We’re rapidly approaching the point where a great owner or CEO is more important to a baseball team than a great general manager.
This would have sounded semi-blasphemous ten years ago, when very few teams used sabermetrics and advanced data. But now, even though a great GM is still a significant competitive advantage, and most teams are still pretty stats-averse, there’s been a key change in the marketplace: more GM candidates, and less influential top-level managers.
In other words, there are more people working in baseball who could be the next Billy Beane, than there are who could become the next Mark Cuban.
The last couple weeks I’ve been writing about the flaws in MP / MW (or marginal payroll divided by marginal wins). In particular, it doesn’t take into account each team’s economic context (i.e. the Yankees make more per win than the Pirates, and should therefore be willing to spend more per win). So if we’re going to rate a GM based on MP / MW, it has to take into account MR / MW (or marginal revenue divided by marginal wins).
But here’s the thing: MR / MW can be changed, for better or worse, by the team’s management. This is aside from just winning games and making the playoffs. If a team’s owner, CEO, or marketing staff is good enough, they can grow the team’s earning potential per marginal win.
Mark Cuban is a perfect modern example of how big an impact a top-level executive can have on a team’s topline. Since Cuban took over the Mavs in early 2000, the team has been very consistent on the court (they’ve won at least 51 games in each of Cuban’s first eight seasons), and has continually outpaced the NBA’s growth rate in terms of revenue.
Since the 1999-00 season, during which Cuban bought the team, the Mavericks’ revenue (according to Forbes) has grown from $59.7 million to $153 million, or 156%. In the same timespan, the average NBA team has grown from $79.86 million to $125.5 million, or 57%. The Mavs moved into a new arena in 2001, but the growth rate since then has still been impressive. In only two seasons since (2004 and 2007) have the Mavs trailed the league, and both were the result of early playoff exits following long runs the previous season.
What Cuban has done, more than anything, is develop a whole new brand for the franchise. In turn, he’s increased the team’s earning potential, and made each marginal win more valuable. This actually makes his GM’s contributions more valuable, as well.
The John Henry/Larry Lucchino Red Sox have done a tremendous job at this, as did George Steinbrenner to a certain extent (George, of course, got too involved in baseball operations at times). But there aren’t many management teams that have been able to consistently beat the league’s growth rate year in and year out, especially on a per-win basis.
And this goes back to my original point: there are lots of great GM candidates out there, but relatively few CEO candidates who could make a significant difference to a team’s earnings potential. As much time as we spend analyzing the game on the field, there is now probably even more to be gained by studying the business off of it.
(Data courtesy of Rod Fort’s indispensable online database)
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