Last August while writing in Forbes Magazine, Mike Ozanian stated the obvious:
If the season were to end today the New York Yankees and Philadelphia Phillies would be the only two of the eight MLB franchises with player payrolls above $100 million to make the postseason. By and large the league’s big spenders (Boston Red Sox, New York Mets, Chicago Cubs, Detroit Tigers) have whiffed. One more observation: Among the eight teams that would currently make the postseason, four (Yankees, Phillies, Minnesota Twins, Atlanta Braves) are above the league payroll median and four (Tampa Bay Rays, Cincinnati Reds, Texas Rangers, San Diego Padres) are below the median. Since MLB increased revenue sharing at the start of the current collective bargaining agreement it has become increasingly clear over time that ownership and management, not spending, are the most important factors in determining success on the diamond.
I think we all would agree with that. Ozanian also published which teams will have money to spend in the next few years and said the following:
Major League Baseball’s winter meetings are now history and several owners have staked nothing less than the financial future of their teams on off-season signings that will eat up huge chunks of revenue for years. The table below shows player obligations (excluding signing bonuses) from 2011 through 2016 as a percent of each team’s 2009 revenue (net of revenue sharing and luxury taxes). The player obligation figures come courtesy of Cot’s Baseball Contracts, which you can get here: http://mlbcontracts.blogspot.com. The Forbes revenue figures are a year old because we have yet to compile 2010 data, but still serve as a good proxy for future revenue for the vast majority of teams. The Minnesota Twins are a notable exception because they moved into a new stadium last season that increased revenue substantially. Of the remaining 29 teams, only the Boston Red Sox, Detroit Tigers and Philadelphia Phillies that have committed an amount equal to more than 150% of 2009 revenue to players. The Twins figure is inflated because they moved into a new ballpark last season. The Red Sox signed Carl Crawford and Adrian Gonzalez to rich deals during the off-season that combined could cost Boston over $130 million. The Phillies inked Cliff Lee to a contract that will cost them $119 million through 2011. Needless to say the Red Sox and Phillies have little room to sign stars in the near future unless they ditch some high-priced talent. On the flipside, the Cleveland Indians, Houston Astros, Kansas City Royals, Oakland Athletics, Pittsburgh Pirates, San Diego Padres and Tampa Bay Rays have less than 50% of 2009 revenue locked up in player contracts through 2011 and therefore have lots of room to sign some expensive talent. Lower player obligations also make these teams more attractive to someone who would be interested in buying them, which is good news in particular for supporters of the Pirates and Royals.
Team Player Revenue Obligations 2009 2011-16 ($mil) as % revenue Arizona Diamondbacks 57 172 Atlanta Braves 97 188 Baltimore Orioles 70 171 Boston Red Sox 164 266 Chicago Cubs 88 246 Chicago White Sox 142 194 Cincinnati Reds 96 166 Cleveland Indians 27 170 Colorado Rockies 131 183 Detroit Tigers 165 188 Florida Marlins 105 144 Houston Astros 46 189 Kansas City Royals 23 155 Los Angeles Angels of Anaheim 73 217 Los Angeles Dodgers 68 247 Milwaukee Brewers 94 171 Minnesota Twins 162 162 New York Mets 93 268 New York Yankees 143 441 Oakland Athletics 39 155 Philadelphia Phillies 211 233 Pittsburgh Pirates 29 145 San Diego Padres 20 157 San Francisco Giants 95 201 Seattle Mariners 98 191 St Louis Cardinals 119 195 Tampa Bay Rays 31 156 Texas Rangers 99 180 Toronto Blue Jays 105 163 Washington Nationals 109 184
I wanted to share this because this means two things: (1) the Dodgers will have plenty of money to sign free agents over the next five years; and/or (2) it makes them extremely attractive to any possible buyer. Love or hate Frank McCourt, even Ray Charles can see what he has accomplished. Even Steve Dilbeck of The LA Times was forced to give him a backhanded complement:
The great irony is that the financially troubled McCourt has made the Dodgers a profitable and desirable team to own. The issue, of course, is less that he turned a profit on the team, but what he did with the profit.
The team’s value apparently has somehow skyrocketed even while all this divorce mess was unfolding. Forbes estimated the Dodgers were worth $727 million last April, but recently upped its valuation to a cool billion.
Frank McCourt, business genius!
Now, all is not roses because of the debt and the divorce. Dilbeck goes on to say:
The problem for McCourt is he has leveraged the team so seriously ($433 million long-term debt, up to $650 million total liabilities) that he hasn’t been able to secure additional funding. He’s had to request an advance from Fox for its 2011 TV rights.
OK, maybe not a genius.
So, the guy who many say has allegedly pillaged the Dodgers has actually increased their value to a BILLION DOLLARS? Things just don’t appreciate like that without spending money either. I am not convinced that McCourt will be forced to sell the Dodgers, although that is certainly a possibility, but Dodger fans should at least be heartened that the Dodgers are a valuable brand, with McCourt increasing their value by nearly 250% in just 7 years. Nothing like that has even been done before. Maybe that’s part of the reason TOPPS named them Organization of the Year. Add in the fact that it has happened in one of the worst economies this nation has seen in decades and the feat is even more impressive.
A pillaged asset is one that has been looted of value. While the amount of money taken out of the Dodgers by the McCourt family may seem obscene, anyone has to acknowledge that increasing the value of the Dodgers by nearly 2.5 times bodes well for the franchise. Add in the fact, that the Dodgers have a low percentage of revenue tied up in contracts, and the 2011-2016 seasons are starting to look pretty good. I admit that Frank has built all this on a” house of cards.” They may all come tumbling down. .. or not! I can’t say. However, he may have another trick or two up his sleeve. It should be interesting to watch. Whoever owns the Dodgers in the next five years has a golden opportunity with player acquisition, and the Dodgers should continue to field a competative team.