Org Report – Los Angeles Dodgers

The following is a continuation of our Organizational Reports, filed by Devon Teeple. As with the prior reports for San Diego Padres, the Toronto Blue Jays, and the Pittsburgh Pirates, this report delves into the Los Angeles Dodgers historically, financially, and from a facility perspective. — Maury Brown

The glory years of the Dodgers are obviously behind them. Gone are the days of Kirk Gibson and Tommy Lasorda, welcome the days of Frank McCourt and Ned Colletti.

The Dodgers live in the minds of most baseball fans and historians as a franchise of historic glory. 43 Hall of Fame Players, 7 Hall of Fame Managers/Scout/Coaches, and 4 Broadcasters. You can lay claim that they are one of the most significant innovators in baseball; having led baseball’s move to the west coast, broke the color barrier with Jackie Robinson, televised the first baseball game ever (at Ebbets Field in 1939) and introduced the batting helmet in 1941. Since the ultimate Dodger championship year of 1988, the Dodgers have been a stranger to post-season. Despite the sluggishness of late, this is still a franchise that has earned its reputation for success with six World Championships and twenty-one pennants, nine Cy Young Award winners, ten MVPs and an incredible sixteen Rookie of the Year recipients.

If you look at the Los Angeles Dodgers from a financial perspective, the team is in the driver’s seat. The Dodgers are no longer just a Major League Baseball team, but a product that has accentuated the positives and has made itself into something bigger. Other professional sports teams that have joined this realm of status are the New York Yankees, Los Angeles Lakers, and the New York Knicks. These are no longer events to attend a sporting event, though that is the main idea, it is now a gathering of Hollywood A-Listers and high profile celebrities; Ice Cube, Dr. Dre, Ron Howard, Larry King, Shia LaBeouf, Matt Leinart, Jay Leno, Al Michaels, Freddy Prinze Jr., Tiger Woods, and Dwayne “The Rock” Johnson.

News Corp. Purchases Dodgers

The transition from baseball team to high profile gathering spot began in the late 1990’s, specifically on March 19, 1998 with the purchase of the team by Rupert Murdoch’s News Corporation, owner of the Fox Network (which owns broadcast rights to MLB games) and 20th Century Fox., (In 2007, Fox no longer has rights to League Division Series games, and has only one League Championship Series per year.) One of the new owners first moves was to trade away highly popular catcher Mike Piazza and on June 21, 1998 the Dodgers fired general manager Fred Claire (read The Biz of Baseball interview with Fred Claire) and manager Bill Russell. Tommy Lasorda is hired as interim general manager, Glenn Hoffman is named interim manager. Hoffman’s interim stay was just that, replaced by “celebrity manager” Davey Johsnon the following season.

Fans were used to the O’Malley’s way of running a team, hands on, and personal and development through the ranks; from 1992-1996 the Dodgers had the “Rookie of the Year ” in their organization. Murdoch’s corporation was a little different giving out enormous contracts to players such as Kevin Brown, and Darren Dreifort. This inevitably tied up money that could have been used for others things. The Dodgers have achieved financial success as a franchise with a team that has not enjoyed nearly the amount of success they have had in the past. Attendance has increased nearly 30% since 1998. Of all the Major League baseball teams currently in existence, the Angels and the Dodgers rank second on the list behind the New York Yankees in with the population of their respective cities. New York City has a population of 18.323 million while Los Angeles is second with 12.366 million.

Dodgers Win/Loss Record with Attendance Since ’98

Things turned around in 2004; a new owner and the Sabermetric Experiment. Frank McCourt became only the second sole owner of the Los Angeles Dodgers in the franchises storied history. One of his first moves was to hire Paul DePodesta, who was then the Assistant General Manager under Billy Beane in Oakland. Though the team made the post-season for the first time since 1996, DePodesta’s tenure was short lived but did contribute in numerous ways that not a lot of people notice.

• Helped construct a roster that produced the 2004 NL West Divison title, the Dodgers’ first playoff berth in eight years.
• Acquired Brad Penny, who has the ability to become one of the National League’s best
• Correctly foresaw the explosion of the free agent pitching market one year in advance, signing Derek Lowe to an excellent deal, as well as extending Penny through ’08 with an option for ’09 at below-market value.
• Signed Jeff Kent and J.D. Drew to favorable contracts, both of which yielded effective performance relative to the size and length of their deals.
• Avoided the temptation to out-bid all comers for Adrian Beltre, who has yet to justify the five year, $64 million deal given to him by Seattle after one of the greatest contract-drive walk years in history.
• Depodesta was fired on October 29, 2005, odds are due to not making the playoffs in his second year. Other things contributed; Depodesta was not a favorite of the fans or the media, and the trade that made an uproar was trading fan favorite Paul LoDuca with Juan Encarnacion and Guillermo Mota to Marlins for Bill Murphy, Brad Penny and Hee Seop Choi.

McCourt Tenure

As mentioned above, 2004/2005 brought changes with ownership of the franchise and the General Manager of the team. Since ownership was purchased by Frank McCourt his focus has been on bringing championship baseball back to Los Angeles while making Dodger Stadium one of the most family-friendly venues in the country. One of the major projects the McCourt has done in his tenure is the rebuilding and remodeling of Dodger Stadium. “This included replacing all 50,000 seats in the bowl, returning to the original color palette and the introduction of a traditional yet modern “box” seat concept along the baseline. During the 2006 season, more than 3.7 million fans visited Dodger Stadium, setting an all-time franchise attendance record and lending testimony to the fact that the ballpark experience is second-to-none.”

