How Do You Even Go About Valuing a Top Executive, Anyway?

Social Navigation

How Do You Even Go About Valuing a Top Executive, Anyway?

Analysis and Commentary

theo epstein press conferenceThe Chicago Cubs and President of Baseball Operations Theo Epstein came to terms on a five-year extension, just in time for the playoffs. What followed went pretty well.

Along with Jason McLeod and Jed Hoyer, each of the Cubs’ big three front office executives could now potentially stick together through the 2021 season, and the trio has already banked one championship. Very good news.

Of course, as expected, that very good news came with a very big price tag. According to most sources, Epstein’s deal with the Cubs is worth something in the $50 million range (plus some additional incentive-based pay), which, over five years, gives him something close to a $10 million/year salary (making him the highest paid executive in MLB). While rewarding Epstein for what he’s put together and properly incentivizing him to stay in Chicago were paramount in these contract negotiations, it isn’t unfair to ask, without judgment … is that too much?

Or rather, the way Russell A. Carleton recently put it: How Much is Theo Epstein Worth?

Indeed, after the Cubs made him the highest paid executive in baseball, Epstein’s value makes for a fair conversation. After all, with $10 million in extra salary, the Cubs could theoretically sign a player worth a bit over one win per year (assuming something in the $8 million/WAR). Is Epstein really worth more than a win per season, relative to whatever replacement-level executive is out there?

My gut says definitely, but it’s not quite as easily measurable.

Either way, Carleton attempts to answer that question (with an admittedly large information gap, but in deep and analytical detail) at Baseball Prospectus.

I don’t want to spoil too much of the article, because you should really just go and read it, but I’ll tell you that Carleton takes a general look at Epstein’s actions in free agency, trade, the draft, his moves at the margins, and his ability to get ahead of the curve. But when pressed on whether the combination of his actions (that are usually a collection of many other hard-working front office executive’s decisions and revelations) are really worth that much money, Carleton produces (what I suspect to be) a very insightful conclusion: “There has to be one person who can aggregate all of that knowledge and those little advantages and turn it into a coherent actionable whole.”  Epstein, for the Cubs, is clearly that one person.

But what do you think? Is Epstein worth as much as a $10 million pitcher out there? Is that even the right way to think about executive compensation?


Author: Michael Cerami

Michael Cerami is a Writer at Bleacher Nation, and you can find him on Twitter at @Michael_Cerami.