The Los Angeles Dodgers poached Andrew Friedman from the Tampa Bay Rays on Tuesday, thrusting their new president of baseball operations into a highly desirable position that’s still fraught with major financial challenges, while leaving the Rays in a position that’s still fraught with major financial challenges, but that’s also more desirable than the headlines suggest. The ripple effects will be numerous for both teams. Here’s what to watch.
What Does This Mean for the Dodgers?
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From the moment Guggenheim Partners CEO Mark Walter and his associates bought the Dodgers from Frank McCourt in 2012, the dominant theme surrounding the club has been big money. While the new owners spent $2.15 billion to acquire the team, an all-time record for a sports franchise purchase, they’d be able to both operate on a loan from Guggenheim and use the proceeds from a giant impending TV deal to pay for everything. It looked like the Dodgers would have unlimited money — and unlimited potential.
Only, the Dodgers don’t, and won’t, have unlimited money to spend, which is why they hired Friedman.
Start with the team’s liabilities. Of the $8.5 billion the Dodgers were reportedly set to get from their new TV deal with Time Warner, about $2 billion will flow right into revenue-sharing funds for less wealthy teams. And while reports vary regarding how much the Dodgers need to pay back in loans, the consensus is that the amount easily exceeds $1 billion. Los Angeles Times columnist Bill Plaschke reported last week that the Dodgers would try to slash payroll to about $190 million, down sharply from the approximately $230 million they’re spending on salaries this year. Part of that cut would be to help offset shortfalls from the Time Warner deal, since TV providers such as DirecTV and Cox have refused to pay the massive demanded rights fees to show Dodgers games, leaving fans in Gardena and Reseda and West Covina without Clayton Kershaw and Yasiel Puig on their televisions.
Even amid those financial question marks, the Dodgers are pulling in way too much for us to assume they’re not profitable. If Friedman can help them slice $40 million in payroll by Opening Day, though, the benefits could be substantial: The owners would reap those savings, while the team would potentially duck under MLB’s luxury tax threshold, saving tens of millions both in present and future costs.1 The goal of adding Friedman isn’t only to hang World Series banners; it’s to do so while generating fatter profits for ownership.
As Jayson Stark’s excellent 2012 article on the luxury tax explains, teams save money immediately by getting under MLB’s prescribed spending limit, and then see additional savings by having the cycle reset. So if the Dodgers got under the limit for 2015 and subsequently surpassed the limit in 2016, they’d be treated as first-time offenders subject to a smaller penalty than a multiple-time offender.
Shedding that much payroll will be a huge challenge, however. The Dodgers already have a tick more than $190 million committed to 15 players for next season,2 including: a $3 million buyout for oft-injured right-hander Chad Billingsley; $11 million combined for infielders Alex Guerrero and Erisbel Arruebarrena, who managed 54 combined at-bats in the majors this season and carry serious question marks about their ability; $23.5 million for the lamentable bullpen combination of Brian Wilson, Brandon League, and J.P. Howell, who were a big part of why Kershaw was left out to fry twice during the NLDS; $21.4 million for Carl Crawford, who hasn’t played more than 116 games in a season since 2011; and $18 million for Andre Ethier, whose $85 million contract has been a disaster from day one.
Not to mention $170 million already committed for 2016, $171 million for 2017, and just shy of $131 million for 2018.
Contracts are guaranteed in baseball, which means the Dodgers can’t get off the hook by cutting any of those players. The team would need to find takers for those guys and/or someone like Matt Kemp (who’s owed $107 million over the next five years) or Adrian Gonzalez (more than $85 million over the next four). And then there’s the matter of taking care of the rest of the roster, where hefty raises (via arbitration) are in store for players like Kenley Jansen and Dee Gordon, and where the team will surely want to add bodies via trade or free agency this winter.
