deal that would send Joc Pederson from the #Dodgers to the White Sox
— Jason Kinander (@JasonKinander) January 20, 2019
Are the Dodgers in trouble for International signings made while Gabe Kapler was in charge of signings? Hope this is false news!
I’d probably be happy to obtain either Pollock or Castellanos. There are plusses and minuses associated with both players. In the end it could come down to cost. Pollock costs a draft pick, and maybe some international money. Castellanos costs prospects and/or current MLB players. And, of course, Castellanos requires that Dodgers and Tigers come to a meeting of the minds.
I’m out on pollock. Too big of an injury risk. Really hasn’t played well since a huge 2015. I mean if he could come back with that season but unlikely. His splits against lefties have not been good the last 2 years, ave. Obp, injury after injury. He has speed, is a good defended, has some pop but with his injury history I am not sure he is much of an upgrade over Taylor for the money and draft pick it would cost. I would favor Castellanos who has been durable, younger, mashes lefties. I understand Detroit has to be willing at fair value but I wouldn’t settle.
Agreed Mark, he could be boom or bust. Do you pull the trigger?
I’d love to have Pollock. He always impressed me as a Dback. Plus he knows the NL, and really knows the NL West teams and ballparks. He’s a gold glove out there, and that is IMPORTANT!!!!
It will cost us a pick, but I think we can get him on a nice 3-4 year deal at a good cost. Play him in LF or RF, and keep him fresh for October as we take our 7th straight NL West title.
I think Pollack could be very, very good in LF for the Dodgers.
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He could also be injured more than he is healthy and he costs a draft pick.
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I cannot see any way he gets a two year deal… it’s most likely three, but it’s a roll of the dice.
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AJ Pollack could be TOP 3 in the MVP or spend the year on the DL. He sacres the hell outta’ me.
Rosenthal reports lots of smoke around Pollack and the Dodgers.
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He’s good and the FO has always liked him, but….
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He’s no Bryce Harper.
Wouldn’t putting Pollack in LF ease the pressure on him to make the fence banging plays and diving catches that often caused his injuries? He, Joc and CT could form a LF/CF triad to rest each on occasion to remain fresh. Or Joc could be traded with Maeda for an OF who hits RH like Castellanos. Maeda’s contract should prove to be of value to a team like Detroit that needs starting pitching and experience. Doing this would then make it possible for them to put Castellano in LF, CT in center and Pollock in RF to help mentor Verdugo and also play LF and CF on occasion to keep all 4 fresh.
Proposed lineup:
Pollack/ RF
Seager/ SS
JT/ 3B
Bellinger/1B
Castellano/LF
Muncy/2B
CT/CF
Barnes/C
Bench: Martin, Hernandez, Freese, Verdugo
The problem that I have with a lot of this, is that the Dodgers spend a boatload outside of play salaries.
Their front office is (and has been) very top heavy. And those guys don’t work for peanuts.
Their analytics/player dev and Int’l scouting departments are the largest in the MLB. And those guys don’t work for peanuts.
There were many options cheaper or just as expensive as Martin for a Catcher, but Martin’s deal had zero CBT impact. They’re still spending more money than they needed to.
If the LPs of Guggenheim are really pushing for tighter budgets, wouldn’t we see it everywhere? Not just in the one region where all teams are scaling back?
Rosenthal reporting there is considerable more Dodger interest in Pollock. I would be in on him for a 1 or 2 year contract with lots of incentives because of his injury history, even though the article I read says two of his injuries were caused by making aggressive plays. Tell you what though, when the guy is healthy he can flat out rake. Plus, with our depth, he could rest a few days out of the week. Would love to have his bat even out our lefty heavy lineup. Great defender too.
Cody Allen to sign a one year deal to close for LAA. $8.5MM with incentives that could take it to $11.0MM, pending physical. That will take LAA north of $170MM AAV. They are trying to stay relevant, but that Pujols anchor is dragging them down.
Excellent column, well thought out. Under Kasten and Friedman, the Dodgers are a development focused organization with a special emphasis on developing players they draft and international players they sign. Trades are the second most important factor with free agent signings last (other than their own players). Both Friedman and Kasten have repeatedly said that. Friedman has also said on many occasions that long term contracts tend to not turn out well for the clubs, the last two or three years usually becoming a payroll burden. Both have expressed concern about aging rosters and big contracts, similar to what happened to the Phillies, now the Giants. These are all clues. They are focused on being really good every year, competing for division titles and eventually winning a World Series. I’m not so sure they would sacrifice the future just to win a World Series. They never trade top prospects (Seager, Bellinger, Buehler etc.) in an attempt to get there. As Friedman has said, there are no guarantees that such moves will win you a title, but they can definitely hurt future teams and the ability to manage payrolls. Putting a good product on the field each year does mean great attendance and interest in the team. Winning a division puts them in the playoffs and gives them a shot at winning the World Series. Are the Dodgers done in 2019. Well, Kasten just said they will be opportunistic and Friedman noted that the team the Dodgers start the year with will not be the team they finish with. Whether changes or additions happen before opening day, Friedman said it’s hard to know at this point.
