Are the Dodgers Good or Bad for Baseball?
The answer is complicated
The 2025 Los Angeles Dodgers just won the World Series for the second year in a row. They accomplished this with a $400M payroll and paid $150M in luxury tax for a grand total of $550M. The next closest team, the Mets, paid a total of $400M in payroll plus tax, and they didn’t even make the playoffs.
This tells me two things. First, the ownership group led by Mark Walter and including minority owners such as Stan Kasten, Magic Johnson and Billie Jean King want to win, and they want to win badly. Magic is a five-time NBA champion and Billie Jean has won twelve tennis grand slams, including six at Wimbledon. Absolutely no one can question their hunger for championships.
Second, they have the right executive to execute their vision. Andrew Friedman cut his teeth with the Tampa Bay Rays with limited budgets. He learned the value of talent evaluation because he couldn’t afford large contracts to established players. In 2015, Stan Kasten brought him to the Dodgers. His talent evaluation expertise coupled with huge payroll flexibility has made the Dodgers the model MLB franchise. In the 11 years under Friedman, the Dodgers have made the playoffs 11 times, been to the NLCS 7 times, and won 3 World Series.
Some have called the Dodgers bad for baseball, but what I see is an organization that uses the rules of MLB to their advantage. MLB is still the only US professional sports league to not have a salary cap. The rules also allow teams to defer player salaries. The Dodgers signed Shohei Ohtani to a $700M contract and were able to defer all but $20M to 2034 and beyond. This allowed them to sign other great players like Glasnow, Snell, and Yamamoto, and build a championship caliber squad for years to come.
So why doesn’t every team follow this strategy? That’s where the complexity comes into play. Let’s start with a chart (via @Brooks_Gate) showing 2024 team revenues and what percentage of that money was spent on 2025 payroll and luxury tax.
The Dodgers and Yankees were the only two teams that cleared $700M in revenues in 2024. The Dodgers spent 73% of that on payroll and Yankees spent 50%. The Mets spent a staggering 90% of their $444M revenue on payroll. What is the norm? I think the general rule of thumb is spending 50% of your revenue on player payroll and the other 50% on team operations (stadium ops, non-player salaries, etc.).
Big market teams make a lot of money. The Chicago Cubs and the Boston Red Sox are #3 and #4 in revenue respectively. Given the 50% rule, the Cubs and Red Sox should be spending at least $280M in payroll and tax annually. Why aren’t they? The answer has to be ownership. Are Tom Ricketts and John Henry adverse to paying the luxury tax? They’ve both won World Series. Is that enough for them? Are they on to spending their money on other things? I think many Cubs and Red Sox fans believe precisely that.
I’ll save the salary cap discussion for another time, but that time is coming soon. The current collective bargaining agreement expires at the end of the 2026 season and the exploding salaries in MLB will be a main point of contention. Would an MLB salary cap be good for the sport? Would it level the playing field and allow the smaller market teams to compete? I think it needs to be considered. Obviously, the players will push back vehemently.
So, is the current situation good or bad for baseball? I think there is no question that big market teams currently have a significant competitive advantage over small market teams. Personally, I think the sport needs to install a salary cap at some point in the future. I think they owe it to the fans of the small market teams who have absolutely no shot at consistently fielding championship caliber teams. How would you like to be an A’s fan watching Mason Miller get traded or a Pirates fan who will have to wave goodbye to Paul Skenes? It must be gut wrenching.
Luckily, the Red Sox are a big market club and should be spending well over the CBT threshold (somewhere around $250M) on payroll. We as Red Sox fans should demand that. The problem, of course, is that John Henry has many mouths to feed. The Penguins, Liverpool FC, Fenway Racing, and BC Golf all need to be fed, and I guarantee you that none of them make as much money as the Red Sox. It is common knowledge that multi-sport owners fund their “poor” teams with their “rich” teams.
Sadly, I think John Henry is satisfied with his four World Series rings and is on to other things. He doesn’t want to be booed when he visits Fenway Park, so he’ll give lip service to building a winner through his court jester Sam Kennedy. There are several good players on the market this offseason. The Red Sox are probably only 3 or 4 pieces away from being a contender. I would love to be wrong about their intentions, but I seriously doubt that I am.