When Frank McCourt purchased the Dodgers many doubted he had the financial wherewithall to compete against the big boys. The doomsayers were saying he'd slash payroll and sell the land to developers. None of that happened, instead every winter the McCourts have done extensive capital improvements to Dodger Stadium while keeping the Dodger budget well over 100 Million.
But things are looking a bit suspiscous these days from an outsider.
1. Many reporters have reported that the McCourts are very unhappy with attendance, which I expect means they are unhappy with the daily cash receipts compared to previous years. Remember ticket sales are counted not by how many butts end up in a seat but how many tickets are actually sold. As anyone can attest, going to a game from Mon-Thurs you can pick and choose to sit anywhere you want because of the large number of season ticket holders who don't bother going to the game. Each person who does not go to a game costs the McCourts (15.00 Parking) + (20.00 Concessions).
2. They were unable to take on salary during the trading deadline and had to resort to selling prospects to get players like Blake, Manny, and Maddux.
3. All of this is hearsay except for the how the Dodgers are going about selling playoff shares to season ticket holders. To me this is the compelling evidence that the McCourts are having cash flow problems. The McCourts have raised ticket prices every year they have been owners. I think it would be safe to say that most season ticket owners have seen an increase of 35% since new ownership took over. In the past when post-season tickets became available, you would purchase them and then get credit when they quickly lost in the 1st round or failed to make the playoffs, thus getting your money back by November. This year the Dodgers added a new wrinkle. If you buy the post-season package they have guaranteed your season ticket price for 2009 to be the the same as 2008 as long you choose not to have your post-season package money refunded, but instead get a credit toward your 2009 season tickets. So they are willing to eat money on the increase in ticket prices in 2009 so that they can keep the money from Nov - Feb. The interest earned on the cash would fall several million short of what they would collect on the ticket price increase. Just for simplicity sake:
Let us say they have 30,000 season ticket holders with an average price of 30.00 per ticket(Conservative). At 81 games a season they are booking 72,900,000. Now if they keep that cash and earn interest from Nov-Feb at let say 7.5% they make roughly 1,800,000. However if they do their normal 10% price ticket increase in 2009 they would book 80,000,000. So they are losing about 5 million in future revenue to keep the cash now.
I don't know squat about the complexity of the McCourts finances. What I do know is that strange decisions are being made and this bodes ill for the future of the franchise. Sure we wasted money when you look at Schmidt/A Jones/Pierre/Furcal/Loaiza but that budget was set back in January and if the McCourts are having cash flow problems that means the revenue is not reaching expectations. Maybe it is other parts of the McCourt empire that is having problems? Are fewer people parking in the Boston parking lots? Was the budget predicated on a playoff run?
Hopefully this is but a blip, but the Dodgers don't draft low enough in the draft and don't spend enough money in the international market to get away with selling prospects as a long term plan.
In all the years as a Dodger fan I can never remember the team trading(selling) a prospect as highly regarded as Carlos Santana to avoid paying salary. Some think that Santana was a fungible asset but from I've read, he is either going to be ranked number 1 or 2 when BA lists the Indian prospects. Pablo Sandoval is tearing up the NL at the moment. For most of the year he did his act in the same league as Carlos Santana, and Carlos Santana was the better hitter. As Andrew said Carlos Santana probably had a better year then the ballyhooed Matt LaPorta.
The best way to nip this in the bud would be for the Dodgers to go deep into the playoffs. They then not only get the TV revenue, they get to keep the playoff revenue while re billing for the 2009 season. When bloggers and fans lambast the Dodgers for trading the future for now, I don't think the McCourts have any choice. They need this team to get into the playoffs. And I think if you are a fan you need them to do the same, or you might just see more Carlos Santana deals in your future.
Many of you claim to be thinking long term when you say you hope the Dodgers don't make the playoffs so that Ned gets canned. To me that is short term thinking. If we don't make the playoffs who knows what we may be looking at in the future.
