The Dodgers spent $1 billion on players and have to cut debt

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Four years ago, Guggenheim Baseball Management bought the Los Angeles Dodgers, who were in bankruptcy, for $2.15 billion. It was a huge chunk of change (record-setting, in fact), but the Dodgers were (and still are) one of the most famous and most profitable franchises, sitting in a huge, highly populated market. Since then, the now-solvent team has dropped some serious money on contracts. They spent big on Adrian Gonzalez, Andre Ethier, Clayton Kershaw, and more. They even spent big money for Matt Kemp to play for another team entirely. In all, it totals $1 billion.

All that spending has had an impact. The Dodgers have won the NL West each of the last four seasons, but according to Bill Shaikin of the Los Angeles Times, they’re also violating an MLB rule about debt and ownership changes. Within five years of changing ownership, a team can’t have debt that is more than 12 times their annual revenue (minus expenses). The Dodgers have been profitable in the last three years, but the huge amount of money they’ve spent has given them some debt, possibly in the hundreds of millions of dollars. So now they need to reduce payroll (for the second consecutive season) to get in line with the rules, aiming to get to around $200 million by 2018.

The Dodgers say that the payroll reduction isn’t related to the debt-reduction rule. It’s to make up for the early days of the ownership change, when they had to act fast and spend freely to rebuild the minor-league system and get the team back to being competitive. The Dodgers don’t seem worried about any of this, and neither does Rob Manfred. Manfred does say that this is about the MLB rules about debt, but even he doesn’t think that complying with those rules will hurt the Dodgers’ ability to compete in the future. In fact, even though there are a number of moves he could make against the Dodgers to ensure their compliance, he said he’d rather work with them directly instead of employing tactics like suspending ownership and management or requiring approval of all expenditures. Considering what the team and fans went through before Guggenheim bought the team in 2012, I’m guessing they’re all grateful for that.