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Epstein Trade


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#101 Minneapolis Millers

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Posted 18 October 2011 - 05:02 PM

Okay, let's again stipulate that the Red Sox should be compensated and that this is a lateral move.

Let's throw aside all the silly issues of leverage and who has to do what. Let's just look at marginal cost and marginal value.

Theo Epstein is the candidate at hand. There are other candidates who could be had for less. They are young, saber-savvy, ambitious, and come with no strings attached. We'll personify them as Candidate B. We'll use dollars as a handy currency for cost and value (we could just as easily use wins or something).

The Cubs are already willing to pay Epstein $18.5 million over five years (including assuming the conclusion bonus with Boston). Candidate B would likely cost, at most, $5 million for five years.

So the marginal cost of Theo Epstein is now $13.5 million to the Cubs.

What is the marginal value of a prospect like McNutt? He's very close to MLB ready, maybe even by the end of 2012. At this point, I'd say a 50% chance of becoming an MLB contributor is reasonable and probably even pessimistic (how much of a contributor is still to be seen, of course).

For the first three years of his career, the Cubs will be able to pay McNutt less than $1.5 million in total. Let's say he averages even 1.5 WAR during those three seasons (a below-average pitcher). 4.5 WAR will generally cost you around $20 million on the open market. So his marginal value to the Cubs at that point is $18.5 million. For the sake of simplicity, let's just take that number and assume that the chances he flames out and becomes an above-average pitcher roughly cancel out. We won't even consider his arbitration years, either. All in all, I'd say we are undervaluing him, but that's fine.

So by giving up McNutt, you are now asking the Cubs to value Epstein at $31.5 million over Candidate B.

Do you consider that a reasonable value? It's not even close. If Epstein's contract were up this year, would you want to see the Red Sox pay $31.5 million to him over 5 years to keep him instead of settling for Cherington?

If the cost is McNutt or more, then Epstein simply no longer makes sense for the Cubs and they'll have to move on.


Unfortunately, I have to run to parent-teacher conferences, or I'd provide a more detailed response. I'll just throw out these basic thoughts. First, Epstein has a track record few can match. How many current GMs have 2 WS titles on their resume? How many had to go through the $200M Yankees to get there? You can hope and pray that Candidate B ends up good, but even some of Theo's proteges, as well as other saber-minded youg guns, have had their struggles. You wan to relive the hendry years? You good with the Cubds previous 8 decades of performance. Go get Candidate B. I'm not saying that Theo is the only one who can save Chicago, but you are underselling him and the Cubs' desire to get him.

And as for Theo's value... He had help, to be sure, but he had some remarkable success finding guys like Pedroia, Ellsbury, Bard et al in the draft. How much is that player acquisition skill worth? A lot more than McNutt.

#102 Cellar-Door


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Posted 18 October 2011 - 05:10 PM

Okay, let's again stipulate that the Red Sox should be compensated and that this is a lateral move.

Let's throw aside all the silly issues of leverage and who has to do what. Let's just look at marginal cost and marginal value.

Theo Epstein is the candidate at hand. There are other candidates who could be had for less. They are young, saber-savvy, ambitious, and come with no strings attached. We'll personify them as Candidate B. We'll use dollars as a handy currency for cost and value (we could just as easily use wins or something).

The Cubs are already willing to pay Epstein $18.5 million over five years (including assuming the conclusion bonus with Boston). Candidate B would likely cost, at most, $5 million for five years.

So the marginal cost of Theo Epstein is now $13.5 million to the Cubs.

What is the marginal value of a prospect like McNutt? He's very close to MLB ready, maybe even by the end of 2012. At this point, I'd say a 50% chance of becoming an MLB contributor is reasonable and probably even pessimistic (how much of a contributor is still to be seen, of course).

For the first three years of his career, the Cubs will be able to pay McNutt less than $1.5 million in total. Let's say he averages even 1.5 WAR during those three seasons (a below-average pitcher). 4.5 WAR will generally cost you around $20 million on the open market. So his marginal value to the Cubs at that point is $18.5 million. For the sake of simplicity, let's just take that number and assume that the chances he flames out and becomes an above-average pitcher roughly cancel out. We won't even consider his arbitration years, either. All in all, I'd say we are undervaluing him, but that's fine.