Here’s a great read on Friedman being a “prospect hugger”:
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https://www.dodgersnation.com/dodgers-the-false-narrative-of-prospect-hugging/2019/01/18/
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Really a well-researched article.
I know it has been mentioned before, but I want to reiterate that The Athletic has an outstanding article (01/17/19) written by Pedro Moura who is a fantastic sports journalist (IMO) covering the Dodgers. The article is an interview with Dave Roberts who I will now call SoCal Dave due to the article referring to him as Southern California Dave. Actually, he refers to himself in that way.
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Mark has already provided some information from the article as to how SoCal Dave saw that the offense was the primary reason for the loss in the last two WS. I think he is wrong on 2017 and I stated as to why yesterday. I would love the opportunity to challenge SoCal Dave on the 2017 WS and get his reaction. But I am not a journalist, so my chances are very slim.
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There was also a very poignant conversation with respect to the Rich Hill controversary. Some quotes from the article:
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“For me, it’s just disappointing because I pride myself so much on communication,” Roberts said. “I went out there to pat him on the butt, and he took it as I was coming to get the ball. For me not to communicate to him and him not to know that I was going out there to support him and get him across the finish line, that’s what gets my gut. Because I had every intention of having him keep going.”
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“It all goes back to accountability,” Roberts said. “If the player says he thought one thing and I saw something different, then that’s my fault that I didn’t communicate the right way. I’ll take that.”
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With respect to Yasiel Puig, and what might have gone into the decision to included him in the Farmer trade:
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When the Dodgers hired Roberts three years and two months ago, he already sensed Puig would demand more of his attention than any other player. He did not know just how much that would be. Between bites of toast, Roberts credited Puig with helping him learn patience and expressed a belief both the player and team could benefit from a change of scenery.
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Finally, with respect to the roster construction:
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“I do believe, and I know Andrew feels this way, that sometimes changing the pieces a little bit keeps things fresh,” Roberts said. “If you look at our roster going forward in 2019, we did more than we did ahead of 2018. We haven’t added more, but we’ve changed, and I think that’s important. And we’re still not done yet.”
A question for Mark, AC, DC. Does Barnes have any options left? Just thinking that Martin’s veteran wisdom might be able to rub off on possible catching callups in Ruiz / Smith. That is if Barnes looks like 2018 rather than 2017.
Time will tell, but I do not think the Dodgers are in at all on Kluber.
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I think the Indians have explored trading him… IF THEY CAN GET A HUGE OVERPAY, but I can’t see it happening.
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I think the Dodgers are just making sure the price stays high on Kluber.
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Here’s the deal: Yes, it’s nice to make sure Clayton ends his career as a Dodger, but there’s no way the Dodgers should have signed him to alost a $100 million extension UNLESS they have a reasonable expectation he can continue to pitch at ACE Level.
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If they did not think he could continue at that level, then I do not believe they should have signed him. They have access to all his medicals, etc., so I am assuming they believe he will continue to be Kershawesque. That’s what I have to believe too. I also have to believe he wants to exorcise his playoff deamons more than we want him too.
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If he is healthy and pitching at that level… and I believe the Dodgers believe he will, the Dodgers do not need Kluber as they already possess the best rotation in baseball along with the most depth.
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Kluber is just a smokescreen put out by Friedman’s minions. He is not going that direction.
Comments got pretty intense yesterday, let’s see if today we can be more civilized.
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Nice work on the numbers AC. What I see here is that the Dodgers can definitely afford to spend and that’s a good thing. I also keep seeing the same thing in regards to possible players being added to the roster and that is the fact that the best fits and biggest prizes this off season are still available. With trades, AC is correct that it takes two to tango. I totally agree that Casty might just be a back plan and that there may be a contingency deal already in place. Same thing in regards to Pollock, why sign if Harper hasn’t set the market yet. AC is also correct that whether or not the Dodgers spend their money will be explained by no one. All we can do is hoot and holler and make a case for who we want to make the team better. No one knows if and why the Dodgers will go over or stay under the CBT. This is especially true when their payroll has been roughly $100 million more in the past.
