The Los Angeles Dodgers have spent more on player payroll than any Major League Baseball team under Guggenheim Baseball Management. Now baseball’s front office is mandating the Dodgers to cut debt and comply with MLB’s rules and regulations.
Bill Shaikin of the Los Angeles Times reports that the Dodgers spent approximately $1.181 billion in four years. Shaken adds that the team’s goal is to cut from $300 million in 2015 to about $200 million in 2018.
The rule “limits debt to no more than 12 times annual revenue, minus expenses,” writes Shaikin.
Tucker Kain has another strategy for the team. The Dodgers’ chief financial officer and managing director of Guggenheim Baseball Management explained that the Dodgers are not driven by the need to reduce debt.
The Dodgers have their biggest threat as their debt. They will no longer have the opportunity to get the big name players such as Yoenis Cespedes.
With dodgers wanting to cut payroll (via @BillShaikin ) hard to see them as cespedes threat. SFG, Wash bigger threats.
— Jon Heyman (@JonHeyman) November 27, 2016
In the first four years with Guggenheim ownership, the team was rebuilding but now they are suffering the consequences. The most realistic option is to bring up their minor league players into great major league talent.
However, the Dodgers were not profitable in their first three seasons with Guggenheim. The contract that collected the most debt for the Dodgers when they acquired Adrián González in 2012. When the team was bought by Guggenheim in 2012 for a record-setting $2 billion, the owners calculated budgets in the account:
- $412 million in debts
- $1.2 billion in investments from insurance companies
- $8.35, 25-year television contract with SportsNet LA
For the 2016 season, the Dodgers estimated about $250 million in players’ payroll which includes the following for all players on the 40-man roster:
“I think the Dodgers will be in a position that they can comply with our expectations in terms of the debt service rule, without any dramatic alteration in the kind of product they have been putting on the field,” said MLB Commissioner Rob Manfred.
According to the collective bargaining agreement, the Dodgers’ owner could work with the league’s front office and renegotiate their debt to ensure the team’s revenue will not be used.
The players that were contributing on the field were free agents Justin Turner and Kenley Jansen. The Dodgers may not be able to re-sign either player due to the team’s financial debt.
Where do the Dodgers go from here?