Manny and the Dodgers: The Business of Baseball

'We decided that we weren't going to obsess over our competitors, but we were obsessed with our CUSTOMERS.'
Jeff Bezos, CEO - Amazon
I'm guessing that Los Angeles Dodgers Owner, Frank McCourt, hasn't been watching 'Charlie Rose'.
I'm guessing that Dodgers General Manager, Ned Colletti, is more of an 'American Idol' kind of guy.

Reading the commentary here on TSN, its pretty clear that the Staff and the bulk of the blogosphere are a lot like Ned. Who is a lot like them. This is not for those folks, like Ned, and perhaps, Frank...
It's too much for them.
You see, Guru knows about some things.
Economics, Business and Baseball are at the top of the list.
I know more Economics than Baseball writers, and more than most Baseball executives.
I know more Baseball than Business writers, and more than most Baseball writers.
Here is what I know.

Business is built around these basics.
* Paying Customers
* Brand
* Product
* Service
Baseball is built around these basics.
* Offense
* Defense
* Pitching
* Base Running

The most important 'asset' from a Business standpoint is a player who has Superstar name recognition, Hits for Power (Pitchers play every five days, or for a few innings at a time) and, it would be nice if the player was:
1.) An FBHOF (First Ballot Hall of Fame) Player, denoting one of the greatest to ever PLAY.
2.) A proven resume of winning and bringing winning to places that hadn't won in awhile.
3.) A built-in Supplementary fan-base.
If a business requires ready access to its customers, as Baseball Clubs do, and Real Estate, then the old maxim holds.
Location...Location...Location.
The kind of Location that would make an organization that was the 2nd Best Brand in MLB in 1958, playing in the United States Biggest City decide to leave for the 2nd Largest City and convince their NYC neighbors to leave as well, for San Francisco - providing a ready-made rivalry and a chance to go from being #2 and #3 in NYC to being #1 and #2 on an entire COAST.
Los Angeles, California is the Dodgers location.
4 Million People live in Los Angeles, 13 Million live in the Metropolitan region.
Split the surrounding regions with the Los Angeles Angels of Anaheim (13M x .5 = 6.5M) and split the city residents 80/20% for the Dodgers (4M x .8 = 3.2M). 6.5M + 3.2M =
9.7M Potential Paying Customers.
Let's say that 1 in 3 of these customers is at least a potential paying customer for Dodger Baseball.
Drop the extra 100,000 and call the 'Pool' - 3.2 Million Customers.
It is from this pool that the revenue for your baseball club will predominantly derive.
An extension of the Dodger brand, however, is an easy extrapolation. No other franchise has a built in audience on both coasts, in the first and second largest cities. Nobody this side of the Yankees has placed as many Hats on heads that have no interest in Baseball than the ubiquitous 'LA' white on Dodger blue. It's practically a stylist requirement for the latest LA hottie...
Or it was.

In their first 30 years in Los Angeles (1959-1988), the Dodgers went to the World Series N-I-N-E times.
9 times in 30 years - 30% of National League Pennants.
5 Rings in 30 years - 16.66% of World Championships.
In the preceding 41 years, in Brooklyn, the Dodgers won 12 Pennants, but only the 1955 'Holy Grail' Title, usually at the hands of their neighbors, be they NL (Giants) or AL (Yankees).
21 Pennants overall. 6 Championships.
All of them between 1890-1988. 99 years, 21 pennants.
In the last 20 years?
Z-E-R-O Pennants.
No rings.
Starlets wear Laker Caps.
Oh, one more important bit. Los Angeles is 48% HIspanic, in the City alone, that equals 1.9 Million People, and that is those who make the Census, which means the actual numbers cannot be calculated, but the anecdotal evidence, the PREPONDERANCE of it, suggests that number is likely closer to 2.5M.
Not in the surrounding suburbs, where there are millions of more, but in the CITY.

For contrast, lets choose another American City, say....Boston.
600,000 People live in Boston. 7.5 Million in the extended area.
There are 14 Million in New England, but at distances that, if we were to include the same range for LA, would bring the discussion into tens of millions.
In Boston, the population is 16% Hispanic (600,000 x .16 = 96,000), lets add for those who are not census-friendly - another 24,000?, which makes 120,000 people.
The rest of New England? New Hampshire, Maine, Vermont? Not Hispanic hotspots. Rhode Island is urban and WOULD BE a magnet, except that the Manufacturing collapse and Economic crisis have killed ALL the jobs. Let's say the rest of Massachusetts is 10% Hispanic and call it, generously, 500,000 Hispanics who might have been potential Red Sox fans.
Got all that?

Manny Ramirez came to Los Angeles from Boston last August, fortuitous circumstances that cost the Dodgers Z-E-R-O dollars.
His Manager, Joe Torre, the most universally respected in the game, spoke glowingly of Manny's impact on his clubhouse. Don Mattingly, another instantly respected figure, who played with HOF players (Dave Winfield, Rickey Henderson) and coached others (Derek Jeter, Alex Rodriguez), said he had never seen a player make the impact with young teammates, work harder on the business of hitting or transform a clubhouse like Manny did.
ON the field? .396/17/53 in 53 Games. Slugging a surrealistic .743, On-Base of .489.
A talent so vast that in his last month in Boston, where the chattering class has agreed by acclamation to brand him with the label of 'Jaking It', he hit .347, slugged .587 and had an on-base of .473.
Ignore the numbers in LA, if ANY team in Baseball could have the 'Bad' Manny numbers from July in Boston, they'd be printing playoff tickets.