So by giving up McNutt, you are now asking the Cubs to value Epstein at $31.5 million over Candidate B.

Do you consider that a reasonable value? It's not even close. If Epstein's contract were up this year, would you want to see the Red Sox pay $31.5 million to him over 5 years to keep him instead of settling for Cherington?

If the cost is McNutt or more, then Epstein simply no longer makes sense for the Cubs and they'll have to move on.

It comes down to how much more likely does Ricketts think Theo is to bring a World Series than option B. A world series is worth what to the Cubs on a purely financial, level You would assume it is comfortably in the 9 figures over the next 5-10 years after the win. Add in the initial increases in suite sales, merchandising, advertising etc, fom the big name signing. So the question becomes, how do you evaluate the chance of Epstein who has done it before making your team into a World Series winner vs. An unknown quantity like Rick Hahn. Then assessing how much Trey McNutt increases your chances, (I'd bet that number is very very low). World Series titles are worth a lot of money to a team, probably even more so the Cubs because of fan base, historical context etc. Epstein has proven he can be a championship caliber GM, Hahn has higher risk, is he the next Epstein or the next DePodesta? So if you think there is a substantially higher chance Epstein can build your organization into a championship caliber team, then he becomes of extremely high value to you. Far more than a decent prospect.

#103 KyleTheCubsFan

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Posted 18 October 2011 - 05:14 PM

Unfortunately, I have to run to parent-teacher conferences, or I'd provide a more detailed response. I'll just throw out these basic thoughts. First, Epstein has a track record few can match. How many current GMs have 2 WS titles on their resume? How many had to go through the $200M Yankees to get there? You can hope and pray that Candidate B ends up good, but even some of Theo's proteges, as well as other saber-minded youg guns, have had their struggles. You wan to relive the hendry years? You good with the Cubds previous 8 decades of performance. Go get Candidate B. I'm not saying that Theo is the only one who can save Chicago, but you are underselling him and the Cubs' desire to get him.

And as for Theo's value... He had help, to be sure, but he had some remarkable success finding guys like Pedroia, Ellsbury, Bard et al in the draft. How much is that player acquisition skill worth? A lot more than McNutt.


I don't care about his WS titles. Andy MacPhail came here with 2 WS rings on his fingers. I'm a lot more impressed with Epstein's consistent run of excellent regular seasons.

If the only choices were Hendry or Epstein, I'd buy McNutt's ticket to Pawtucket myself. Fortunately, they aren't the only choices.

Edited by KyleTheCubsFan, 18 October 2011 - 05:14 PM.


#104 ivanvamp


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Posted 18 October 2011 - 05:54 PM

I don't care about his WS titles. Andy MacPhail came here with 2 WS rings on his fingers. I'm a lot more impressed with Epstein's consistent run of excellent regular seasons.

If the only choices were Hendry or Epstein, I'd buy McNutt's ticket to Pawtucket myself. Fortunately, they aren't the only choices.


For *YOU* there are plenty of other choices. But the Cubs have made it quite clear that Theo - and Theo alone - is their guy. It would be a bitter, bitter, bitter pill for them to swallow to have to go elsewhere.

Of course, you know this and are just trying to make it sound like they'd be just as fine with a different, young, sabermetrically-minded GM. They wouldn't, or else they'd have gone after them already.

In the end they may indeed have to look elsewhere, but if they let McNutt (4.55 era, 1.67 whip, 6.2 k/9 in AA in 2011) be the reason that they lose Theo, they're going to be kicking themselves pretty hard.

#105 KyleTheCubsFan

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Posted 18 October 2011 - 06:02 PM

For *YOU* there are plenty of other choices. But the Cubs have made it quite clear that Theo - and Theo alone - is their guy. It would be a bitter, bitter, bitter pill for them to swallow to have to go elsewhere.


Evidence, please. You have none, because you made that entire scenario up in your head.

