Baseball Economics Just Don’t Add Up

Yu Darvish

The economy of baseball is broken. Nothing is adding up at this point. In case you haven’t heard and not hearing anything (News) is part of the problem. What I mean is that over half of the MLB free agents have yet to sign and we’re nearing the end of January. The hot stove normally a ferocious wild fire has been dimmed to a faint glow. The economics of baseball just don’t add up anymore.

There have been accusations of collusion. MLB owners turned around and placed the blame on mega agent Scott Boras. They didn’t name him directly in their statement, but everyone can put two and two together and figure out they’re talking about Boras. I don’t think Boras has anything to do with it.

The free agent pool certainly isn’t exciting, but there are plenty of good players available. Guys like Yu Darvish, Jake Arrieta and J.D. Martinez highlight the market. Those guys and many others have yet to find homes. We’re only about a month away from spring training camps breaking.

If it’s not collusion then what could be causing the delay? Nobody knows for sure. There is another theory that the nerd invasion that has taken over MLB front offices has played a huge role in the lack of free agent signings. Most front offices are now entirely driven by analytics and small market thinking. Much like the Dodger’s front office has been. Player development has taken over as the top priority, (FAZ) and teams have decided that free agency is too much of a risk. They would rather wait to win and develop from within then to spend on free agency.

http://gty.im/869169958

It’s just not worth it for most MLB clubs. The problem is that unrestricted free agency seems to be going the way of the Dodo bird. There is no hard cap, but there is a luxury tax which effects future spending periods. The Dodgers have been trying to stay under the tax threshold this winter, among a few other high payroll clubs as well.

I think that tanking is another huge problem dogging baseball. There are a lot of teams that are way too quick to burn it all down and rebuild. Teams like the Marlins and Pirates think that winning is just an option. What those teams have done is sad and pathetic in the same way that Bluto and Badger think that the LADR spam filter moderation is.

Winning shouldn’t be an option but instead should be mandatory. Every team should be forced to at least try and compete. Unfortunately clubs see recent success stories of the Cubs and Astros and want to follow in their footsteps. But those clubs had to lose for years and it took smart drafting and player development in order to do so. It also took a few good trades and signings as well. Do you think the Cubs win the World Series if they do not sign Jon Lester? Do the Astros beat the Dodgers without acquiring Justin Verlander?

The free agency system doesn’t seem to work because clubs are paying older players for past years of production. Perhaps the answer could be to make players eligible for free agency earlier, after three or four years instead of six years. It is a young man’s game and players decline once they get into their thirties.

I know this; the tanking has got to stop. Teams should be penalized for losing on purpose.  I think it is possible to rebuild without destroying your entire roster. There is no reason to alienate fans by forcing them to watch unwatchable baseball for several years with the possibility that it may one day lead to winning seasons.

I believe that the only answer is to institute a hard salary cap on player salaries. Players fought hard to prevent this from happening, but things are so broken, and owners are so out of touch with the realities of the game that this seems to be the best solution. The game itself is healthier than ever, but the economy of baseball is broken.

If things are not fixed soon then the divide between the large market clubs and the small market clubs will continue to get bigger. The rich and the poor will mean less parity. The middle class is shrinking in major league baseball. Fortunately the Dodgers are part of the elite class. I would like to see baseball fixed but as long as the Dodgers continue to win Pennants, then I’m happy. Believe that! Discuss.

Scott Andes

Scott Andes

Scott Andes: Former Co-editor of Lasorda's Lair. Longtime writer and Dodger fanatic Cheap MLB Tickets

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Michael N Norris
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Michael N Norris

Cannot argue with that logic, but the players are not going to give up anything they have fought so hard to obtain. Ethier is still out there and Granderson is not…..try to figure that one out. Andre is a much more rounded player than the Grandy man. You think this year is bad? Wait until next off season,,,,,it is going to be so out of whack.

MJ
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MJ

Scott

I personally think the baseball commissioner shouldn’t make the teams like the Dodgers, give these teams that are purposely tanking, as much money is they are.

These teams that are purposely tanking to get top prospects, are gaming the system, but not all of these teams, will be successful, so that is not good for their fans, and baseball in general.

