Are Yankees' and Dodgers' Ownerships Headed for Financial Power Rivalry?

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Are Yankees' and Dodgers' Ownerships Headed for Financial Power Rivalry?
Kirby Lee/USA Today

Behold an image: The bosses of the New York Yankees and Los Angeles Dodgers sitting at a poker table and upping the ante with each new hand, egotistical rivals constantly raising the stakes just for the sake of proving who's boss.

So...just a daydream?

In all likelihood, yeah. Probably. For as fun as it is to picture the Yankees and Dodgers as two financial titans fueled by their contempt for one another, reality says it's a stretch. 

If anything, I wonder if they're actually better thought of as partners, and whether that's for the best.

We'll get to that. First, we should discuss the context that makes this discussion possible, beginning with how the Dodgers came to be in it.

You probably know how the story goes. Magic Johnson and his troupe of investors paid $2 billion to buy the club from Frank McCourt in 2012 and immediately took to spending millions on players. By Opening Day of 2013, the club's payroll was more than double what it had been a year before.

Most recently, the Dodgers just handed Clayton Kershaw a $215 million deal, the richest contract ever given to a pitcher. In doing so, they made it clear that the bottom of their wallet is still nowhere in sight.

It's hard to say exactly how much the Dodgers have spent on players since 2012, but Bill Shaikin of the Los Angeles Times has the precise figure somewhere in the neighborhood of $1 billion. Yup, that's billion with a "b."

Thus the Dodgers' path to Major League Baseball's spending Mt. Olympus has been a meteoric rise. The Yankees, meanwhile, have recently decided they're better off not budging from that same spot.

Mike Stobe/Getty Images

It looked for a while like they finally would in 2014. The plan, as principal owner and team boss Hal Steinbrenner outlined for The New York Times' David Waldstein in early 2012, was to get the team's payroll under the $189 million luxury-tax threshold, thus ending a long-running cycle of exorbitant payrolls.

One thing Hal apparently didn't anticipate was a meager 85-win season in 2013, in which it was clear from start to finish the Yankees were a team in desperate need of help. That the Boston Red Sox emerged from the depths to win the World Series probably only made them even more desperate.

Desperate enough, perhaps, to possibly bring about the death of Plan 189. 

Sure enough, that's what's happened. As of now, the Yankees have about $195 in salaries on the books for 2014 thanks largely to an offseason spending spree that looks like this (via MLB Trade Rumors):

The Yankees' 2013-2014 Offseason
Player Years Dollars (M)
Masahiro Tanaka 7 $155.00
Brian Roberts 1 $2.00
Matt Thornton 2 $7.00
Carlos Beltran 3 $45.00
Hiroki Kuroda 1 $16.00
Kelly Johnson 1 $3.00
Brian McCann 5 $85.00
Jacoby Ellsbury 7 $153.00
Brendan Ryan 2 $5.00
Derek Jeter 1 $12.00
Total 30 $503.00

MLB Trade Rumors

That the Dodgers have spent roughly $1 billion on players in less than two years is impressive. But the Yankees spending half a billion on players in just a couple of months? That's equally impressive.

And to a certain extent, it does feel like the Yankees proving a point to the Dodgers. It does feel as if the Yankees have turned to them and said in their best condescending Wonka voice, "Oh, you think you're the best at making it rain? You must be new here."

In an alternate universe, maybe that's exactly what the Yankees' offseason spending spree was all about. In our universe, however...well, we know better.

Maddie Meyer/Getty Images

The Yankees' spending spree wasn't born out of a desire to keep pace with the Dodgers. It was born out of a disastrous 2013 season, and it was enabled by money that was freed up with Andy Pettitte and Mariano Rivera retiring, players like Robinson Cano and Curtis Granderson departing as free agents and Alex Rodriguez being hit with a 162-game suspension for 2014.

Beyond that, it's not apparent that there are any ego complexes at work between the two clubs. Not if free-agent bidding wars are any indication.

The Yankees didn't lift a finger when the Dodgers were wooing Zack Greinke last winter. The Dodgers, for their part, decided ahead of time that they wouldn't be a thorn in the Yankees' side when it came to their chances of re-signing Robinson Cano. Nor does it seem the Dodgers ever lifted a finger to stop the Yankees from signing Brian McCann, Jacoby Ellsbury or Carlos Beltran. 

Things might have changed with Masahiro Tanaka. It was clear all along that both the Yankees and the Dodgers coveted the Japanese ace, New York because it needed him and Los Angeles because it wanted him. Mark Saxon of ESPN Los Angeles couldn't help but dream of a scenario in which the Dodgers decided their want for Tanaka was more important than the Yankees' need for him.

That might have been the first shot fired in a power struggle unlike any ever seen in MLB history. But it didn't happen.

The Dodgers bid strongly for Tanaka, but Bill Shaikin (see above link) spoke to one source who said the club's bid was "not anywhere close" to the Yankees' bid. In the end, the club's owners chose to listen to the front office's assessment of Tanaka over any ego-driven impulses they might have had.

Toru Takahashi/Associated Press

"We'll look back in a few years and see whose scouting reports were more accurate," said a source familiar with the Dodgers' thinking, per Shaikin.