Two potential big cuts could be on the horizon: First, it’d be a big upset if the Dodgers re-sign impending free agent Hanley Ramirez. Friedman’s not one to be tempted by Triple Crown stats alone, and it’s tough to imagine him throwing lots of money at an injury-prone malcontent on the wrong side of 30 who’s more of a DH than a shortstop at this point — an obvious problem for an NL team. Second, Zack Greinke can opt out of his $147 million deal after next season, so Friedman needs to figure out if that’s a good thing (given the desire to shed payroll) or a bad thing (since Greinke is really good).
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Friedman is as well positioned to make that judgment as anyone. When he joined the then–Devil Rays in 2004, he did so as a 27-year-old graduate of the investment banking and private equity worlds. What might have seemed like a weird fit actually made perfect sense given who his wingmen were: Stuart Sternberg and Matt Silverman, also graduates of the financial world, via Goldman Sachs. After Sternberg succeeded Vince Naimoli as managing general partner in 2005, he hired Silverman as club president and Friedman to run the baseball operations division.
The results didn’t come right away, with the 2006 and 2007 D-Rays losing a combined 197 games. But behind the scenes, good things were happening. Thanks to years of futility, the team was amassing high draft picks, which it used to land contributors such as B.J. Upton, Jeff Niemann, Evan Longoria, and David Price. Friedman also made multiple shrewd trades, finding a diamond in the rough in Houston’s Ben Zobrist, flipping former no. 1 pick Delmon Young for a package that netted Matt Garza and Jason Bartlett, and so on. While also successfully buying low on players like Carlos Pena, the Rays went from worst to first, storming all the way to the 2008 World Series. That incredible reversal began a stretch in which the Rays, playing in baseball’s toughest division, won two division titles, bagged four playoff berths, and were the second-winningest team in the majors from 2008 through 2013. Despite tiny revenue streams and tiny payrolls due to a weak local TV deal and lousy attendance at the outdated and terribly located Tropicana Field, the Rays won.
The Dodgers hope Friedman can work similar win-smart magic in L.A., only this time with a payroll closer to $190 million. And while the bigger perks of his new gig would seem to be more money plus an all-world talent like Kershaw at his disposal, Friedman’s best hope for honoring his “win efficiently” mandate might actually be the club’s impressive collection of young talent.
While plenty of critics scapegoated Puig for his parade of playoff strikeouts, he was the Dodgers’ best position player this year, and since he’s only 23, he probably will be for the next several seasons. Inking Puig (who’s signed for four more years at about $24 million) and 27-year-old Hyun-Jin Ryu (four years, about $25 million) cheaply will stand as two of Ned Colletti’s greatest feats as Dodgers GM. Another of the newly reassigned Colletti’s biggest achievements: his restraint at this year’s trade deadline, when sellers dangled star players in exchange for the Dodgers’ top prospects, only to have Colletti say no. Third baseman Corey Seager, center fielder Joc Pederson, and teenage lefty sensation Julio Urias lead a stacked Dodgers farm system that could deliver exactly the kind of cheap, high-impact talent to fulfill the franchise’s twin goals of wins and profits.
Of course, one of the teams that talked most aggressively with the Dodgers at the deadline dangled a left-handed ace who would’ve given L.A. an über-rotation. The team was the Rays, the pitcher was David Price, and the guy who did the dangling was Friedman. The hope is that Friedman will take advantage of the players left behind while also doing a better job with the little things, such as constructing a bullpen with more than one reliable reliever in it, which Colletti (who’s shifting into a senior advisory role) failed to do.
Still, plenty of questions remain for the Dodgers. They’ll likely hire another high-ranking baseball ops person to work with Friedman, similar to the Cubs’ Theo Epstein–Jed Hoyer setup, and they need to figure out their managerial situation. Speculation has naturally turned to Joe Maddon, the Rays skipper who worked well under Friedman and gets high marks for his in-game tactics and leadership abilities. Maddon’s under contract with the Rays through next season and told Los Angeles Times reporter Bill Shaikin he wants to remain a Ray, while Dodgers president Stan Kasten said the team plans to move forward with Don Mattingly in 2015.