Yueh_Fei
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Yueh_Fei

MJ I would love that. But what is purposefully tanking vs. fielding a team of minor leaguers who are trying? The relative payroll? Money talks. I am in favor of making it fun and mixing it up, while bringing something to the fans and the minor leaguers who are under an NCAA-like abusive and exploitative system. I think that each of the teams who are fielding bad teams should be forced to play their team against the winners of each AA and AAA leagues during the off season once those seasons are decided. The definition of a bad team should… Read more »

Badger
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Badger

Collusion? Wouldn’t surprise me but the business of baseball, competing so you can make a buck, will seldom be out of the hands of a few select clubs. We all know who they are.

Until there is a hard cap nothing will change. Every now and then we will have an Oakland or a Tampa get to the series. But those teams who can reset the luxury tax will continue to corral the stars.

Yueh_Fei
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Yueh_Fei

I just read yet another illogical, internally inconsistent article trying to defend the Gerrit Cole trade from the Hardball Times, comparing the returns on the trades of Cole and Gray. Gray was a good comp and most As fans were happy with the trade return they got, which the author found perplexing (news – probably because the Pirates got robbed and the As didn’t). Basic argument was that quantity over quality was better for a rebuilding team like the Pirates. I don’t think that approach has ever worked as a rebuilding strategy in the history of professional sports. Sometimes the… Read more »

Yueh_Fei
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Yueh_Fei

The Baseball America top 100 prospects came out. Not one of the prospects the Pirates got for Cole made it, and in fact the Astros got more prospects, and more highly ranked ones, than the Pirates on the top 100. Add to that our Cuban experiment continues to flop. Yadier Alvarez, on the list last year at 26, has now fallen out of the top 100 entirely. I had wanted to trade him months ago and now his value has evaporated – hopefully he has a comeback year. Keibert Ruiz at 40. We really need to trade at least one… Read more »

Bluto
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Bluto

I posted on the other entry a very informative (IMO) podcast which dealt with many of these issues.

Artificial caps on open markets don’t make much sense to me. Not sure how they would solve anything but helping the bigger market teams and all owners everywhere.

There are more innovative solutions and ideas in the realm of stopping tanking. How about rewarding the top pick in the draft to the team that missed the playoffs with the BEST record, not worst? That removes some of the incentive to purposely lose.

lots of interesting ideas out there….

Yueh_Fei
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Yueh_Fei

I am not in favor of the last team not having the top pick, as the last place team should get a head start to play better. But maybe not guaranteed the top pick is sufficient. The NBA has a lottery, for example. Although I am not in favor of a lottery either because sometimes a team gets lucky (or their top pick is injured and they end up getting 2 number 1 picks in a row). I am in favor or a system where the last place team gets the top pick without a lottery, but that pick goes… Read more »

Artieboy
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Artieboy

How is forcing teams to innovate a bad thing? How if forcing teams to rethink player investments a bad thing? Who was a more enjoyable player, minor leaguer Chris Taylor or bloated free agent Andrew Jones? Yes there are minor leaguers who show why they don’t belong in the majors and their are free agents who are worth every penny of their long term contract. Sorry Scott I don’t see the economics as being broken. I see that they have been broken for generations with escalating free agent salaries and teams having to trade players in their final contracts or… Read more »

Badger
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Badger

Just read an interesting explanation of cap issues in an excerpt from Baseball Between the Numbers. I would love to share it with you but at risk of it sitting in moderation for hours I will not post it. Google it if you wish. The bottom line is unless baseball changes the way it does business it risks fans drifting away from certain franchises simply because they are tired of losing. Along the way of fixing this problem there will be unintended consequences, but fix it they must. “As economists will tell you, if you want less of something put… Read more »

Badger
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Badger

“When looking over the numbers, keep in mind that revenue and operating income figures measure cash in versus cash out for the 2016 season (including playoffs) and are net of revenue sharing, stadium debt payments and MLB’s luxury payroll tax. Team values are enterprise values (equity plus net debt). Revenue and expenses of team-owned real estate (stadiums, stores, parking lots, etc.) owned by the team are included in our valuations, but the value of the real estate itself is excluded. We also do not include the value of regional sports networks owned by teams or their profits or losses. But… Read more »

Badger
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Badger

Who said this:

“Time is not a function of the market; ability to pay and demand are. The timing is not disturbing because the demand and the ability to pay are still evident.”

Johnny Rock
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Johnny Rock

Scott Boras

Badger
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Badger

Thank you Johny Rock.

Dialogue. It’s why we are here!