The Dodgers didn't feel compelled to get Tanaka at all costs. And while the Dodgers weren't a factor in the bidding, you can easily look at how the Yankees approached Cano and see that they didn't feel compelled to retain him at all costs.

The writing on the wall is that neither club is totally without discipline when it comes to spending on players, which obviously works against the notion of previously unknown numbers being discovered every time there's a free agent on both clubs' radars.

Additionally, there are no practical reasons for the two clubs to obsess over the other's spending. There's no rivalry on the field between them, as they exist not only in different divisions, but in different leagues. The Dodgers are not the Red Sox. The Yankees are not the Giants.

There's also no territorial battle at play. The Yankees don't need to worry about battling the Dodgers for the soul of Southern California, and the Dodgers don't need to worry about battling the Yankees for the soul of New York. Those jobs belong to the Angels and Mets, respectively.

It's fun to imagine the owners of the Yankees and Dodgers as monopoly men engaged in a game of one-upmanship fueled by wholesome things like envy and spite. It really is.

But merely imagining that might be as real as it gets. To date, neither organization seems hell-bent on making the other look like a lesser superpower. Rather than antagonizing one another, they look more intent on tolerance. 

Hence the reason they look more like partners to me. That'll be the case as long as they're occupying the same space in their very own spending stratosphere, and both should be there for a while.

Kirby Lee-USA TODAY Sports

While neither club has limitless resources, both certainly have plenty. The Dodgers have a 25-year TV deal worth $6 billion to them, or $240 million per year. The Yankees, meanwhile, are still baseball's all-around revenue kings. Per Bloomberg, the club took home an MLB-high $570 million in revenue in 2013. Figures compiled by Wendy Thurm of FanGraphs say the Yankees' own TV deal will be worth $300 million per year by 2042.

As for what could possibly stop the Yankees and Dodgers from pouring their considerable resources into payroll, it sounds like the luxury tax is to be treated as more of a nuisance than a roadblock.

To this end, Hal Steinbrenner said after the Yankees signed Tanaka that this was his stance all along.

“I have been saying for well over a year now that it makes sense to meet [the $189 million threshold], but not at the expense of a championship-caliber team,” Steinbrenner told the New York Post's Joel Sherman.

Dodgers president Stan Kasten expressed more or less the same sentiment earlier this winter to the Los Angeles TimesDylan Hernandez. He claimed the Dodgers hope to one day be able to build from within, which would naturally mean cheaper payrolls, but he acknowledged the club will do what it takes to win.

“I think we will always be focused on building the best team we can,” said Kasten. “Other considerations will be secondary.”

As much as both may prefer to get under the luxury-tax threshold eventually, it's a fair bet the Yankees and Dodgers won't have much choice but to keep going over it. For as New York can vouch, spending big on payroll can launch an organization into a vicious cycle.

Generally speaking, the more you spend, the more likely you are to win. And the more you win, the more often you find yourself picking at the bottom of the draft and, in this day and age, with less money to spend on both draft picks and international amateurs. As such, it becomes hard to build from within.

Jeff Roberson/Associated Press

Consider the Yankees. Ever since the 1990s gave them Rivera, Pettitte, Jorge Posada and Derek Jeter, the only superstar their system produced was Cano. With no elite talent coming from within, paying to acquire talent from elsewhere has been their only real means of keeping their win totals up.

As of now, the Dodgers have a solid farm system—No. 15 in MLB by Bleacher Report Mike Rosenbaum's reckoning. But after finishing with one of baseball's best records in 2013, it will be harder for them to add to their system in 2014. If they're successful again in 2014, it will once again be hard for them to build their system in 2015. And so on.

The Dodgers aren't perfectly set up to keep throwing money at players, as they have at least $160 million in commitments every year between now and 2017. Working in their favor, however, is the reality that big contracts are clearly more movable than they used to be (see Fielder, Prince for a prime example). If the Dodgers find themselves in a position where they need to jettison money, they might be able to do so.

As for the Yankees, they have under $150 million in commitments for 2015 and 2016 and will be down to about $86 million in commitments by 2017. They'll be able to keep spending if they must, and the fact that they're not on the verge of adding a whole bunch of elite talent from within makes it a good bet they will indeed keep spending.

It's hard to imagine any other clubs catching up to the Yankees and Dodgers if they do keep up their current spending habits. There are a fair amount of rich clubs out there, but New York and Los Angeles really are on a different level. The Yankees were the level's only occupant until the Dodgers came along, but so far it looks like there's enough room on it for the two of them.

This is bound to be frustrating for the other 28 teams in the league. Things were tough enough when it was just the Yankees jacking up prices with their ridiculously big checkbook. Now both they and the Dodgers have the power to do it, making their rivalry not with each other, but with everyone else.

Regarding MLB's best interests, however, this is OK. As Jeff Passan of Yahoo! Sports recently wrote, "as long as there are financial leviathans, there will be villains, and as long as there are villains, there is the triumph of conquering them." 

The only thing better than one ultimate villain is two ultimate villains. And as long as the Yankees and Dodgers remain on equal footing in the big-spending game, two ultimate villains is what Major League Baseball will have.

 

Note: Contract and payroll data courtesy of Cot's Baseball Contracts. 

If you want to talk baseball, hit me up on Twitter.

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