1 recs | 13 comments
It's a good point as far as it goes
I don’t like Ned and very much want to see him fired. But that is exclusive from the way I view the franchise under McCourt. Eliminating Ned is a positive, but ultimately it’s the thought process under which the team got Ned that is important. McCourt hired Paul DePodesta because he was a star in a popular book, not necessarily because he understood how a winning team should be assembled or because he had a rational list of things to look for in a GM. That is, so long as the team is run by the McCourts, so long will it be at sea, unless they somehow stumble into competence. That is not an encouraging sign.
scareduck - September 9, 2008
Can't disagree
at this point. Problem is that as a Dodger fan we can hope to get a better GM but we are surely stuck with the owner. Hoping he stumbles into competence is all we got.
Phil Gurnee - September 9, 2008
Yea, assuming the McCourts have cash flow problems, and I agree with you TC that they do, given the entire ordeal before they even bought the team of whether they would have the money, that’s a good point. It’s too bad, like you say, that nothing can be done with an incompetent owner. An incompetent owner with money is one thing, but one without it is another. If we had a suave GM like Beane who understood the market inefficiencies and could sign good players on the cheap, then we could contend much easier with a leaner payroll that the McCourts could easily afford, maybe 75 million rather than 100+. But Colletti’s free agent signings have all been simply throwing money at a bunch of players who weren’t that good or had an injury history. I think his only two signings I’ve liked have been A. Jones and Furcal. I thought the Jones move was a calculated risk that failed.
As for his cashflow problems, I wouldn’t be surprised if he has cashflow problems elsewhere. It seems most owners don’t really get too much money from their teams unless they are either in NYC or keep payroll so low they cannot not make money (all of Jeffery Loria’s teams). Maybe he’s not bringing in enough baseball money to cover the baseball costs, and he doesn’t have enough to supplement that. Or maybe we’re just fooling ourselves. He does have plenty of money, but he won’t spend non-baseball money on baseball expenditures. A notable example of this is Carl Pohlad, the Twins’ owner, who I believe is the richest owner in the game, yet doesn’t spend any of his non-baseball money on the Twins because he doesn’t want to go into the red with the Twins, which is why they still have a mid-market payroll.
Tango and Cash - September 9, 2008
Pohlad
could probably have a few rings with just a little upgrade in payroll.
Phil Gurnee - September 9, 2008
Also, regarding LaPorta/Santana
Matt LaPorta is not a catcher. That is, remember about five years ago when Jeff Mathis was one of the top catching prospects in baseball because he had just come off a year when he had utterly defeated Cal League pitching. Catchers, perhaps uniquely among position players, have a tendency to tank as they go through the upper reaches of the minors. While I’m generally with Andrew on the pointlessness of giving up Santana (and disagree with it vehemently), and I also agree on the point that Logan White’s job is not made any easier by the Dodgers’ penuriousness when it comes to amateur signings, Santana’s value won’t really be known for a couple years at least.
scareduck - September 9, 2008
Yes
I remember when Mathis was the hot prospect and Santana could easily suffer the same fate. That doesn’t change the fact we traded/sold a top prospect for salary relief. It could have been Elbert and the argument would be the same. We never how these things are going to turn out for a few years.
Unlike many I have zero problems trading the youth of tomorrow for wins today as long as we get value in those deals. I do have a problem when we could have just taken on payroll instead of trading our prospect depth. The lack of depth could keep us from making a play for the Miggy’s when they come available.
Phil Gurnee - September 9, 2008
Very Interesting
I agree that making a playoff run is important because not only does it help us keep Manny/signCC or whatever, but the extra money helps keep us from making Casey Blake type deals. I think the other big benefit is it keeps the D-Backs from getting the money, which could help them re-sign Dunn or Hudson and extend Webb. In a way, winning the division here could also be a big help to us in winning the division for the next 5 years.
Brendan Scolari - September 9, 2008
On the subject of season ticket sales
That assumes the team will get 100% of their season seat holders re-upping. In the current economic climate, it’s not clear that will be the case. I would not be surprised to see a small but significant erosion in renewals, especially if the team doesn’t make the postseason or goes one-and-done (again).
