First, Foremost and Always: It is Still a Business

Wednesday the Dodgers announced “layoffs across the organization.” Right about now, I do not know who has been laid off. I would be surprised if this included anyone in player development and the baseball ops side of things… but you never know. Allegedly, the Dodgers have lost over $100 Million in 2020. If you are on the side of labor, you might say that is way overinflated and if you are on the side of ownership you might say that is just the tip of the iceberg.

I have no clue, but unless you have ever ran you own company, you may not either. I am going to tell you a real life story that may shed some relevance on the current situation.

Here’s the Story

As you may or may not know, my wife and I own US Water Systems. In 2014, one of our competitors tried to buy us. I ignored them until the 4th offer (they call it a Letter of Intent or LOI) , which I could not turn down. I demanded they put up $150,000 cash because were were baring our soul and finances. In 2014, we were about 1/3 the size we are now, but the deal seemed great… at the time.

LONG STORY SHORT: Their intent was to steal all of our intellectual property and eliminate us as a competitor. Because we were going to consolidate our accounting and purchasing departments, I found jobs for our CFO (he’s now the Director of Finance at Indiana University) and our Controller (I got her a job with a friend who runs a non-profit… and she is still there).

We also lost our Operations Manager as he wanted no part of the merger. Well, at the eleventh hour, they tried to change the terms and I told them politely to get screwed. I walked away and we were really in bad financial shape. We lost our Controller, CFO and VP of Operations who were system administrators of new software we had just installed, and it was a disaster! My tax return shows that we lost $496,000.00 that year. However, I was forced to borrow $800,000.00, and since we were in bad financial shape, we had to pay “loan shark interest.” In 18 months we paid back $1.400,000.00!

I am not sure how we did it… but we did! The point is: my tax return said I lost $496,00.00… but I had to play $1,400,000.00 back. Don’t feel sorry for me, It all worked out. We now have no debt and I can look back and laugh at it now. I also kept the $150,000.00. They told me I had to give it back and I replied: “Let’s have a Judge decide!” I ended up hiring two of their key employees and life is good. So, when Stan Kasten says the Dodgers lost more than $100,000,000.00, it may or may not be what their tax return says, but it’s lot.

So, in light of the pandemic and the organizational layoffs, it will not be business as usual this winter. To go out and spend lavishly on free agents would be a slap in the face to the laid off employees.

If I had to bet, I would say that the lineup we saw last year will be pretty much the same in 2021. It’s fun to think about trades and signing free agents, but its mostly fiction. Lindor isn’t coming to LA. DJLM is too old, too expensive and costs prospects… or at least one. Chris Bryant has been on a downward spiral. Josh Hader could be damaged goods and is way too expensive.

All of the Dodger’s Free Agents could be back, none of the Free Agents could be back, or some of the Free Agents could be back. Who really knows? McGee, Baez, Wood, Turner, Kike, and Pederson may find a very lukewarm market. I would think Treinen gets some offers, but you never know. Some may even come back on one-year deals.

I would not be surprised is Justin Turner comes back on a one-year deal that is is the range of $6 million. Hernandez, Pederson and Wood will not get what they received in 2020. The union is going to cry “collusion” but most teams understand that it will be around June before they put butts in seats.

As I write this, Pfizer is seeking emergency authorization to distribute their vaccine ASAP. Once the company files, it would be up to the U.S. Food and Drug Administration to decide whether the two-shot vaccine works safely enough to roll out to millions of people. I believe that since it is based upon Messenger RNA technology and the likelihood of side effects is very low that it will be approved in under two weeks! I believe that this is a National Emergency and damage done by lockdowns could exceed the death toll of the disease.

Today the Wall Street Journal reported:

“Given the urgency, the FDA is expected to move quickly. The timing of the filing is in line with industry and government officials’ projections for authorization and distribution to begin next month. Pfizer said the filing could allow for distribution to begin by the middle to end of December.

A green light would cap the fastest vaccine development program ever in the West, going from laboratory to authorization in less than a year. Pfizer, which partnered with Germany’s BioNTech in March, has so far spent about $2 billion on the effort.

Then companies, health authorities and physicians would face more daunting tasks: making enough shots to meet demand, distributing them and convincing people to take them.

Health authorities say vaccines, and the protection they provide if enough people receive injections, will be key to allowing people to return to schools, workplaces and other establishments.“

The vaccines are critical to resuming a normal life, which includes baseball. I would not be surprised if Spring Training were pushed back to the middle to end of April… but I do believe that we will see baseball with fans in the seats THIS season. In the meantime, this baseball labor situation is going to get real UGLY!

https://www.youtube.com/watch?v=ewFBuYHldeY