THE LOS ANGELES DODGERS spent $100 million to renovate Dodger Stadium ahead of the 2020 season, an ambitious undertaking that modified most of the infrastructure in an effort to modernize baseball’s third-oldest ballpark.
“Irony of ironies,” Dodgers president and CEO Stan Kasten said. “After all these years of being the most beautiful stadium ever built to watch the game of baseball, we now also added 21st-century amenities. We have two acres of entertainment, and new food, and new history displays, and kids’ areas, and merchandise. Now we have elevators, and escalators, and connecting bridges — we now have all of that! We have a front door! You’ve seen pictures of it — it’s amazing!”
And it has all been just sitting there, untouched, for a year.
Kasten told CNBC in late October that a fan-less 2020 season led to revenue losses “north of $100 million” for the Dodgers, adding that it would take the franchise “years to catch up.” Three weeks later, the team followed a leaguewide trend in issuing organizationwide layoffs. Three months after that, they splurged on Trevor Bauer, brought back Justin Turner and raised a payroll that now is approaching a whopping $245 million, according to Cot’s Contracts, 26% higher than that of the second-place New York Yankees and the only one on pace to exceed baseball’s luxury-tax threshold.
The Dodgers’ payroll is high, but manageable, given their flexibility to creep back under that threshold in a year or two. Their roster is loaded with stars, but their abundance of young talent makes it seem as if the Dodgers’ run of excellence — consisting of eight consecutive division titles, a 2020 World Series championship and a 2021 PECOTA projection of 104 wins, the highest known number that system has ever produced — might never end. They have built a baseball utopia, evolving into the type of juggernaut their sport rarely produces. While most of their competition reels from the revenue losses of the coronavirus pandemic, which kept fans away from ballparks for an entire season, the Dodgers are doubling down.
How?
As one rival executive noted: “I think it’s important to go back to the beginning.”
WHEN ANDREW FRIEDMAN replaced Ned Colletti as the Dodgers’ head of baseball operations in October 2014, he inherited a major league team primed for contention and a minor league system sprinkled with high-ceiling talent. But he also took on a bloated payroll littered with bad contracts, one that, if left unaddressed, might trigger the type of rebuild necessitated by recent high-priced teams like the Philadelphia Phillies and the Detroit Tigers.
Adrian Gonzalez, Carl Crawford and Andre Ethier — all either acquired or extended under Guggenheim Baseball Management, which infused the organization with cash upon claiming ownership two years earlier — were owed more than $200 million as they approached their age-33 seasons. Matt Kemp, already displaying signs of regression, had five years and more than $108 million remaining on his extension. The Dodgers were coming off a 94-win season, but they beat up on mediocre teams and didn’t get nearly enough return on investment from an expensive, underperforming pitching staff. Change was necessary.
Over the next four offseasons, the Dodgers’ new front office made moves that aimed to balance immediate winning with long-term sustainability.
The Dodgers added established veterans who didn’t require long-term commitments, hit on lesser-known young players who retained value and eschewed the massive contracts that so often haunted high-revenue teams. When they chased stars at midseason, they targeted Yu Darvish and Manny Machado, pending free agents who wouldn’t cost as much in prospect capital. They absorbed the contracts of players like Ryan Webb in order to accumulate additional draft picks. And they used Kemp in three separate trades in an effort to improve their financial outlook, the last of which netted a couple of promising prospects. In the meantime, they also beefed up their scouting and player development and built what one rival executive described as a “think tank” within their analytics department.
“They did what a lot of teams say they want to do and don’t,” the rival executive said. “They invested in their infrastructure.”
The Dodgers paced their sport in luxury-tax penalties every year from 2013 to 2017, bills that totaled nearly $150 million over that five-year period. The payroll ballooned to $272 million for the start of Friedman’s first full season in 2015 but dipped to $187 million by Opening Day in 2018, the first of three consecutive years under the threshold. It set the stage for the present.
Teams that exceed the luxury-tax threshold, determined by a Competitive Balance Tax payroll that uses the average annual value of contracts, pay an escalating overage tax that charges 20% the first year, 30% the second year and 50% thereafter. But the penalties reset once teams get back under the mark just once. The fear for those who navigate in that realm isn’t crossing the threshold initially, it’s putting themselves in a position where the only way to stop the escalating penalties is to dramatically cut costs, much like the Boston Red Sox did by sending Mookie Betts and David Price to the Dodgers 13 months ago.
The Dodgers essentially blew up their budget by signing Bauer to what will likely amount to a two-year, $85 million contract on Feb. 5. But his proclivity to short-term commitments appealed to the Dodgers because they mitigate the vicious cycle of those escalating penalties. The 2021 threshold is set at $210 million and the Dodgers are dangerously close to exceeding it by more than $40 million, which would increase the overage tax to 42.5% and push them back 10 spots in the upcoming draft. The latter penalty is at least as big a deterrent as the former. In all likelihood, the Dodgers will find a way to position themselves just below that mark before season’s end. But they can now absorb such consequences.
“The moves and things that we’ve done the previous three years gave us a little bit more flexibility right now,” Friedman said. “From our standpoint, we feel really good about the team we have in place. We know that there’s some added cost associated with it, which is not ideal and it is a cost. But we feel like with where we are, and the team we have, that the reward kind of outweighs that.”