The Cubs apparently conducted an entire GM search fairly stealthily in the weeks after the season ended. That report came out rather quietly in all the hubbub. We know that at some point, they offered Epstein a rather large contract. We have no idea who else they may have offered the job to, or who else they considered an acceptable candidate.

Of course, you know this and are just trying to make it sound like they'd be just as fine with a different, young, sabermetrically-minded GM. They wouldn't, or else they'd have gone after them already.


They were willing to pay about $13 million extra over five years to get Epstein. How much further do you expect them to go? A top-50 prospect in all of baseball before last season?

Again I'll ask: If Epstein were to fill out his duties next year, how much would you be willing to pay for a 5-year extension, knowing that Cherington is your next option?

#106 Tyrone Biggums


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Posted 18 October 2011 - 06:41 PM

Okay, let's again stipulate that the Red Sox should be compensated and that this is a lateral move.

Let's throw aside all the silly issues of leverage and who has to do what. Let's just look at marginal cost and marginal value.

Theo Epstein is the candidate at hand. There are other candidates who could be had for less. They are young, saber-savvy, ambitious, and come with no strings attached. We'll personify them as Candidate B. We'll use dollars as a handy currency for cost and value (we could just as easily use wins or something).

The Cubs are already willing to pay Epstein $18.5 million over five years (including assuming the conclusion bonus with Boston). Candidate B would likely cost, at most, $5 million for five years.

So the marginal cost of Theo Epstein is now $13.5 million to the Cubs.

What is the marginal value of a prospect like McNutt? He's very close to MLB ready, maybe even by the end of 2012. At this point, I'd say a 50% chance of becoming an MLB contributor is reasonable and probably even pessimistic (how much of a contributor is still to be seen, of course).

For the first three years of his career, the Cubs will be able to pay McNutt less than $1.5 million in total. Let's say he averages even 1.5 WAR during those three seasons (a below-average pitcher). 4.5 WAR will generally cost you around $20 million on the open market. So his marginal value to the Cubs at that point is $18.5 million. For the sake of simplicity, let's just take that number and assume that the chances he flames out and becomes an above-average pitcher roughly cancel out. We won't even consider his arbitration years, either. All in all, I'd say we are undervaluing him, but that's fine.

So by giving up McNutt, you are now asking the Cubs to value Epstein at $31.5 million over Candidate B.

Do you consider that a reasonable value? It's not even close. If Epstein's contract were up this year, would you want to see the Red Sox pay $31.5 million to him over 5 years to keep him instead of settling for Cherington?

If the cost is McNutt or more, then Epstein simply no longer makes sense for the Cubs and they'll have to move on.


I think that you're undervaluing what Epstein brings to the table here, which is fine but what if McNutt flames out? Then you walk from Theo because of a prospect that had a ceiling, but never reached it. If it was only McNutt the Sox were asking for then this would be done already, plus I've read that some people believe hes better off as a reliever due to the fact, his secondary offerings are lacking. Its a sure thing for a lottery ticket, again its not like we're talking about Matt Moore or Minor or Teharan here.

#107 Tyrone Biggums


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Posted 18 October 2011 - 06:50 PM

I don't care about his WS titles. Andy MacPhail came here with 2 WS rings on his fingers. I'm a lot more impressed with Epstein's consistent run of excellent regular seasons.

If the only choices were Hendry or Epstein, I'd buy McNutt's ticket to Pawtucket myself. Fortunately, they aren't the only choices.


The excellent regular seasons are a good way to evaluate the success, and few have done it better, when you get in the playoffs its usually a crap shoot anyways.

However, I don't think you see the big picture here...yes of course the Cubs could get a good young up and coming GM, but how many of those flame out? Who says Rick Hahn (whom I think is semi overrated compared to a guy like Thad Levine in Texas) can do the same job as Theo and build the baseball operations department from the ground up? Do you give him control of the whole department as his first job? This is only half of the job, as the other half is the PR aspect of it, a rookie GM is more likely to wilt under the pressure of a rabid fan base than someone who has worked in a major market before. Look at Epstein's track record in regards to trades, aside from Gagne and Suppan what deadline deals came back to bite him? I will also say that the Suppan deal was in his first year as well.

