Have the Dodgers International Investments Reaped a Return?

The post-2012 version of the Los Angeles Dodgers is a billion-dollar sports franchise. Purchased by billionaires’ in 2012, with over one billion spent on player salaries during the 2012-2016 seasons, for a franchise that is worth $2.5 billion dollars, which places them as the number two valued team according to Forbes Business of Baseball. There is no question of the Dodgers billion-dollar name in terms of its ownership, player salaries and investments, and franchise value.

That being said, where have the Dodgers spent their money?

According to Baseball America, the Dodgers forty-two (42) international signings between 2015-2016 ranks near the top of all Major League teams. Since 2012, by way of highlighting, here are some of the Dodgers international signings that have had mixed or little to no return on investment:

Yasiel Puig (OF): seven-years, $42 million dollars, the jury is still out;

Hector Olivera (INF): six-years, $62.5 million dollars, no longer in baseball;

Alex Guerrero (INF): four-years, $28 million dollars, now playing in Japan;

Jose Miguel Fernandez (2B): $300,000 dollar signing bonus, minor league agreement; likely to play for the Dodgers in 2017 in a utility or bench role;

Others have signed, including Erisbel Arruebarrena (INF, $25 million), Yaisel Sierra (RHP, $30 million), and Pablo Fernandez (RHP, $8 million) that have since been released or are currently recovering from injury.

[graphiq id=”bKfPN5cJCW9″ title=”Yasiel Puig Career Batting Triple Slash” width=”640″ height=”523″ url=”https://w.graphiq.com/w/bKfPN5cJCW9″ ]

Since 2012, by way of highlighting, here are some of the Dodgers international signings that have brought significant or a largely positive return on investment:

Minor leaguers Yadier Alvarez (RHP, $16 million), Yusniel Diaz (OF, $15.5 million), Omar Estevez (2B/SS, $6 million), Starling Heredia (OF, $2.6 million), Ronny Brito (SS, $2 million), Keibert Ruiz (C, $140,000), and Johan Mieses (OF, $40,000) are the 23rd, 21st, 20th, 12th, 11th, 5th, and 4th ranked prospects in the Dodgers farm system;

Kenta Maeda (RHP, eight-years, $25 million with incentives), Hyun-jin Ryu (LHP, six-years, $36 million), and Julio Urias (LHP, $1 million) have all contributed to the Dodgers starting rotation and although it is unlikely that Ryu will ever pitch again based on his shoulder concerns, Maeda and Urias look to be stars for the long run.

There are of course intangible results from investments. The Dodgers commitment to the Dominican Republic began a baseball tradition and it helps the community today. Nonetheless, their international spending has resulted in financial penalties and the result, like everything in life, is never perfect.

“It’s something we haven’t seen before, a Rays-type risk aversion strategy that’s supercharged with piles of gold. I call it Money-wasting Ball! When it doesn’t work, it looks like the silliest mess in professional sports. It was always a philosophy of patience, though. And if this keeps going, Dodgers fans are going to be happy that the front office is far more patient than they are.”

-Grant Brisbee, SB Nation, in “The Dodgers have wasted a lot of money, and it might be working” (July 5, 2016).

However, where have the investments taken the Dodgers organization? In other words, what are results of such investments? In the words of many-a-stockbroker, what are the organization’s and the fan’s “dividends” from the investments?

“Money often costs too much.” ~Ralph Waldo Emerson

To start, the Dodgers have won the National League West Division for four straight years. An accomplishment that was the first in its storied history and is rare among sports teams (minus the New England Patriots of the National Football League, the New York Yankees, and the Atlanta Braves of Major League Baseball).

Next, the Dodgers in 2017 boast the fifth best farm system in Major League Baseball boosted by investments in  international talent and draft picks.

Third, according to the San Diego Union Tribune, the Dodgers are again favorites to win the National League West Division and are likely World Series contenders. The Dodgers’ ranking, compiled before the Dodgers traded for second baseman Logan Forsythe and signed free agent set-up man Sergio Romo, is a sign of sustained success. Something promised by new ownership since 2012.

I don’t like money, actually, but it quiets my nerves. ~Joe Louis

On the other hand, the Dodgers have not been to or won a World Series since 1988. This is alarming when you consider that a Dodgers team was in and/or won a World Series Championship in every decade between the 1940’s and 1980’s. The Dodgers also won the National League pennant in 1890, 1899, 1900, 1916, and 1920. Essentially, the Dodgers franchise World Series drought is their longest since the time between 1920 and 1941 when the team was in Brooklyn.

As we have discussed before, the Dodgers will be forced to make spending changes in 2017 and beyond with the Collectively Bargained Agreement hard caps on international signings. On the other hand, the Dodgers’ tax consequences are insignificant when compared to the Dodgers franchise value, its owners wallets, others sports leagues, and corporate America tax rates. In the words of of one American industrialist:

“Money is like manure. You have to spread it around or it smells.” ~J. Paul Getty

Indeed, the Dodgers have spread their money around the world and their organization in terms of stadium upgrades, farm system development (international and domestic), and free agent signings. The Dodgers have not seen the inside of a World Series in nearly thirty years, but the franchise is moving in the winning direction. The Dodgers ownership and decision-making brass have fulfilled their promise to its fans for sustained success.

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Jeremy Evans

Jeremy M. Evans is the Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clientele. Evans is an award-winning attorney and industry leader based in Los Angeles.

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