A likely bigger problem is asses-in-seats. I go to Angels games and would guesstimate that anywhere from 60-90 of the announced attendance is actually in the stadium for games, with typical being around 75%. Maybe it’s just me, but the times I’ve been in Dodger Stadium this year and what I’ve seen watching them on TV at home it seems like it trends much lower than that. For instance, I can’t ever remember a game where the reserve level seats at the extreme ends are ever filled or even seated. There have been plenty of games where the field level seats in fair territory (where home runs land) on either side have been ghost towns. The tickets may be bought, but the hot dogs, Cokes, etc. aren’t getting purchased. Maybe that’s changed lately, but I wouldn’t bet on it either way.
scareduck - September 9, 2008
Re:
Exactly my point. Attendance numbers are okay, but I think asses-in-seats is one of the problem the McCourts are having. However since Manny was acquired those seats have been filled much more then were before the trade. This is one of my arguments with you when you discard the Manny trade without taking into account the economic effect he is having for the McCourts.
Phil Gurnee - September 9, 2008
Perhaps
but that’s only a short-term heroin fix. The real costs of getting Manny here in the first place are the very high dislodgement of quality young players, including the creation of a long-term hole at third base. And McCourt has yet to actually pay Manny’s salary. Sure, a lot of payroll comes off the books at the end of the year, but as I said before, the problem is the process that decided to get Manny in the first place.
The asses-in-seats problem would solve itself if the Dodgers actually had an exciting team. Ned pretty much bollixed before the season that with the acquisition of Andruw Jones, one of a long string of mistakes he’s had to paper over. It strikes me as extremely likely that the current wave of Dodger talent is about to peak immensely earlier than it otherwise would have, simply because the front office is too short-sighted and plain old in love with veterans. The Diamondbacks this year are showing the limitations of an exclusively homegrown club; the Dodgers should have been able to avoid that, but Ned insisted on taking foolish risks.
Having dug into the history of the Angels some, the current regime in Chavez Ravine begins to remind me a lot of that team in the Mike Port era, save for the public name-calling. (Ned, as a born-and bred PR man, would never engage in some of the obscene, and in this era, unthinkable smears in the press that Port engaged in; for instance, he had the temerity to call out Donnie Moore in 1987 after it was obvious he was pitching injured.) Yes, he fielded some winning teams, including the one-out-away-from-the-World-Series 1986 club, but it was paid for on the installment plan; as often happens, Port neglected or was simply incompetent with the farm system. Reviewing their drafts over the five years he ran the club, only Jim Abbott, Gary DiSarcina, Jim Edmonds, Damion Easley, Tim Salmon, Chad Curtis, Garret Anderson, and Troy Percival had extensive careers with the Angels (and you could argue that DiSar’s was years too long!). The rest were sent away in fairly pointless trades did little to improve a team that spent more years under .500 than above it.
The good news, I guess, is that the shelf life of GMs these days is shorter, and in the Dodgers’ case, because Frank McCourt’s financial horizons are so short.
scareduck - September 9, 2008
Interesting, but Misguided
You’ve got so much wrong it’s hard to read. Your piece is thoughtful but off base. The days of owners pulling out money from their pockets are nearly gone. Baseball no longer allows clubs to operate irresponsibly in the red. Maybe Fox signing Kevin Brown and losing $50 million a year while passing the buck to the fans had something to do with that. Revenues, not owners, pay the bills. It’s that simple.
The McCourts are not the issue here. When you have an extraordinary payroll, as the Dodgers do, and you can add Casey Blake, Manny Ramirez, and Greg Maddux for very little money, that’s awesome. Why you choose to rake Ned Colletti over the coals for the deadline deals is beyond me. Acquiring a solid option at third base and two first-ballot Hall of Famers is a great haul for any team at the trade deadline and beyond, but the fact that it took very little spending should be something the organization should be praised for! You malign Ned Colletti when you should be praising him. They didn’t trade Carlos Santana instead of paying cash; Santana, a good but potentially superfluous catcher, was the key player to the Indians. That’s how they got Casey Blake, who’s been an upgrade at third and a positive veteran presence in the clubhouse.
