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The Business of Professional Sports Coaches’ Pay

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Darren Rovell of CNBC just had an interesting report on the New York Yankees and Joe Torre's potential firing. Yankee owner George Steinbrenner had said that Torre's job was on the line with the Yankees this season. With this in mind, Rovell came up with some three points for firing a CEO/Manager:

baseball.jpg

  • Performance is slipping
  • Future Growth not realized
  • Losing control of team/incident

Rovell says that Torre falls victim to the first point as his "performance is slipping". The expectation that Torre set with his last contract is extremely high. Winning a lot of games and making the playoffs is not enough. Management (Steinbrenner) only cares about championships. Rovell then compares Torre with Bob Nardelli of Home Depot - who was fired earlier this year. Both are/were judged as being overpaid for their performance.

CNBC then compared the average Yankee player salary of 6.25M vs. Torre's 7M salary (according to ESPN). That's only a difference of 12%. The average US employee makes $29,544 with the average CEO making 10.8M, a difference of 36,455%. This is obviously a huge gap that catches the viewers attention. We'll get to this a little later.

The segment closed with Rovell mentioning that the Yankees could lose some players who have become fan favorites if they don't bring Torre back. In short, if Torre goes, Mariano Rivera and Jorge Posada might go.

I have a lot of questions here. Should Torre be compared to the CEO of a company? I would argue that GM Brian Cashman is closer to the CEO title. Should Torre's salary be compared to the average of the Yankee players (as CNBC did) or the average of all Yankee employees? I would argue the later. It seems that the better benchmark would be a middle manager compare to the people he/she manages. I imagine that gap is a lot closer to the 12% than the 36,455%.

[Update: It looks like Joe Torre turned down a one-year contract, so that's answers that.] 

Posted on October 18, 2007.

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8 Responses to “The Business of Professional Sports Coaches’ Pay”

  1. dong says:

    I think comparing the players to average employees is really kind ridiculous. The players are the product.

  2. Marc B. says:

    Nate Silver (of Baseball Prospectus) had a good take on Joe Torre’s compensation last week: http://www.baseballprospectus.com/unfiltered/?p=585 – he compared Torre’s salary vs. the salary of managers/coaches in other sports.

  3. Patrick says:

    I don’t think you can compare Torre to a CEO. Heck, Cashman didn’t even come close to that until the last time he renegotiated his contract and told Steinbrenner to butt out. I think an MLB manager equates to an mid/upper level manager because they have their hands fully entrenched in the day to day performance.

    Salary-wise, I would compare Torre to either other MLB managers, or other managers/head coaches in other professions. Comparing him to players is not comparing the same thing.

  4. thisisbeth says:

    The problem with comparing Torre’s salary to the Yankees average is that a few of the Yankees players make significantly more than Torre–it’s just the few that make the minimum that bring the average down to below Torre’s.

  5. Brip Blap says:

    Torre’s more like senior management, or even middle management. He can decide which employees to put on his project teams, but can’t really hire employees on his own. Like Patrick said, Cashman was hardly a CEO and isn’t today, either – obviously Steinbrenner is the Chairman/CEO.

    The Yankees’ payroll is out of control (as is Boston’s) – it’s such a warped model that it’s barely comparable to other sports at this point let alone “real” Americans…

  6. Foobarista says:

    If Torre’s like anything, he’s more like a dean in an academic department than a CEO. Deans are often paid a lot less than the department’s rockstar professors, and a dean’s job is to help a bit with recruiting and hiring, do the bureaucratic work, and otherwise stay out of the way of a group of high-performing people, often with massive and clashing egos.

    A baseball manager obviously does more actual management than a dean, but otherwise it’s a closer analogy than a CEO.

  7. Writers Coin says:

    I was just discussing this with a coworker the other day and it hit me: why don’t teams punish managers by lowering their salary instead of firing them? I mean, in this case, it was the perfect thing to do. You retain the manager that keeps this team glued together, you slap him on the wrist for not winning (even though it’s obviously not his fault), and you keep Mariano Rivera and Jorge Posada from jumping ship.

    And it looks like that was the idea, but the wild card is Steinbrenner’s crazy antics, and Torre was through with all the ultimatums.

    I say well done Joe!

  8. Laura says:

    I don’t see Torre as CEO. He’s more like VP of Product Development. I think a financial penelty would be appropriate in this situatuion. But my point is moot after seeing the news today. :D

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