Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?

By July 25, 2014Bitcoin Business
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Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?

It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over 30,000 Bitcoins ($17.9 million USD) a year, won after a fierce bidding war with the Silicon Valley A’s. Steinbrenner taps his watch and exuberantly projects a hologram of all the World Series trophies the Yankees will now win the coming decade. The media eats it up. So who is this new acquisition? The next superstar slugger? A phenom Japanese pitcher? No, it’s the Yankees’ new general manager.

Sound far-fetched? Maybe not. According to a study from FiveThirtyEight’s Benjamin Morris, elite baseball GMs such as the Oakland A’s Billy Beane are drastically underpaid given the value they add to a franchise. Morris’s analysis claims that Beane has given the A’s $1.38 billion in additional win value over the last 15 years, putting him in the proximity of Babe Ruth and Barry Bonds, and he notes that that might even be a conservative estimate. (Beane currently earns just $1 million a year.) This study mirrors a recent analysis on Deadspin, which argues that high-performing general managers—those charged with finding the next market inefficiency—may in fact themselves be the next market inefficiency.

This raises two questions:

  1. At what point will teams realize this and start paying high-caliber GMs the money they’re worth?
  2. Will this uncapped front office spending cause MLB to impose league-wide regulations on front office payroll as they currently do on player payroll?

If owners are soon asked to shell out eight-figure per year contracts for GMs, which would still be pennies on the dollar according to Morris’ analysis (most currently make in the low seven figures), then might owners push for league-wide restrictions on front office pay, both in the name of limiting expenditures and maintaining competitive balance? Right now, superior front office strategy is the biggest thing keeping the Oaklands and Tampa Bays of the league in contention with the big market behemoths. What happens when these high-revenue teams also pluck these skilled GMs away like they already do with small market superstar players?


Oakland A’s general manager Billy Beane’s value is comparable to Babe Ruth and Barry Bonds.

One might argue that such regulation would be impossible to enforce, as a team could theoretically employ off-the-books assistance from a myriad of hidden analysts. (It’s not as if a team could employ some off-the-books third baseman to give them an extra 20 home runs.) Such a gambit would of course be extremely high risk, though, with likely massive penalties that wouldn’t justify the risk. Plus, teams in theory already have ample opportunity to glide under payroll restrictions by paying players extra money under the table, but this has never seemed to be an issue, as teams again run into the liability issue.

There are similar unchecked spending situations in other sports, most notablely in coach pay. None of the four major North American sports leagues include coach salary on their payroll, and the team-by-team pay can vary wildly. New Orleans Saints head coach Sean Payton makes $8 million a year, while Atlanta Falcons head coach only makes $2.2 million. The disparity between coach numbers isn’t quite as great, but the uncapped spending has caused an explosion staffs, with Jacksonville and Tampa Bay each having 23 assistants on the payroll. This might not be an issue in the MLB, though, as another recent FiveThirtyEight analysis points out that baseball managers are almost entirely expendable.

While restrictions on front office spending may soon be necessary, it’s more likely that MLB will simply turn a blind eye. Revenues across the league are skyrocketing thanks to new TV deals, and as Morris pointed out, payroll is already highly correlated with win percentage. It’s not as if owners are suddenly going to be concerned about this now. However, if teams really start to see the value of elite GMs, and start paying them the astronomical sums Morris claims is fair market value, this could all change.

The MLB players union is by far the strongest player union in sports, staunchly bargaining for an un-capped payroll—something the NHL, NBA, and NFL player unions have all failed to do—and agreeing to only a high, forgiving luxury tax (one only five teams have ever exceeded in its 11-year history). Should regulation be forthcoming, would a hypothetical front office union have the same labor negotiation success, or could we be headed for the great GM lockout of 2028?

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