And there are no postseason shares. As any forward-thinking franchise does, you seek season ticket renewals when your team is hot in September. That may be news because of how long it’s been since the Dodgers were in the thick of a September pennant race. What’s more, clubs usually tack on a fee to renew—in addition to your postseason bill! Every club I’m aware of offers to apply the money from any unplayed postseason games to your season ticket bill for next year—so you only pay once. The Dodgers required NO renewal fee if you apply your money from unplayed games.
I may be watching from 3,000 miles away while going to college in New York, but I see a situation that’s a lot better than you may realize. Enjoy your hunt for a Blue October. It doesn’t happen every year.
dipsquad99 - September 10, 2008
Actually you are wrong
on many points.
1. Carlos Santana is not superfluous
2. I’m a season ticket holder of the Dodgers, Lakers, and Clippers and this is the first time ever, one of those teams has given you the choice of renewing your tickets at the same price if you agree to purchase playoff shares. This is unprecedented, it is not normal operating behavior. It is a grab for cash now at the expense of cash later. Maybe they are a head of the curve and everyone will start doing it but I think I’ll drop dead before Jerry Buss allows me to renew at the same price from one season to the next. The Clippers don’t raise season ticket prices because they would lose the few they have.
3. I did not rake anyone over the coals. I’m more then happy to see them trying to win the World Series. If you think I’m unhappy with the deals you don’t read my posts. I’m only unhappy that we just didn’t take on Blake’s salary instead of trading Santana to offset the cost of salary.
Phil Gurnee - September 11, 2008
Rebuttal
To address your points:
1.) Prospects are prospects for a reason. Santana never made it higher than A-ball and although his numbers are very respectable, it was still for the Inland Empire. The age difference between Martin and Santana is less than three years. The Dodgers are ready to have Russell lead them to multiple National League West crowns in future seasons; everyone is just waiting for Russ to take the responsibility of that leadership role. Martin’s numbers may be down this year, but he is hitting .311 with runners on. Considering the Dodgers offense in the pre-Manny era, that is an important note. For these reasons, Carlos Santana was a superfluous catcher in our organization.
2.) The idea of comparing your Dodger’s season tickets with other Los Angeles sport franchises is erroneous. There is nothing that can be proven by a comparison of two different sports that are played in vastly different venues and governed by different financial strategies.
3.) It was very clear that the team needed some life thrown into them. With the way the pitching staff has been performing for much of the year (1st in NL ERA, 2nd in NL WHIP, and 3rd in NL BAA), it was clear that the challenge was going to be batting well enough to get into the playoffs. Although it is an over-used analogy, EVERYONE saw what Colorado did last year. They mowed through the national league and finally were defeated by a superior, more-experienced team in the World Series. The post-season is an entirely different beast and everyone’s record is 0-0 to start the post-season. The pick-ups at the deadline were exactly what the team needed and the second-half numbers show it. Moreover, Maddux and Ramirez, along with Lowe, can take a relatively young team and teach them what it takes to succeed in October. LaRouche was always injured and Santana was still largely unproven. These deals were not about fear to take on salary, a silly argument against a team that has the 8th highest payroll in baseball (an increase of nearly 10 million dollars over the 2007 payroll.) These deals were about riding a strong staff into the playoffs and trying to win this season. After all, that is the primary goal in baseball, to win now.
As an additional note, you have no idea what the Indians wanted from the Dodgers. To my knowledge, there was no indication that the Dodgers had the option of paying Blake’s salary rather than giving up a prospect. For their everyday 3rd baseman the Indians wanted a prospect in return, especially because Victor Martinez can barely catch anymore and Kelly Shoppach may not be the long-term answer.
dipsquad99 - September 11, 2008
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