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I like the idea of the lineup that MJROD posted. But, I would rather have Harper than Machado, go ahead and move Munchy and Pederson for Casty as MJROD / MT suggested and let Verdugo play CF.
CT3 – 2B
Seagar – SS
JT – 3B
Harper – RF
Castellanos – LF
Bellinger – 1B
Verdugo – CF
Barnes/Martin – C
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Even better, sign Pollock and Harper and move Verdugo for Kluber. As previously stated, I don’t care about makeing the money work because the Dodgers have oodles of money and more falling off next year.
LF Pederson and Taylor
SS Seager
3B Turner
CF Bellinger
1B Muncy and Freese
2B Hernandes and Lux
RF Verdugo
C Barnes and Martin
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or
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LF Pederson and Hernandez
SS Seager
3B Turner
1B Bellinger
2B Muncy
CF Taylor and Toles
C Barnes and Martin
RF Verdugo
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The second lineup makes it harder for lux to fit in later in the year as well as limit Freese to mostly pinch hitting duties. Both lineups are strong enough to get to the WS at which point pitching and defense will decide who wins.
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If the Dodgers struggle against lefties then a mid-season trade might be considered. That is the time I would consider a rental such as Casty and no sooner. Taylor, Muncy, Verdugo, Toles, and Pederson will have played themselves onto the playoff roster or onto another team.
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I would trade for Haniger and an Ace if I were to make any trades prior to spring training. I predict San Diego will sign Machado. I think Harper as a Dodger is about 50 50 and I suspect Hill would be traded if Harper were signed. If Harper is a Dodger he will accept a 4 year $150M contract with an opt out after 3 years and Verdugo would be included in a trade to make room for him.
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Taylor and Muncy should improve in 2019.
Maybe Kluber and castellano are all that’s needed. The lineup above looks good, but a better fit at 3rd base will be arenado.
I think the Farmer trade was made for three reasons.
1. Salary dump.
2. Get rid of players who were not happy. Not Farmer.
3. Flexibility.
I believe Freidman wants to do more for the Dodgers. To get Realmuto, Kluber or Castellanos, they need a trading partner. If the price is too high Freidman will walk away.
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The only control Freidman has are the free agents. In some cases a draft pick is involved. Freidman can spend what ever money he wants on free agents. However, I think we all know Freidman. He will not do something stupid. So we may begin the season with what we have now. I am ok with that decision. In the last two years Freidman has made deals to help the Dodgers win the WS. It did not work out. However, he did not help the bull pen last year and help was needed.
One can start a charity where claiming 95% of donations go towards research for children’s illnesses and paying for the best doctors and chemists and so on. If the doctors and chemists are the staff of the charity they’d perhaps pay themselves top dollar with the best benefits and retirement eating the greatest part of the donations chalked up as expenses of all research helping cure those terrible illness that take lives of too many children. Where I see charities operating and honestly helping a need I often wonder how much they are paying themselves. There’s room for a lot of perks to be charitable. I’ve seen priests utilize extravagant lifestyles with toys, vacation and travel and be able to claim their oath to poverty as they do not own the toys, private jets and villas. I’m not picking on Catholic charities more than any charity but they are an easy target to make example. It costs $ to run things. L. Ron Hubbard said something to the effect of “if one wants a path to succeed towards wealth, start a religion”. He wasn’t a real bad scifi writer but……..
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The only thing this has to do with baseball is, it is where my mind went when all the percentages of teams spending could be viewed as a parallel and living with ADD has put me drifting to who knows where? I don’t view the organization as manipulators of both fans and shareholders…. well I guess that is exactly what their business is. Hmmm Come friends! join my church of church of unwritten possibilities. What will it be of? Can’t say as that can’t be written!
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Sorry AC but it’s partly on you. All those numbers! Is ADD evolution? Oops, I got nothing.
I would rather see the Dodgers make trades for Castellanos and Kluber, I think the two of them are needed a lot more then Harper, but the important question is what do the Dodgers want to do. I guess we will find out the answer in the next 4 weeks.
Great summary.
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I don’t think Friedman is even close to done and he must be in on Machado and/or Harper because that could be what is holding up Plan B. I do believe they would go over the LTT for one year, even though they have said otherwise… IF they got Machado or Harper. I think Plan B is Castellanos and it’s likely Friedman may have a deal in place for him contingent on the BIG TWO.
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Guggs and Kasten also KNOW that if they are DONE adding payroll, that will likely have a negative impact on attandance, which is one of the real reasons they can’t be done. People have thought they were done because of how slow the bulk of the FA market has been. Players are talking and the C work is going to get thrown around.