Just my opinion that you will probably disagree with, then I'll come back with the fact that The Cubs knew what they were getting into when they asked for compensation regarding Epstein, so they shouldn't be shocked that the Sox are asking for prospects over cash. Then you'll say something like well 6.5 million is more than fair, then someone else will chime in and say that the Sox owners have blown more than that on the SS position in the past 9 years. Sound about right?

#108 Tyrone Biggums


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Posted 18 October 2011 - 06:55 PM

Evidence, please. You have none, because you made that entire scenario up in your head.

The Cubs apparently conducted an entire GM search fairly stealthily in the weeks after the season ended. That report came out rather quietly in all the hubbub. We know that at some point, they offered Epstein a rather large contract. We have no idea who else they may have offered the job to, or who else they considered an acceptable candidate.



They were willing to pay about $13 million extra over five years to get Epstein. How much further do you expect them to go? A top-50 prospect in all of baseball before last season?

Again I'll ask: If Epstein were to fill out his duties next year, how much would you be willing to pay for a 5-year extension, knowing that Cherington is your next option?


Fortunately for us Cherington would be denied the chance to interview...and I know what Henry said on the interview with the Sports Hub about not getting in the way of a promotion however, in this situation there is no chance of this happening due to whats going on.

How much would the Sox be willing to pay? Well lets see, since the market has been set by the Cubs I would imagine that they would meet that price. I'm tired of people mentioning the 6.5 million and making it seem like we're a destitute organization and "The Sox need the money"...if money was the driving factor it would have been agreed to ahead of time, instead of prospects

#109 Cellar-Door


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Posted 18 October 2011 - 07:00 PM

Evidence, please. You have none, because you made that entire scenario up in your head.

The Cubs apparently conducted an entire GM search fairly stealthily in the weeks after the season ended. That report came out rather quietly in all the hubbub. We know that at some point, they offered Epstein a rather large contract. We have no idea who else they may have offered the job to, or who else they considered an acceptable candidate.



They were willing to pay about $13 million extra over five years to get Epstein. How much further do you expect them to go? A top-50 prospect in all of baseball before last season?

Again I'll ask: If Epstein were to fill out his duties next year, how much would you be willing to pay for a 5-year extension, knowing that Cherington is your next option?

Two Things: One while McNutt may have been 48 last year he won't be now, if baseball America redid the list right now I doubt he makes to top 100.
Two: While it may be true the Cubs looked at other candidates, they decided Epstein was worth enough more that they asked for permission to offer him a deal knowing he would cost a certain level of compensation. Additionally you are undervaluing the appeal of a proven commodity vs an unknown. Sure Hahn or Byrnes could be just as good as Theo, but it is certainly not a given, and as such the Red Sox are asking to be compensated for that. In player terms it would be like this, Epstein is David Wright, a proven top commodity coming off a subpar year, Hahn is like Vitters, has shown real skill in some of the necessary tools, but never really done the job. Byrnes is like Ian Stewart, once a hot prospect, but didn't succeed when given the shot. That is the fundamental flaw with the idea that there are lots of potentially great GMs out there as espoused by Cameron at fangraphs. It assumes that all smart guys who understand Sabermetrics, or have done the assistant GM job can make successful GM's, and there is plenty of evidence to the contrary. A bad GM sets a team back years, and it is a risk, sure Theo might not work out, but he has been one of the more successful executives in baseball for nearly a decade, and that certainly gives you a substantial advantage in assessing his future potential in comparison to other options.

Edited to add: There is no guarantee 1 that other options would take the job, or 2 they would even be allowed to interview. Dan Jennings in Florida has been requested 4 times over the last few years and each time the Marlins refused to allow permission to speak with him. So while many teams do allow their people to look at other jobs, especially promotions, it isn't guaranteed.

Edited by Cellar-Door, 18 October 2011 - 07:31 PM.