Harlan Wolfe
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Harlan Wolfe

Just a guess–Yasiel Puig?

Michael N Norris
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Michael N Norris

There are good free agent signings and there are bad. The ownership is the one taking the risk by paying said free agent. Sometimes you are able to get a player for a reasonable price and he performs magnificently. Sometimes you pay through the nose and the guy is a total flop. The Dodgers over the years have had their share of bad signings. Comparing Taylor to Andruw Jones is not a viable comparison since Taylor was obtained in a trade. Jones was a free agent who reported out of shape and never was worth any of the money he… Read more »

Bluto
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Bluto

There was a lot there Michael, but I’m not sure to what end?

That players deserve to make money? Or that Free Agency is a necessary evil/means to that end?

Not sure what the bit about ticket prices was/is about…

Michael N Norris
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Michael N Norris

As player salaries have risen so have the tickets. An average fan cannot afford to go to very many games, let alone buy season tickets. Free agency started the trend to rising salary’s. Million dollar players are common now, not so much until the mid 70’s. I can’t say I blame them for trying to get the most they can, but players are so far detached, as are the other forms of entertainers I mentioned, that there is no way fans can understand someone getting that much money playing a game. I remember O’Malley not increasing the price of tickets… Read more »

Bluto
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Bluto

You don’t think it’s simply a market?

Badger
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Badger

Free market? Yeah, right. I get your point Michael. And I agree with you. It’s different here in Arizona. I can get discounted tickets from the dbacks, box seats for about $40. I haven’t gone since ‘16. I have no plans to go again. But for those who still want go, yeah, it’s a form of entertainment. It’s a lot more expensive than going to the movies, and I have no idea what concert tickets go for, but you don’t go to concerts, 81 times a year. Dodgers season tickets are becoming for the wealthy. Taking your family to the… Read more »

Michael Norris
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Michael Norris

No I do not..It is extortion…….

Artieboy
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Artieboy

I see it as entertainment. And I don’t see very much entertainment in Rich Hill and the orchestra of relief pitchers. Obviously I’m in the minority as many fans do pay to see that spectacle.

Michael Norris
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Michael Norris

I was reading a story on Yahoo about a life long Dodger fan and his fiancé who were trying to decide if a 45 percent increase in the tickets they had the season before was worth it. 45 percent? If you were paying 100 a game to go, now it is 145….that’s ridiculous. The most I ever paid to see a game was 70 dollars two years ago to sit behind home plate at a Dodgers-Rockies game at Coors. I had the cash so I splurged. But could I do that now? Oh hell no. I can see movies here… Read more »

Yueh_Fei
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Yueh_Fei

I read that too Michael. I think it was season tickets priced so we are talking about a lot more money than just one game. Crazy. Sad article that made me a little angry.

Badger
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Badger

Yeah, I saw it too. That couple, longtime season ticket holders, are being priced out. But, as they indicated, somebody else will step in. Los Angeles, all by itself, has enough people to put 40k b.i.s. every night. Add the metropolitan area and they could support two teams. Oh wait….. Yeah, if the market allows you to do it – Ef the fans. Pay up or listen on the radio. Garth Brooks? He doesn’t understand the American way. I saw Alabama at the Minnesota State Fair several years ago. Don’t recall what I paid. I recall it was worth it.… Read more »

Michael N Norris
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Michael N Norris

I just checked Yueh…..cheapest ticket at Dodger Stadium per game is a 47 dollar premium reserve seat. That is the per game price. The most expensive is the dugout box which goes for over 800 a game. I would safely say the average fan is not sitting in the dugout box. And can go to maybe 1 home game per home stand at those prices…..That 47 dollar reserve is up about 10 dollars from what it was. I sure as hell cannot afford going.

Badger
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Badger

But wait!

“For a limited time only, take advantage of significant markdowns off the regular mini plan price with packages starting as low as $15 per ticket! Choose ten (10) games at a special value price from a preselected pool of thirty (30) games.”

