The Dodgers and the Edge of Selig’s Influence
Baseball’s new collective bargaining agreement attempted to fix a number of ‘problems’ that had plagued the league’s long-suffering owners – problems exacerbated in part by the huge jump in revenue the league’s enjoyed. Specifically, the agreement included a number of provisions aimed at minimizing threats to competitive balance (that is, to rein in salary growth).@
To counter the freewheeling spending by the New York Yankees, the luxury tax was increased, with penalties increasing for exceeding it in consecutive years. To stop teams blowing past bonus slots (and to stop amateur talent from essentially pushing themselves down in the draft), the agreement instituted a hard cap on amateur draft spending, with draconian penalties for ignoring the cap. To stop some teams trying to corner the market on international free agents, the agreement instituted another hard cap. It’s been one year, so we don’t have a lot to go on, but it seems to have made an impact on teams willingness to exceed these thresholds.
The Yankees have blown past the luxury tax cap every year since 2003 (when the new luxury tax went into effect), but as Maury Brown notes, they are working hard to bring payroll under $189 million. The Tigers haven’t been able to nab Andrew Miller or Rick Porcello to well-over-slot deals after they fell past teams at the top of the draft, and no one risked losing a first round draft pick by spending more than 5% over their draft pool. The Mariners could no longer utilize their hard-earned competitive advantage in the Caribbean, or, for the cynics, the Mariners could no longer light millions of dollars on fire by giving contracts to severalof high-profile busts. Even the Rangers, whose international spending in the run-up to the new CBA’s effective date was breathtaking, toed the line and kept within the new hard cap.
Then there are the LA Dodgers. After signing Zack Greinke and Hyun-Jin Ryu to eye-popping contracts, the Dodgers are set to blow past the luxury tax limit for years to come. Many argue that the league should increase the penalties for doing so, but that’s exactly what the league thought it just did. It got everyone’s attention, including the Yankees, who appear to want to comply for the first time. The Dodgers evidently believe that they can afford to pay the penalties, and given their rumored TV deal, they’re probably right.* Wendy Thurm is clearly correct when she points out that the Dodgers outlays (so far) aren’t out of line with the Yankees’ payroll budgets from 2004-2006.! Still, the point is that the owners took steps to make such spending less likely, and it’s taken one year for a team to break ranks (a team that, of course, never signed the CBA – that was the Dodgers’ previous owner).
Because even the Yankees seem wary of the new penalties, the Dodgers spending doesn’t really seem to have altered the market too much. It appears that Nick Swisher can’t use Andre Ethier’s 5 year/ $85 million deal as a starting point. Sure, Ethier was younger, but he’s also markedly worse than Swisher. Anibal Sanchez didn’t get a boost from Greinke’s deal. Unlike Greinke, Josh Hamilton went for far less than he was asking for (sure, he was asking for an insane amount, but *so was Greinke*, and Greinke is a pitcher). If free agent spending made cost-controlled, pre-arb prospects more valuable, you certainly couldn’t tell from the Trevor Bauer trade. At the moment, the Dodgers seem to be in a very different spot to the rest of baseball. This probably won’t last, and Thurm’s right that we all probably felt similarly when the Yankees picked up CC Sabathia or when they acquired Alex Rodriguez. But even then, teams would make an occasional run – the Red Sox exceeded the old cap a few times, and the Tigers/Angels did so once. Even after their pick-up of Hamilton, the Angels should be able to fit under the cap thanks to losing Torii Hunter, Ervin Santana and Dan Haren, who made a combined $42,450,000 last year.
At this point, there are no tidy conclusions to come to (except that I would love to see the Dodgers and Angels miss the playoffs again) – the situation’s too fluid and too new. Maybe Brown’s right and teams can make targeted strikes, increasing their payroll well above the luxury tax limit for one year or maybe two before bringing it back down. Maybe the Dodgers are just the first team to devote more revenue to salaries, and maybe they’ll be followed by others; one could argue that the players would benefit from higher salaries/more revenue going to payroll and skinflint owners would get a huge influx of penalty payments to sit on while decrying threats to the soul of the game. Until then, we’ll have to see if the Dodgers spending can translate into wins and not just ‘good will’ (which the Guggenheim Group had anyway, simply because they weren’t Frank McCourt). We’ll see if Angels can get past Texas with their latest move, and we’ll see what they plan to do about their backloaded contracts making 2015-16 look challenging. And we’ll see if the M’s core develops enough to justify outspending the LA teams for the right free agent. As it stands, it’s pretty hard to argue the M’s should’ve given Hamilton more than he got from Anaheim, and the M’s clearly would’ve had to have beat that offer by some margin. The fact that some teams are spending (large) fractions of billions on players exacerbates complaints that the M’s ‘don’t want to win’ or ‘aren’t serious.’
Like Dave, I think the M’s should spend more this year. But unless you’re the Dodgers, every team needs a core to build around – not just to keep costs down, but in order to prioritize and target free agent (or trade) acquisitions. The M’s problems lie partially with the fact that the Angels have made splashy free agent moves, but much more with the fact that they were able to pair Jered Weaver with solid players, and that they were able to (finally) call up the game’s best player in May of this year. The Dodgers have spent money essentially everywhere, but they were able to lock up key players like Matt Kemp and Clayton Kershaw. This isn’t to say that two players is all it takes, or that the M’s can’t spend until they find their own Matt Kemp. But the M’s have identified several players as cogs of their rebuilding effort, and being right about some of those players means more to this franchise than Josh Hamilton or Zack Greinke.
@ – And what of the other party to the CBA, the players? At this point, the MLBPA appears to be clear winners. As Joe Sheehan pointed out, from the limited evidence we have, the deal clearly *has* done what the players wanted it to: direct more money to their members, as spending on international free agents appears to have dropped while spending on the amateur draft is no longer surging.
* – Though Darren Rovell warns that more of that windfall may be subject to revenue sharing than we (and maybe the Dodgers) initially assumed. This will be something to watch, and something that will almost certainly end up in court.
! – Wendy’s article is great, as it’s essentially the first one I’ve seen that attempts to adjust for inflation and/or revenue. Two really, really basic things that everyone else scribbling on this topic didn’t do. Kudos to her.