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What Is Theo Epstein Worth?

Ever since the Chicago Cubs decided to replace Jim Hendry as their GM, speculation about Theo Epstein has been rampant. Since Boston finished off their September collapse last week, the talk has gotten even louder. Today, Gordon Edes reports that the odds of him leaving may be as high as 50-50, even though he’s under contract to the Red Sox for another year. Bob Nightengale chipped in with a note that, if John Henry were to allow Epstein to head to Chicago, they would ask for significant compensation in return.

That brings up a pretty interesting question – what is a Major League General Manager worth? As Buster Olney wrote over the weekend, GMs draw salaries in the range of $800,000 to $2.5 million per season, and their supporting staff make significantly less than that. Olney quoted a “high ranking executive” as saying that “you could fund an unbelievable front office for what it takes to pay a couple of utility infielders.” And he’s right – the cost of acquiring talent to fill your baseball operations department is a fraction of the cost of acquiring talent that actually puts on a uniform.

As is theorized in Olney’s piece, maybe the current market inefficiency is the pay scales of those in charge of building the rosters of the Major League teams, and Tom Ricketts could save himself a lot of cash by building a “dream” front office rather than investing in marginal upgrades on the field. If Theo Epstein could initiate an organizational overhaul that would save the Cubs significant amounts of money in free agency and streamline their player development, maybe they should just pay whatever price is necessary to get him out of his contract in Boston?

I’m not completely convinced this is true, however.

To a large degree, the price of a thing is set by how hard it is to get a similar thing somewhere else. While water may be the single most important resource on earth, in that we all need it to survive, it’s also remarkably cheap for most people in developed countries because we have access to an awful lot of it. In order to justify spending a lot of money luring Epstein to Boston – and compensating the Red Sox for letting him out of his contract – the bar wouldn’t just be initiating cost savings for the Cubs and improving the organizational efficiency of their baseball operations department, but it would be doing so at a level significantly beyond what the Cubs could have gotten by hiring any one of a number of whip-smart folks across the game.

Let’s just use Rick Hahn as a working example, for instance. Hahn is perhaps the best regarded Assistant GM in the game right now, having served as the quantitative part of Kenny Williams’ team in Chicago, and is widely expected to be a top candidate for nearly every open GM position this winter. He’s also from Chicago and grew up as a Cubs fan, so it’s not much of a stretch to assume that he’d be interested in the position.

For the Cubs, Hahn is essentially the baseline – they could offer him the position at a salary commensurate with what other first time GMs are making and not have to give the White Sox any kind of compensation in order to steal him away. Hahn and Epstein share a lot of the same views about the sport and would likely approach roster building from a similar analytical perspectives. The efficiency initiatives that Epstein would begin would probably be similar to the things that Hahn would begin – at this point, the “secret sauce” of high revenue teams run by a saber-leaning GM aren’t so secret any more. Theo Epstein isn’t the only guy in baseball who is going to suggest that the Cubs pour a lot of money into player development.

In fact, at this point, I’d argue that the individual ideas that any GM candidate can offer are now probably so similar that they aren’t worth paying that much for. Smart, analytical baseball executives have essentially become commoditized – there are a few thousand Ivy-league graduates willing to work for peanuts and cracker jacks pounding on these team’s doors every year, and there is a seemingly never-ending supply of wiz kids attempting to climb the ladders of Major League front offices.

Instead, the differentiators for GMs are the management skills they bring – how well they’ll be able to build a cohesive organization, how many other talented people will want to come work for them, and how well they’ll be able to handle the media and the fans when things aren’t going as well as hoped. This is essentially what Tom Ricketts would be paying for – the belief that Epstein could command a level of respect beyond what a guy like Hahn could because of his prior success as the lead dog in a similar situation.

Is that worth a salary many times over what a guy like Hahn would command, plus the compensation that would have to go to Boston in order to get Epstein out of his contract? I don’t know. Maybe in the specific situation that the Cubs have fostered, the best fit really is a guy who already has experience in that role and would come in with a resume he could point to when times get tough.

However, while I agree that a lot of Major League front office executives are underpaid relative to the benefits that they bring their organizations, I don’t know that spending a lot of money to buy big name guys to fill out a baseball operations department would actually be exploiting a market inefficiency. As the hires in Texas, Toronto, Tampa Bay, and other places have shown, there are plenty of terrific GMs just waiting for an opportunity to shine. The supply of qualified candidates is so high that I’m not sure that throwing a lot of money at an established guy is actually going to bring you a significant upgrade.