Michael N Norris
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Michael N Norris

Uh huh..you get to see the great teams like San Diego and Atlanta…..Maybe a Giant game if you are lucky………Just read a very interesting article on ESPN about Epstein, Cashman and Friedman……Most think their approach is what is keeping the big ticket guys from getting what their agents expected them to get in free agency. It also said do not expect those 3 to just go out next year and lay 300 million plus on guys like Machado and Harper. Precisely what I have said about FAZ from the beginning. He is not going to go 10 years and that… Read more »

Badger
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Badger

I agree. For a short time I thought maybe they were waiting for some contracts to clear so they could get in that ‘19 FA game. But no. I don’t think so. I’ve said a few times these guys are going to do it THEIR way. They know what they know and signing older Superstars to long term contracts ain’t their bag. Who knows what happens if Kershaw were to leave. If we win it in ‘18, why wouldn’t he leave? Mission accomplished, I’m going home. If they don’t win it? Enough of this crap, I’m going to go win… Read more »

Bluto
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Bluto

I guess I don’t understand why the tickets should be priced for the “average fan” to enjoy at their convenience. There’s radio, there’s internet, there’s the Dodgers cable channel for those who can get it.

Why shouldn’t the live experience be priced at a premium compared, when the at home experience can be had for minimal dollars.

To coin a cliche, I am not sure there is anything wrong if going to a game isn’t a right for the “average” fan.

I only go to games when I can get a good seat and parking for free.

Badger
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Badger

Only the wealthy should have access.

There you have it folks. Major League Baseball has become polo.

It’s true, most cannot afford the new Mercedes. But, if you are fortunate enough to live close by, there is always A ball.

Bluto
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Bluto

How are you defining access?

And what is the value/point of that type of access?

Badger
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Badger

“How are you defining access?”

Differently than you apparently.

As a 15 year old watching Koufax from a Row 5 box seat behind home plate is an experience I’ll never forget. We also saw him on KTTV Channel 11 from a similar angle. Not the same experience. Access.

Bluto
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Bluto

Yes, I appreciate that one experience is different than the other, I don’t understand though why both should be accessible to everyone.

Especially if the market can prove that the live one is substantially more valuable.

Broadway Musicals are more expensive than the film versions thereof.

There’s something of a parallel there, I think.

MJ
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MJ

I wonder how Corey is doing.

Because Corey’s arm or elbow did effect his hitting, and it affected his hitting, terribly.

I think he might have made the decision to try to heal his arm, the more conservative way.

And I have no problem with that!

I think it is the player that should make the decision, after he gets all the different experts opinions.

I just hope Corey is ok.

Michael N Norris
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Michael N Norris

He did not have surgery. Opting instead to let rest bring the inflammation down. They will most likely check him thoroughly when they report to spring next month. The physical is about the first thing they do when they get there. Kemp has been at Dodger Stadium working out with some of his team mates. According to reports, Cody Bellinger has put on about 15 pounds. He is bulking up to try and have more stamina this season.

Badger
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Badger

I wonder what 15 pounds will do to his speed? I put on 10 pounds to play linebacker in college and it slowed me down to a 4.6.

Kemp is working out at Dodger Stadium? What’s he look like? Where’s the report? We need pics. I know some think he is worthless. No value. I’m waiting to see.

Michael N Norris
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Michael N Norris

There were no pics. If I remember correctly the report was on either Dodger Blue or Dodger Digest. It said he was working out at Dodger Stadium with some of his team mates who are also in town.

Badger
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Badger

DodgerNation had a brief mention. No information.

Any predictions?

I got some:

The dollar will fall, some kind of nuclear event will happen in California, Trump will continue to piss off 80% of the world but we won’t do anything about it, Cubs will win the pennant, real estate values will have an adjustment, malls will start closing, earthquakes will increase, volcanoes will erupt, The Day After Tomorrow will become a reality, and I’ll have a dozen more posts stuck in moderation.

How’s that?

Michael N Norris
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Michael N Norris

On a totally different subject, HOF voting results will be announced on Wednesday. Locks….Chipper Jones, Vlad Guererro and Jim Thome. Close…..Trevor Hoffman and Edgar Martinez. No shot this year…..Barry Bonds and Roger Clemons. No shot what so ever……Andruw Jones.