Promotions

On the promotional end of things McCourt has also elevated the teams status in the community; “the Dodgers Dream Foundation has provided hundreds of thousands of kids throughout Southern California with educational, athletic and recreational opportunities through programs such as: The Dodger Dream Fields which renovates local baseball and softball fields to provide a safe haven for children to play baseball; Play Ball LA which connects youth and former Dodger players through baseball clinics at their local ballparks; Dodgers Ticket Donations which provides tickets to non-profit youth groups enabling some younger fans to experience Dodger Stadium for the very first time; and the Jackie Robinson Scholarship Fund which provides college scholarships to local minority youth”.

Programs that the team is involved in can be view through the following links.

• “Think Cure”
• “Dodgers Dream Foundation”
• “Community Programs”

Colletti Tenure

Ned Colletti was named General Manager of the team on November 16, 2005. His responsibilities include the following; overseeing the team’s baseball operations, including scouting, player personnel and player development. Colletti biggest attribute is his ability to build a team through minor league and player development. The team’s current 40-man roster includes 26 players who have come up through the team’s minor league system, a significant increase over the past decade. Including 4 players in the top 100 prospects and 2 in the top 15; (Clayton Kershaw, and Andy LaRoche). Since arriving in Los Angeles, Colletti has solidified the Dodgers focus in Asia, by acquiring free agents Takashi Saito in 2006 and Kuroda. They have also signed Robert Boothe, its first amateur signing from Japan and strengthened its presence in China. Colletti has increased the club’s commitment to scouting and player development in the Dominican Republic.

The professional sports teams industry includes approximately 800 organizations, which in turn produce and annual revenue of about $16 billion. Needless to say, the industry is concentrated with the top 50 organizations controlling 60 percent of the revenue. The Competitive Landscape is the demand driven by consumer income and corporate entertainment. It is obvious that teams in large cities have an advantage due to increased television coverage and the amount of people that can attend one of their events. Teams in smaller areas are obviously at a disadvantage, but can build their team support and loyalty through smaller promotions throughout the city. The major revenue sources for teams are the admissions of the event (40%), advertising and endorsement fees (10%), concessions and food (5%). All other revenue streams are from facility rentals, programs and merchandising. This is an area where the Dodgers excel. The team may be struggling but because of their fan base and their locale, they are a success financially though it may not always show on the field. “Today, Scully calls a limited schedule of games (all home games and road games in NL West ballparks) for both flagship radio station KABC and television outlets KCAL and FSN Prime Ticket. Scully is simulcast for the first three innings of each of his appearances, then announces only for the TV audience. If Scully is calling the game, Charley Steiner takes over play-by-play on radio beginning with the fourth inning, with Rick Monday as color commentator. If Scully is not calling the game, Steiner and Steve Lyons call the entire game on television while Monday (now as play-by-play) and Jerry Reuss do the same on radio. The Dodgers also broadcast on radio in Spanish, and the play-by-play is handled by another Ford C. Frick Award winner, Jaime Jarrin. Jarrin has been with the Dodgers since 1959. The color analyst for some games is former Dodger pitcher Fernando Valenzuela, for whom Jarrin once translated postgame interviews. The Spanish-language flagship is KHJ. Live traffic reports pertaining to Dodger Stadium are broadcast from the Dodgers Transportation Center inside the ballpark. KABC radio’s Captain Jorge Jarrin (son of Dodger broadcaster Jaime Jarrin) and Doug Dunlap handle those duties during the pre-game and post-game shows as well as during Dodger Talk following the game. In 2006 the Dodgers introduced an on demand channel on Time Warner Cable called “Dodgers on Demand”, hosted by Tony Kinkela.”

In addition, “The Dodger Magazine” has six regular season editions that feature player profiles, personnel, national/local editorials, and stats on the home and visiting teams. There is a circulation of about 250,000 and are complimentary to all VIP dugout seat holders and VIP suite holders throughout every home game.

Forbes Valuations – “The Next 50 Years” Plans for Dodger Stadium

The value of the Dodgers remains incredibly high, as one would expect from an exceptionally strong brand in a top 5 market. Even with Dodger Stadium being over 46 years old, the value of the Dodgers has been the model of consistency ranking as high as 3rd, and locked in as the fourth most valuable club in MLB since 2002. The value of the Dodgers has increased 60% over that period of time and should keep heading in that direction as the Dodgers continue to renovate Dodger Stadium, and look to develop all around the historic stadium. The Dodgers have launched “Dodger Stadium – The Next 50 Years” which will transform the stadium and surrounding area into what the Dodgers see as a year-round destination.

Below is an artist rendering of the proposed development along with the Forbes valuations for the Dodgers from 2002-2008.

Conclusions

Los Angeles has been known to spend big money on big time free agents, (Andruw Jones, 2 years, $36 million), but see little in return. Over the past few years the Dodgers have shown that change will be made on the fly until results are shown; Murdoch to McCourt, DePodesta to Colletti, Grady Little to Joe Torre. We all know that baseball is a game of development and time and there is no quick fix solution. Is it time for one of the most financially successful franchises of all time to finally let the youth they have developed lead the team? On the other hand, will they continue with the high priced free agents; Andruw Jones, Nomare Garciaparra, Juan Pierre, Jason Schmidt?

Maury Brown contributed to this team report

Devon Teeple is a staff member of the Business of Sports Network which includes the Biz of Baseball, the Biz of Football, the Biz of Basketball and the Biz of Hockey.  He is also a intern with the Football Outsiders and collaborator with the Plymouth River Eels. Devon is available as a freelance writer and be contacted via email at thegmsperspective@gmail.com or devon@businessofsportsnetwork.com