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Sunday, November 6, 2011

Executives: What Are They Really Worth?

Current systems developed by statheads can give us all a really good estimate on what the open market deems a player to be worth.  Win values can be calculated, average salaries can be adjusted, inflation can be accounted for, and an expected worth can be determined.  This system is rather easy to determine for players, but how does one determine the value of someone working in the front office?  From GM's to statistical analysts to regional scouts, everyone associated with the front office is doing something positive or negative towards the overall well-being of an organization.  These things are often overlooked.  Perhaps not by people who follow baseball religiously, but definitely by the casual fan.  In all actuality, how much are executives worth?  These individuals can make beneficial moves that save millions, but can also make moves that cost millions.  Theo Epstein recently traded a PTBNL for two front office office executives.  The move, in all likelihood, won't cost the team much at all, and they get two well-respected members in an organization.  So how can we determine what these guys are worth?  Well, let's look at two cases based on overall efficiency: The Yankees, and the Rays.  Two teams with drastically different payrolls and executives that either got big deals this offseason or were recruited heavily by teams with GM vacancies.


Total Payroll: $202,689,028 (USA Today)
Total Projected Fangraphs Wins by WAR: 60
Dollars Spent per WAR: $3,378,150


Total Payroll: $41,053,571 (USA Today)
Total Projected Fangraphs WAR: 46.1
Dollars Spent per WAR: $890,533

Clearly there is some discrepancy between the abilities of Brian Cashman (NYY) and Andrew Friedman (TBR).  Cashman is paying 379% more money than Friedman per win, and both teams made it equally far in the playoffs.  Cashman just signed a new deal at roughly 3 million dollars per season, and Friedman's salary is unknown.  So what is this effectiveness worth?  Well, that may be extremely hard to determine.  For one, Cashman doesn't have to be as effective with his dollars to get a lot of wins.  His general message from Yankee ownership has always been: "Get the wins for the team regardless of the cost."  However, Friedman doesn't get that luxury.  He and his fellow executives need to build through the draft, make smart trades, and sign low-risk, high-reward free agent contracts in order to succeed.  It was recently reported that the team would be cutting salary even more after this season, forcing Friedman to be even more efficient with his wins, but likely in a spot to win just about as many games.

Theo Epstein just agreed to a contract giving him 3 million dollars per season over five years.  However, many executive contracts do not get posted to sites like Cot's Baseball Contracts and other reference sites.  If Andrew Friedman can lead his team to the postseason after structuring a roster for 890,000 dollars a win, surely he is worth a significant amount more than a GM who blows well over 3 million dollars per win.  Can anyone really say a good GM doesn't impact a roster by more than the league average win?  If the market demands players get paid almost 4.5 million dollars per win, surely executives have to be worth more.  Even if one is to say that players are impacting rosters by 5 wins a year, then I think that executives can impact rosters by up to 20 wins.  20 WINS?!?!?!??!?!?!?!, you say?  Yeah, 20 wins.  Not a ridiculous proposition.  A few good trades and signings can easily turn a roster around by 20 wins within a couple of years.  Yes, the players are the one playing the games, but executives are the ones in charge of putting those players on the field at the same time.  So how can one possibly justify paying a front office executive so little?  How can the Cubs acquire two frontline executives for one PTBNL?  How are the Red Sox not getting a top prospect at the minimum for one of the most highly praised executives of the last quarter-century?  I couldn't tell you.  In the end, the owners will determine exactly what everyone that touches the organization is worth.  Perhaps someday, with all of the modern changes to how the game is analyzed, front offices will be more appropriately valued and player contracts will go down without the introduction of a salary cap.

Pipe dream?  Probably.  However, thinking outside the box like this is what has made baseball change for the better over the past two decades.

1 comment:

  1. I would just like to point out that the Yankees did win more games, and research ( shows that those wins are by far the most expensive.