Jeff
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Jeff

Some years ago, on a basketball radio show featuring Rick Barry. His idea regarding compensation for athletes based on performance is the only logical solution to the ever inflating cost of doing business and the egoic demands of the players. Negotiating contracts based on performance makes sense. Production is rewarded. Non-production is not. Period. Even in the ordinary workplace, if someone is not doing their job well, they are usually replaced or not promoted. Giving someone a multi-year contract based on past performance is absurd. But giving someone a multi-year contract based on the future, is even more absurd. No… Read more »

Michael N Norris
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Michael N Norris

Uh Jeff, that was basically the way it was until free agency hit in the 70’s. Players got 1 year contracts and were bound to the team they had signed with unless traded or released. Baseball players basically saw this as serfdom and as the union got stronger decided to fight it. At first they lost, Curt Flood refused a trade and went to court. He lost. But not much later the rules were changed and free agency raised it’s ugly head. Since then player salaries have done nothing but rise. It was for years that if a player did… Read more »

Yueh_Fei
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Yueh_Fei

Hi Jeff, love to see your post and you bring up a great point. Production based compensation works for everyone except the union bosses and the owners and their executives. Especially the owners, because the executives’ main task is to make sure the owners don’t get blamed, either for doing well (and giving credit to the owner) or taking the heat and moving when things go poorly (which is why owners continue to pay big “golden parachute” payments. I am not disagreeing with you or hating on the execs/owners, and I totally agree with you it is all about the… Read more »

Badger
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Badger

I think Jeff’s point is a good one, but the truth is we are WAY past compensation based salaries in professional baseball. That ship sailed decades ago. The players union is a powerful organization of millionaires. Most of us were stunned they allowed the Maeda contract. I doubt we see any more of those. There is plenty enough money in baseball for some teams to survive without much on site fan support. Look at the MLB attendance figures for proof of that. Some teams, those in huge markets, will likely always have enough fans show up, and large enough tv… Read more »

Yueh_Fei
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Yueh_Fei

Nowadays one gets a performance based contract only after an injury (or in Maeda’s case, a career threatening injury diagnosis).

Does anyone see the irony there? You can’t make this up. Welcome to the real world. I used to live in it, not anymore, and I’ve got no plans to go back to it. The Guggenheim world is a lot better (and Google “Guggenheim, Walter and Court”. Not McCourt, just Court.

Badger
Guest
Badger

“CEO swears he didn’t buy hot exec a $13M mansion”

Nice

You think Gagonhymen might sell the Dodgers?

Badger
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Badger

Too much?

Michael N Norris
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Michael N Norris

The Dodgers continued their powerhouse off season of minor league signings by inking 30 year old former Astro draft pick Andrew Robinson to a minor league deal. Drafted by the Astros in 2010 he spent last year at AA in the Nationals farm system.

Yueh_Fei
Guest
Yueh_Fei

You got me on that one Michael. Powerhouse offseason. Ha ha.

Badger
Guest
Badger

We just don’t have to do much. It’s very much the same lineup that won the West by 11 games.

Michael N Norris
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Michael N Norris

Well that will be true if every player in that lineup does what he did last year and the ones who did not have great years, aka Pederson, Forsythe and Grandal step up and have better years. Then they will be a powerhouse. If the injury bug does not hit one of the stars, if the bullpen is as good or better than last year, which means someone has to step up and be the new Morrow. If the starting pitchers can log more innings and take some of the heat off the bullpen. There are a lot of if’s… Read more »

Michael N Norris
Guest
Michael N Norris

All accolades are appreciated……they signed another former major leaguer named Moscoso or some crap like that, to a minor league deal. He has not pitched since 2013 and I think he is in his mid 30’s. Their signings and pickups of the waiver wire dumpster are less than inspiring, but that is the way of the FAZ.

MJ
Guest
MJ

Remember most didn’t think much, when they signed Morrow, last year.

He didn’t come up to the majors, until they had to bring Morrow up, or he would be free, to negotiation, with another team.

But more importantly, we are getting close to some better conversation, because spring training is right around the corner!

Michael N Norris
Guest
Michael N Norris

Well that is true. 22 days until pitchers and catchers report. Wonder how long until those big free agent dominoes start falling. Arietta, Darvish, Martinez, Cain, all still out there and a bunch of fringe guys too including Andre and Utley. I read a story that said the Dodgers actually have interest in bringing Utley back.

jerry
Guest

that why more and more young kids are playing socker .. if they can see baseball ..why would they want to play it….

Badger
Guest
Badger

Good point jerry

I wonder what fans will look like in 20 years. Those kids playing soccer today, are they gonna pay $300 to see a Dodger game?

Bluto
Guest
Bluto

Soccer?

Jeff
Guest
Jeff

Yes football (called soccer only in the U.S.) is probably the greatest sport on the planet. World Cup time coming. Very exciting.