"Money" is the word that best describes the Los Angeles Dodgers over the last few seasons. Under previous owner Frank McCourt there didn't seem to be enough of it to go around, but ever since Guggenheim Baseball Management took over, there hasn't been an end to the spending. Zack Greinke's new contract, signed this past weekend and the second-largest ever given to a pitcher, is just the latest move in this trend. To make this strategy work, though, the Dodgers can't stop.
The Dodgers wouldn’t be the first team to just keep on spending. The Yankees used to be that way and the Red Sox looked like they were getting there, too. Ever since the new collective bargaining agreement was signed, though, the two clubs have changed their plans for the future. The Dodgers changed things up as well, but they decided to keep on adding rather than to cut.
A bit of back story: First, the Red Sox, whose situation Dodgers' fans should be intimately familiar with. After all, last August the Dodgers performed the baseball equivalent of a government bailout on the Red Sox, freeing them from underneath the rubble of investments gone bad and allowing them the opportunity to reinvest in better options and plans going forward. The Dodgers flashed their new money to the rest of the league with this trade, bringing in Adrian Gonzalez, Carl Crawford, Josh Beckett, and Nick Punto, as well as the over a quarter-of-a-billion in future salary they represented, in exchange for prospects and James Loney's expiring contract.
Boston was in this mess for two reasons. First, the previous general manager, Theo Epstein, had loaded up the Red Sox with a few hefty, long-term deals in his last few seasons at the helm. John Lackey signed for five years, $82.5 million before the 2010 campaign. Beckett inked a five-year extension shortly after. Carl Crawford signed for seven years at $142 million the next winter, and Adrian Gonzalez, while inexpensive in the last season of his original deal, began a seven-year, $154 million extension in 2012.
There was also an under-appreciated stumbling block that came to pass by the time Ben Cherington took over for Epstein. The new collective bargaining agreement froze the luxury tax threshold at $178 million for the second year in a row, keeping the Red Sox from getting the kind of financial breathing room they were likely expecting from season-to-season -- the soft ceiling had risen significantly each year since 2005 to help account for the value of the dollar over time. It made the 2011-2012 off-season a bit tough, with Boston having to trade players and shift money around in order to fill holes without going over budget. With the CBA keeping things at $178 million once more for 2013 before finally climbing to $189 million in 2014, things weren't likely to be any easier the next winter, either.
The Red Sox didn't mind crossing the luxury tax threshold, as they had done it multiple times before, but they didn't blow by it the way the Yankees usually did. That limited what they could do, and the fact that revenue-sharing rebates and something of an amnesty program for the luxury tax were introduced in the new CBA meant they had even less reason to do so. Combine this with a season that was going nowhere and the desire of Boston to let Cherington build his own roster, and you end up with what those in Boston affectionately refer to as the Nick Punto trade.
Now, the Red Sox had legitimate reasons to step back, given their poor season, the fact that a team with this core was stuck in place for years, their new boss in the front office. But, things like the luxury tax even mattering to the Red Sox means they shouldn't have put themselves in a situation where it could be a problem to begin with. If you're only willing to go so far past the tax threshold, and that budget is spent before the season even begins, it's difficult to maneuver in-season to compensate for injuries, ineffectiveness, and the like. This is how the Red Sox ended up trying to replace Jacoby Ellsbury with Marlon Byrd and Scott Podsednik in 2012, and also why they had to pick over the remains of Rich Harden and Erik Bedard to bolster their 2011 rotation when one pitcher's elbow was in ribbons (Daisuke Matsuzaka), another hurler's elbow was on the way to the same fate (Lackey), and yet another was days away from an announcement stating his spine had a stress fracture (Clay Buchholz). With little room to add real payroll, and the farm system emptier than it had been thanks to the acquisition of an expensive piece like Gonzalez, the scraps of others were what Boston had to work with to plug holes, and it cost them in consecutive seasons.
Reading this should please Dodgers fans, as they might not have to worry about this kind of attitude when it comes to spending. At the Greinke press conference, Magic Johnson said "We want to win" in response to the question of whether money was an object to the Dodgers or not. This could just be posturing, but with a record television deal in the works, the Dodgers can put their money where their problems are and still have plenty left over.
That viewpoint should also be a reassurance to Dodgers fans who see what the Yankees are doing. In their quest to be under the luxury tax in 2014, New York is essentially refusing to commit money for more than one season. Russell Martin took off for the Pirates because of this, Nick Swisher is going to sign elsewhere, the bullpen is now without Rafael Soriano, and even more players could be lost in another year when the likes of Curtis Granderson, Phil Hughes, Mariano Rivera, Andy Pettitte, Hiroki Kuroda, and more become free agents as well.
It's strange to see the Yankees want to get under the tax, but because they've been over it so many times, they are going to be penalized at a 50-percent tax rate for every dollar they spend over the threshold -- that rate is new to the current CBA. What's also new, though, is the aforementioned luxury tax amnesty. Should a team that has been over the luxury tax repeatedly get underneath it for one year, they can drop the tax percentage all the way down to 17 percent -- in the past, the penalty was based entirely on the number of infractions over a specific time frame, so a one-year drop gained teams little leeway.
By itself, that's not a huge amount of money for a team like New York, but when combined with the revenue-sharing rebates that teams under the tax remain eligible for, it's a significant number of millions we're talking about. River Avenue Blues, a Yankees blog, estimated $41 million in savings between cutting the payroll, rebates, and the lower tax should the Yankees get things down to $189 million for 2014. Considering two teams spent just $55 million on their entire teams in 2012, and more than half of the league takes in less than that per season through their television deals, that $41 million represents significant coinage.
The issue, as alluded to above, is that this hampers the Yankees' plans to field the best team possible. In a perfect world, maybe Swisher is re-signed, Martin is retained for that second year, and there are no real concerns about Robinson Cano's free agency, or whether Granderson should be dealt now in order to make life easier in a year. Alex Rodriguez's remaining $119 million over five wouldn't seem like such a big deal, and neither would the $99 million still owed CC Sabathia, should something go wrong there. That perfect reality no longer exists, though, as it was tossed out with the old CBA, and replaced by this new one that shines a brighter light on the business side of baseball operations.
For now, the Dodgers are avoiding the problems run into by the Yankees and the Red Sox in their quests to field expensive, successful teams, but they just started down this road -- they haven't been at this long enough to worry about the upper reaches of the luxury tax, or deal with countless disappointments in their hugely expensive core. The Dodgers took on much of Boston's failed financial experiment, and added even more expense on top of that to go along with what was already an impressive array of long-term deals for the likes of Matt Kemp and Andre Ethier, but it's to be seen if that will work out as poorly for Los Angeles as it did for the Red Sox.
The Dodgers don't have to spend just for the sake of it, but when the time comes to make a choice about whether they should throw more money at problems -- whether due to injuries, ineffectiveness, a lack of cost-controlled kids, or simply the allure of a fat rebate check -- Los Angeles is going to have to keep using their most abundant resource, rather than give in to the temptation to take a step back, if they want to keep winning. There is a life-cycle to teams, stages of building and rebuilding. The Yankees and Red Sox have used money as a kind of dark science to push that cycle aside. Now the Dodgers are in the necromancy business too. It's unknown what Guggenheim's financial ceiling is, but it's likely best for all involved if we never get the chance to find out, lest the team suffer the same fate as their rich cousins out east.
Marc Normandin is one of SBN’s Designated Columnists and one of the managers of Over the Monster. Follow him at @Marc_Normandin.