Still, the rumor mill won’t let this one die easily. The Dodgers would surely offer Maddon a big raise, lots of talented players to manage, and many of the same freedoms under Friedman, plus the chance to move closer to his wife, Jaye, who spends most of her time in Southern California. After the 2002 season, a scuffling team traded outfielder Randy Winn to the Mariners for a coveted skipper, one of the only times we’ve ever seen a club give up something significant (or, really, anything at all) to land a manager. That manager was Lou Piniella. And the team that got him was none other than Tampa Bay. If the Dodgers and Rays want to make a Maddon deal, there’s precedent.
Add it all up, and it might take a year to see the full ramifications of Friedman’s hiring. Maddon would be a free agent at that point, and another disappointing season in L.A. could prompt the Dodgers to pursue him then, if not sooner. Price also becomes eligible for free agency after the 2015 season, and sources say he has quietly expressed an interest in becoming a Dodger. So, too, has Giancarlo Stanton, the Marlins slugger who’s rebuffed overtures to sign an extension in Miami, becomes free agency–eligible after 2016, and could be trade bait before that. Meanwhile, the Dodgers will face plenty of stiff NL competition from the perennially successful Cardinals and Giants, the young and talented Nationals, and other rivals. Given all the puzzle pieces in play, hiring Friedman is merely the first step in what will be a complicated quest to accomplish the two things every owner wants: more wins and more profits. It also adds even more drama to what’s already baseball’s most drama-filled franchise.
What Does This Mean for the Rays?
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Of all the fallout that’s sure to ensue from Friedman’s departure, one of the most surprising early developments was whom the Rays hired to take his spot: Silverman. Though he’ll have more than a decade of experience at the highest ranks of Tampa Bay’s front office, this will be the first time he’ll have “baseball operations” in his job title, much less “president of baseball operations.” Still, under Sternberg, the Rays’ front office has operated more like a series of partnerships than a strict hierarchy. Silverman has long had his hand in the baseball side even while maintaining his primary role as team president (a position that now goes to Brian Auld, previously the team’s senior VP in charge of business ops).
More than anything, Silverman’s new title demonstrates something that’s evident in every front office, but especially Tampa Bay’s: The GM might get the rock star treatment, and those below him might be mostly anonymous, but it takes a village to run a baseball team.
In the Rays’ case, that village includes scouting director R.J. Harrison, farm director Mitch Lukevics, baseball ops directors Chaim Bloom and Erik Neander, baseball research and development director James Click, pro scouting director Matt Arnold, and many others. If you’ve followed baseball’s analytical writing community over the years, you might’ve read the work of Baseball Prospectus alums Bloom and Click as well as the work of Josh Kalk, Shawn Hoffman, Dan Turkenkopf, and Peter Bendix, all of whom have played key roles in helping the Rays build a reputation as an analytically savvy and winning ballclub. Lest anyone think the Rays rely excessively on stats, think of Crawford and Upton, James Shields and Alex Cobb, Matt Moore and Jeremy Hellickson, Desmond Jennings and Jake McGee, Longoria and Price, and remember all the people who helped scout and develop those fine, homegrown players.
Silverman told Rays beat writer Marc Topkin he has no plans to create an Epstein-Hoyer or Friedman-TBA setup, adding that he doesn’t expect to hold the de facto GM position for 10 years. Read between the lines and you can see how the Rays function. Under Friedman, it was never about one guy, and it certainly won’t be under Silverman, with the not-for-10-years statement suggesting that one of the many shrewd people in Tampa Bay’s front office could take the reins in the not-too-distant future once that someone gains more experience. In the meantime, Silverman, like Friedman, will lean heavily on the deep front-office roster surrounding him to make decisions.
And like Friedman, Silverman will guard the Rays’ trade secrets like a rabid jackal and do his damnedest to keep all of those front-office contributors cloaked in mystery, so other teams won’t be tempted to swoop in and poach them, too. Three years ago, I published a book called The Extra 2%, which detailed the Rays’ methods as well as their obsession with secrecy. Now that Friedman’s gone and organizational continuity becomes even more important, expect that quiet, team-oriented management approach to continue. Don’t expect the Rays to lose much of their decision-making skill.
