Budgeting against a Bully

The defending World Champion San Francisco Giants are not exactly a small market team.
They are comfortably in the middle, nowhere near the financial budget of the Yankees, Red Sox, and the newest and maybe biggest of all, if not the National League-the Los Angeles Dodgers, but well above the Clevelands, Pittsburghs and Minnesotas.

However, the spending of the new ownership of the Dodgers puts the Giants in a position familiar to fans in Toronto, Baltimore, and Tampa-Having to budget against a bully.
San Francisco has resources similar, if not above those teams, but will face a team and bitter rival that will outspend the Giants easily, so the Giants will have to make some decisions for the short term and the long term.
For now, the Giants, still in need of an excellent bat, will try to patch holes at the major league level, stay competitive for a few years, and hope that some player development will come along at the right time.

Part of continuing to patch the holes in the off-season was keeping their own players as Angel Pagan and Marco Scutaro were re-signed to contracts of 4 and 3 years respectively and Jeremy Affeldt was re-upped for a three-year deal to stay in the bullpen.
We can argue on the lengths of those deals, but the Giants are attempting to keep a certain core together and hope to buy time for some players to filter through the system and therefore cheap replacements.
The Giants could have added the big bat in Nick Swisher, but the Giants have reached their budget threshold and hope to get through 2013 when they finally get the bloated contract of Barry Zito off the books.
The elimination of the Zito deal could help pay Tim Lincecum (assuming the desire is there) and with the difference put that towards a need for 2014-Budgeting, you see,

The Giants only outside moves thus far have been a cheap signing of reliever Chad Gaudin from the Marlins and bringing back fan favorite Andres Torres from the Mets after using him to obtain Angel Pagan before the 2012 season.
Neither of these are huge impact signings, but they fill small gaps and could be quite useful or make little impact at all.

The other reason why the Giants have not made a larger move against the Dodgers' relentless throwing of dollars around?
They need savings to bank for the Buster Posey extension.
An extension to Posey that will allow the team to avoid arbitration that could cost the team more money and as it seems always does-ill feelings from the arbitration process between the team and the player.
The need for that extension has more than anything to do with the uninspiring off-season for San Francisco.
Without Posey, the team has no "face of the franchise" in position players, let alone the National League MVP, the Giants cannot afford problems with Posey and the budget dictates being prepared for that day.

Meanwhile, the Dodgers continue to add to their arsenal with the signing of the top free agent pitcher available in Zach Greinke and emerged as the top bidder for Korean star Hyun-Jin Ryu.
This in addition to adding Adrian Gonzalez and paying Josh Beckett and Carl Crawford for their past in order to obtain Gonzalez makes the Dodgers not quite finished now or in the future.
Los Angeles will have a huge infusion of cash after their cable deal is finished and the Dodgers ownership group does not seem inclined to stop spending.
The Giants will have to deal with that and have to make the decision that all teams that cannot compete at the top financially- patch and float or hit the bottom and bounce.

If I was making the decision, I would try to compete at the level for the next year or two while Tim Lincecum is still a Giant and then try to rebuild a bit on the fly.
After all, Matt Cain and Madison Bumgarner are signed for the long term, perhaps Lincecum could be replaced and that money used to refurbish a position.
The Giants have resources and will have more than some, less than others to battle the Dodgers checkbook, but they will have to manage them wisely.
Some players that Brian Sabean would like to keep or add will not be able to be kept or added and there will be opportunities to improve that will have to be passed on.
However, that is the cost of budgeting against a bully...