SIX YEARS AGO, the Dodgers’ farm system was headlined by three young men named Corey Seager, Julio Urias and Joc Pederson. Only the Chicago Cubs boasted a comparable trio. Their pipeline of young talent was, by consensus, the industry’s most promising, led by Kris Bryant, Addison Russell and Jorge Soler. When they won it all a year later, snapping a championship drought that had lingered for more than a century, the Cubs seemed poised to emerge as a dynasty. Today, they’re a cautionary tale — a symbol for the speed at which franchises can become stale, no matter how vast its revenue streams, how intelligent its brain trust or how deep its farm system.
That concept guided the Dodgers’ principal decision-makers as they navigated through this past offseason and reconvened for spring training, sources familiar with the team’s thinking said. It’s why rolling out the same core group from last year was hardly ever an option, regardless of the excellence it displayed. It’s why — after a measured-yet-persistent pursuit of top-shelf talent, which took them through DJ LeMahieu and Marcell Ozuna, among others — they ultimately signed Bauer, the reigning National League Cy Young Award winner. It’s why guarding against complacency has become their foremost priority.
“I think that there’s a reason why — not an exact reason why — no team has repeated since 2000,” Dodgers manager Dave Roberts said at the start of camp, referencing a 20-year drought that stands as the longest ever among the four major American sports. “Because it’s not easy.”
The Dodgers’ coaches will spend the spring trying to tap back into the palpable desire their players displayed when they reconvened in the summer of 2020, when the anger of perennial disappointment blended with concerns that the pandemic might shut down their quest entirely. The hard-charging San Diego Padres, whose aggressive offseason might have nudged the Dodgers toward Bauer in the first place, will push them in 2021. So might the players’ stated desires to celebrate a World Series championship traditionally, with screaming fans and flowing champagne and long parade routes. Roberts referred to it as “a dangling carrot.”
“We never really did get that full chance to celebrate last year,” Dodgers first baseman Max Muncy said, alluding to the restrictive health-and-safety protocols necessitated by the pandemic. “It was kind of like the season ended and that was it. To me, if anything, I’m hungrier than ever to go out and win a championship again just because I feel like we haven’t had that full chance to celebrate. And hopefully once we do it again we get that chance.”
The Cubs never quite maintained a similar edge. A 103-win championship season in 2016 was followed by a 92-win season that ended in a five-game NL Championship Series loss to the Dodgers in 2017 and a 95-win season that ended in a wild-card loss to the Colorado Rockies in 2018. In 2019, they missed the playoffs and their manager, Joe Maddon, left. In 2020, they slumped through the summer and Theo Epstein stepped down, precipitating an initial teardown that saw Yu Darvish and Jon Lester depart. In the meantime, Bryant and Javier Baez took steps back, Russell and Kyle Schwarber flopped, and Jake Arrieta and Craig Kimbrel fell off. The payroll became top-heavy, the roster grew stagnant and players became content, a sentiment expressed by Baez last week.
Surging through the 2021 season, the Dodgers believe, could set an important tone for the next half-decade.
Toiling through it could halt the momentum they’ve built to get here.
“With the team we have coming in, the expectation is to win a World Series,” Dodgers longtime ace Clayton Kershaw said. “And so we have to remember that it doesn’t matter that we won last year, but at the same time remember that our team has a chance to be really special again. And we can’t take that for granted. I’ve said it before, but there’s not many teams that have gone all-in, year after year, like we have, to try to bring home a World Series. I don’t take that for granted. And that’s our motivation for this year — not trying to squander that opportunity, first and foremost.”
THE DODGERS HAVE had detailed plans in place for how to welcome fans back into their ballpark, at any capacity, since last May, two months before Major League Baseball moved the All-Star Game in Los Angeles from 2020 to 2022. The wait continues.
“It’s maddening,” Kasten said. “It’s maddening — but, there is light at the end of the tunnel.”
The seven-day average of COVID-19 cases in L.A. County at the start of March had fallen 43.1% from just two weeks earlier, according to data compiled by the L.A. Times, giving Kasten hope of bringing in fans by the start of the regular season. The Dodgers led the majors in attendance every year from 2013 to 2019, and the excitement around their current incarnation has reached a new level. When the team put a limited amount of spring training tickets on sale Feb. 20, they sold out in about two hours. On the morning of March 1, a season-ticket holder was selling seats in the left field pavilion for the April 9 home opener for $5,000 each on StubHub, even with no assurances that fans would be allowed inside.
“We all love Dodger Stadium,” Kasten said. “But if it’s possible, we’re going to appreciate it even more than we ever did before because it was taken away from us for a year. That’s what I think.”
Kasten wouldn’t comment on the layoffs that were announced 22 days after the Dodgers’ title-clinching victory in Game 6 of the World Series, referring, through a spokesperson, to an original statement that cited “widespread economic devastation caused by the coronavirus.” The same offseason, the Dodgers committed $136 million in combined salaries for Bauer and Turner. Taken together, the layoffs and the payroll increase is yet another example of the big-business juxtaposition that vexes much of the American public. The spending, at least, can be justified.
The Dodgers hosted close to 30 million fans from 2013 to 2019. Their massive television deal, signed in January 2013, pays them more than $8 billion over a 25-year period. Last July, Forbes valued their franchise at $3.4 billion, a 70% increase from their purchase price eight years earlier. Kasten called competing annually for championships “central to our business model” and believes it can be done “in a responsible way.” Spending now, of all years, might seem strange. But the payroll, Kasten said, isn’t analyzed in year-to-year increments.
“We look at it in a very large, long-term approach,” he added. “We think if we do the right things long term, even short-term problems will be overcome by the other things we put into place over our whole time here. We’ll see if we’re right.”