It seems to me that there are two angles being missed in the Joe Torre death watch.
The first is that of George Steinbrenner’s competency. From his reclusiveness over the past year or two, to some of his phraseology in yesterday’s Bergen Record interview, there are ample signs that The Boss is not entirely in command of his faculties. Speaking of umpire Bruce Froemming, for example, Steinbrenner said:
“The umpire was full of [expletive],” Steinbrenner said of the retiring Froemming. “He won’t umpire our games anymore.”
Nominally, this could be correct — if the Yankees indeed bow out to the Indians in the LDS, that might be the last time they’ll see Froemming, who is retiring. But Froemming is also on tap to umpire key games in the LCS and World Series. And the intent of Steinbrenner’s comment is another matter. It doesn’t seem to be a snide remark about Froemming’s retirement at all; rather it is an ominous, sort of Monty Burnsian decree about something which the Yankees have no power over whatsoever. The polite way to put this is that Steinbrenner has become a caricature of himself; the impolite way to put it is that he’s become senile.
I have no particular idea how estate laws work in a small, closely-held business like the New York Yankees. There seems to be enough mutual dissatisfaction between the Yankees and Torre that Steinbrenner is not exactly upsetting the apple cart by suggesting that Torre might not be offered a new contract. Nevertheless, if Torre does not get renewed, it’s worth wondering whether the same decision would have taken place if this was the Steinbrenner of five or ten years ago.
The other angle has to do with Torre’s salary, which is routinely cited as $7 million but which should more properly be described as $6.4 million, the average annual income from his current three-year contract. Either way, Torre is the highest-paid manager in baseball — and any time that you are the highest-paid anything, you make yourself a target. But is Torre’s salary too high in the abstract? If we backtrack through the MORP formula, we find that $6.4 million is roughly equivalent to what it costs to bring on a 3-WARP player. The closest we have to a consensus is that a great manager can be worth an extra 2-3 wins a season, so this would dovetail nicely with that. It’s also worth keeping this in mind the next time that your team brings on a new manager and claims that he’s going to turn the team around. If that’s really the case, why aren’t you paying him more than Mark DeRosa?
Torre’s salary represents about 8% of the average baseball payroll of $83 million. It might also be instructive to compare this figure to those in other major sports leagues.
In the NBA, the Lakers’ Phil Jackson reportedly receives between $7 million and $10 million a year, which translates to between 11% and 16% of an average NBA payroll. Almost everyone would agree that an NBA head coach is comparatively more important to his team than an MLB manager — so far, so good.
In the British Premiership, Manchester United’s Alex Ferguson, who regained his position as the top-paid manager when Chelsea’s José Mourinho resigned last month, is paid a reported £3.6 million per year (US $7.3 million), whereas player expenditures are in the range of £64 million ($131 million) per team, representing about 6% of team payrolls. Mourinho, for what it’s worth, was being paid £5.2 million per year (US $10.5 million), or about 8% of average player expenditures. So the economics here are about the same here as they are in baseball, which makes sense since soccer football, like baseball, is a relatively hands-off sport, with most of a coach’s impact coming in between matches.
The surprise is in the NFL. Bill Belichick’s new contract reportedly pays him between $6 million and $8 million per year, whereas average NFL payrolls are about $102 million. (Seattle’s Mike Holmgren makes $8 million a year, but is also a de facto GM). So the ratio here is between 6% and 8% — no higher than it is in baseball, and possibly a bit lower. Now, it should be mentioned that the head coach is not the same as the entire coaching function in the NFL, since professional football teams have large and relatively well-compensated rosters of assistants. On the other hand, the NFL’s salary cap and non-guaranteed contracts are surely very effective in restraining player salaries, whereas there are no restrictions on salaries paid to head coaches. And NFL coaches can often receive competitive offers from the college ranks, which is less true in basketball and not at all true in baseball. Considering that NFL head coaches are unambiguously more important than their counterparts in baseball — an NFL coach can gain his team about 1/2 win a season (equivalent to 5 wins a season in baseball) simply by getting fourth down decisions right — and very probably more important than their counterparts in basketball, it seems clear that either the top NFL head coaches are underpaid, or the top baseball managers are overpaid.
I believe, in fact, that both of these things are true. If I were the GM of the Lions, I would not blink an eyelash at paying Belichick $15 million per season. At the same time, I don’t think there’s much reason to spend any more than you have to on a baseball manager, unless perhaps Earl Weaver comes out of retirement.
If baseball managers are overpaid, then why is this the case? I suspect this has to do with the nature of luck in the sport. When a team goes from winning 76 games in a season to 90, which really isn’t all that uncommon, this is taken as some sort of minor miracle, and credit is heaped upon the manager, the Veteran Leader, and whoever else might happen to be standing in the way. The reverse, of course, is true when a 90-win team becomes a 76-win team. And indeed, the margins can be much less than that. The Cardinals went from an 83-win team in 2006 with a healthy Chris Carpenter to a 78-win team in 2007 without Carpenter; their results this season were nothing if not eminently predictable. And yet Walt Jocketty has now been fired, and Tony La Russa might soon join him.
Manager salaries are, in many ways, just offerings made to the karma gods, by GMs and owners who are overly eager to attribute cause to what essentially amount to random events. If the Yankees fall to Cleveland and Torre gets canned by a tinfoil-hatted Steinbrenner, then there’s a certain amount of bad karma involved. But there was a certain amount of good karma in making Torre the highest-paid manager in baseball in the first place.
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