Speaking of which...
Manny came to Cleveland in 1993, and became a starter for good in 1995. That was the 41st Season since the Indians had last been to the World Series.
They went to 2 of the next 3.
In his last 3 seasons in Cleveland, he hit 127 HR's and drove in 432 Runs. The Indians were a powerhouse, playing to packed Jacobs Field Crowds, in a place that had been baseball dead for DECADES.
Indian management decided they didn't NEED an HGFBHOF (Home Grown First Ballot Hall of Famer) in his prime and let him go to Free Agency.
Needless to say, the Indians lost for awhile, nibbled in '07 and now have sent away their latest HGFBHOF type, charismatic minority and hope to find a way to win without retaining any of the game changing talent they develop. Good luck with that.
Manny, of course, signed in Boston.

When he arrived, the team had not won a Championship in 83 years, or been to the World Series in 15 and a guy named David Ortiz was a stiff who the Minnesota Twins would unload for nothing.
When he left, they'd won Two Championships in two tries and were eliminated from another on an extra-inning/7th Game HR (probably not Manny's fault, but you never know...oh wait, it was Pedro's fault...or Grady Little's...it always has to be someone's FAULT). Oh, and Ortiz is now 'Big Papi' after feasting on his buddy Manny's work ethic, hitting advice and presence behind him in the lineup.
Then he went to LA, singlehandedly lifting the Dodgers to a Division Title.
In the playoffs? Manny Hit .533, On-Base 682 and Slugged 1.067. His OPS was 1.749.
Beyond Belief. And THAT was against a Pitching Staff that went on to Win the World Series and KNEW Manny was the key to the Dodgers.
Knowledge doesn't help you get Manny out. Ask Mike Mussina!
The best in every business eventually get to dictate WHERE they play and dictate how MUCH they will be paid. Ask Jennifer Aniston, who got paid $1M an episode and got each of her cast mates the same money just so NBC could hold onto 'Friends'.
Do you think NBC suddenly believed that Matt 'Joey' Leblanc, was worth 6M MORE than Alex Rodriguez makes? Or were willing to throw nearly 200M at six sitcom actors?
They did it because their CUSTOMERS wanted that talent, and their ADVERTISERS wanted to see those customers before ponying up their cash. In simple terms, they PAID money to MAKE money.
Business is like that.

Manny is a franchise player who has been badly mishandled by two successive organizations who were more interested in bending him to the local marketplace than making him the centerpiece. In Cleveland and Boston, General Managers, Mark Shapiro and Theo Epstein, barely disguised their contempt for Manny. Shapiro shipped him out, Theo TRIED to in 2003, which would have precluded either championship, but if you ask Theo and Larry Lucchino, you'd think Manny was a bit player in all that.
Whatever...
In Los Angeles, with Torre, in a big market (a REAL one, not a media construct) where people live-and-let-live and celebrities are about as novel as mini-vans, a place with roughly 20 times as many Hispanic fans who LIKE his style, appreciate his look...on a team that announced in the fall, would carry a payroll of 120M but are sitting with less than 80M today...
They offered Manny Ramirez two years, with deferred money over a course of five years PAST the two years of the deal.
Do you think the Dodgers have offered their fans a full REFUND if they do NOT sign Manny?
Do you think the young Dodgers who REVERE Manny won't miss him? Russell Martin says they'll win anyway, so do the Red Sox. Nobody ever has so far, but I suppose it might happen.
But isn't this all just smoke and mirrors and spin?
The numbers and the arguments make Scott Boras point for him. They are inarguable, which is why the arguments you read are of three types;
1.) From people who believe that players should be treated like employees.
2.) From people who believe that he should have been GRATEFUL to be in Boston, humbled himself, cut his hair and ignored the things that he disliked. In other words, put the Boston ownership, who he gave championships and who tried to cut him, the Boston players, who went from an urban/ethnic mix to a redneck/frat boy one during his time in Red Sox and the Boston fans, who forgot Pedro the MOMENT Schilling got to town and began giving the finger to New Yorkers (like Manny) and immigrants (like Manny) ABOVE his own needs and the needs of his family.
3.) From people who think players should suffer along with the rest of us, regardless of the underlying economics.
All of these arguments are EMOTIONAL.
Emotions have no place in business.
All of you who call Scott Boras names? He is a WINNER. Ask Alex. Ask Teixeira. Ask Derek Lowe.

His job is to cut through the GARBAGE that the Clubs and the Media and the Fans are spreading, and make no mistake, that is EXACTLY what it all is (see above) and, calmly, demonstrate to the team, the media and the fans that IF the Team was serious about winning and making money, they would not only sign Manny but they would start PROMOTING him for all the reasons listed here and as a positive role model, a guy married to his HS Sweetheart who lives for his family and to hit baseballs, instead of devaluing the brand they depend upon.
Just because the Dodgers are stupid, doesn't mean YOU have to be.