The more pressing issue is the team’s on-field talent. Since the Rays nabbed Price with the top pick in 2007, their drafts have been a raging disaster. Only one first-round pick since then has appeared in a major league game, and that was Tim Beckham, the high school shortstop who was the no. 1 overall pick in 2008. Beckham has amassed a grand total of eight big league plate appearances. That’s a particular shame considering the player selected four spots later in ’08: Florida State catcher Buster Posey. That blunder was one of several Rays draft mishaps that’s thinned what was once a ludicrously loaded farm system.
Meanwhile, new limits on amateur draft and international signings have the potential to hurt teams like the Rays hardest; already shut out from bidding on the biggest major league free agents, the low-revenue Rays now stand to incur significant penalties if they try to spend a few extra million on younger talent. This year, they’ve opted to exploit loopholes in the system and spend big on a few high-potential international players. It better work, because the Rays will now have their hands tied for a while in terms of budget space on that front.
The good news is that the major league team could still be competitive in the near term. The Rays were a playoff team as recently as last year. Even after trading Price to Detroit, they control the rights to multiple quality twentysomething starting pitchers, including Cobb, Moore, Hellickson, Chris Archer, Jake Odorizzi, and Drew Smyly. Smyly was the biggest piece of the Price deal that also delivered Willy Adames, an intriguing teenage infield prospect, and Nick Franklin, a versatile player who the Rays hope could one day become a poor man’s version of Zobrist. In addition to Zobrist, the 2015 lineup will likely include Jennings, franchise player Longoria, 2013 Rookie of the Year Wil Myers (whom the Rays hope can shake off this season’s injuries and ineffectiveness), and other capable players. Even with the Rays contemplating a payroll reduction of their own, getting Price off the books and potentially trading a couple of arbitration-eligible players (Hellickson? Matt Joyce?) could net a competitive team next season.
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The bigger concern is what might happen long term. Though Friedman might take a couple of key folks with him to Los Angeles, it’s hard to imagine a mass exodus of front-office minds. The man to watch is Sternberg. The Rays owner is the one who set the tone for that collaborative and highly effective management structure that will remain in place even with Friedman gone. He’s also accepted the “good enough” status quo in St. Petersburg, banking some profits thanks to baseball’s healthy national revenue streams and revenue-sharing system even as the far greater riches that would come with a better TV deal and better stadium deal elude him.
The Rays’ current local TV deal, which nets them a paltry $20 million a year,3 expires after the 2016 season, so there’s at least a glimmer of hope on that front. Still, no one but Sternberg knows how long he’s willing to hold out. Tampa–St. Pete taxpayers have (rightly) balked at a hugely expensive, publicly funded new ballpark, but Friedman’s departure could nudge the needle a little more. Moreover, if Sternberg and his partners sold the team tomorrow, they’d make a gigantic profit from the $65 million it took to gain their initial 48 percent stake, with a purchase price of $500 million or more in play.4 Of course, given how dramatically this franchise altered its fortunes after Sternberg arrived, imagining a world with someone else in charge won’t be pleasant for Rays fans.
The Dodgers get $340 million a year before revenue sharing, for comparison.
Forbes valued the Rays at $485 million in its annual franchise rankings, published in March, and Forbes’s estimates are almost always low.
As is usually the case in baseball, the most likely outcome for both the Dodgers and the Rays probably lies somewhere in the middle. Expecting one smart hire to spark a streak of World Series wins ignores how spectacularly difficult it is to win even one title, let alone a bunch of them. Conversely, removing one brick, even a very valuable one, is highly unlikely to make the walls cave in for an organization as well built as the Rays are on the baseball side. We may eventually look back to Friedman’s move as a turning point for the Dodgers and the Rays, but if we do, it’ll be less because of the man and more because of the ripple effects he caused.