Markets Don’t Work, LA Dodgers Edition, Part Jillion

by evanmcmurry

The past few years have seen numerous teams—Phillies, Red Sox, Marlins, Angels—blow hundreds of millions of dollars on their rosters, only to appear in last place trailing teams like the Nationals, with a leaner payroll, or the Just-Rays, with no payroll at all. In 2012, those four profligate teams combined to $620 million in salaries and the best they could do was narrowly miss the second wildcard slot, still considered mediocrity’s crown. So why are the Dodgers dropping the equivalent of Ghana’s GDP on their 2013 roster, as solidified by yesterday’s signing of Zack Greinke to the second-highest salary of a pitcher ever?

The dumping of money by the Dodgers’ new owners has confused me since they took on what was, from space, two massively overpriced players in Josh Beckett and Carl Crawford, solely to get one somewhat-overpriced player in Adrian Gonzalez. In short, the Sox made what turned out to be three poor deals, and the Dodgers responded by doubling down on those deals.

I care less about this as a baseball fan, though ridiculous salaries aren’t helping the sport, than as someone in a society that claims to be ruled by rational markets. Baseball salaries seem like a classic bubble, in which the market value of a commodity is completely divorced from its actual worth. But what’s amazing in the case of the Dodgers is there’s proof before the owners’ faces in the woeful finishes of the most expensive teams that spending this amount of money in no way correlates to a winning season, or even one in which you place over .500. I realize, as I’ve said before, that MLB is not a perfect simulacrum of the free market. But man is it a poor argument for it.