#110 ivanvamp


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Posted 18 October 2011 - 07:21 PM

Evidence, please. You have none, because you made that entire scenario up in your head.


Right. I made up the entire scenario that the Cubs are really, really gunning for Theo....all a made-up pipe dream. I mean, after their extensive search they decided to offer Epstein - a man already under contract for another year - one of the most lucrative GM contracts in the sport. And even when the Sox have issued their demands (considered by some - you included - to be outrageous) for compensation, they haven't simply walked away. From the accounts in the papers, the Cubs wanted this wrapped up by the World Series. It isn't going to happen now. And yet they still are working towards getting Epstein.

Why do all that unless Epstein is far and away their #1 choice? If they have, as you imply, such a nice list of young, sabermetrically-minded GMs who would all cost less in salary, and who certainly would cost less in terms of compensation to another team (in some cases, it would be zero such compensation), why not simply go that route? Occam's Razor tells us to seek the simplest answer, and the simplest answer is that they REALLY want Theo. And if they REALLY want Theo, then to not get him would be a bitter pill to swallow.

Now I made some inferences from the reported facts. But all the inferences make complete sense. Clearly, I did not make that entire scenario up in my head.

Again I'll ask: If Epstein were to fill out his duties next year, how much would you be willing to pay for a 5-year extension, knowing that Cherington is your next option?


For the Red Sox? I have no idea what they'd be willing to pay him. I am of the opinion that they think highly of Cherington and are quite willing to part with Epstein, so they probably wouldn't offer him much. But they also have a very, very valuable asset still under their control for another year, and they know they'd be fools to just let it go for a few million dollars, especially when a mere manager (less important to the overall organization than a GM) just recently netted another team two pretty good prospects.

#111 mcpickl

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Posted 18 October 2011 - 07:26 PM

If the Red Sox really want to keep Epstein and/or hold him hostage for a year, then the Cubs can and will move on to the next choice. When this process began, I personally had Epstein fourth or fifth on my list of about half-a-dozen guys in an "awesome" pile that included several guys at the sub-GM levels. And since Ricketts has done a lot more due diligence than I have on GM candidates, he can probably find a few more. Before Theo Epstein was Theo Epstein, Curse Breaker, he was a young, hungry, saber-savvy GM. The Red Sox are about to hand their organization over to a yougn, hungry, saber-savvy GM and don't expect to miss a beat without Epstein. The Cubs can and should do the same.



Please stop saying things like this. You've made some good points in this thread but, no offense, where you had Epstein ranked is meaningless.

Ricketts clearly has him #1. His #1 choice wants to come, and he's already agreed to a deal with him. This is his first major move, and an extremely important one for the future of the Cubs franchise.

It's much tougher to walk away from Epstein in this scenario than, oh well I'll just hire another guy further down my list.

#112 nighthob

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Posted 18 October 2011 - 07:55 PM

...the marginal cost of Theo Epstein is now $13.5 million to the Cubs.

What is the marginal value of a prospect like McNutt? He's very close to MLB ready, maybe even by the end of 2012. At this point, I'd say a 50% chance of becoming an MLB contributor is reasonable and probably even pessimistic (how much of a contributor is still to be seen, of course).

For the first three years of his career, the Cubs will be able to pay McNutt less than $1.5 million in total. Let's say he averages even 1.5 WAR during those three seasons (a below-average pitcher). 4.5 WAR will generally cost you around $20 million on the open market. So his marginal value to the Cubs at that point is $18.5 million. For the sake of simplicity, let's just take that number and assume that the chances he flames out and becomes an above-average pitcher roughly cancel out. We won't even consider his arbitration years, either. All in all, I'd say we are undervaluing him, but that's fine.

So by giving up McNutt, you are now asking the Cubs to value Epstein at $31.5 million over Candidate B.

Do you consider that a reasonable value? It's not even close. If Epstein's contract were up this year, would you want to see the Red Sox pay $31.5 million to him over 5 years to keep him instead of settling for Cherington?

If the cost is McNutt or more, then Epstein simply no longer makes sense for the Cubs and they'll have to move on.


What's the marginal value of a wasted season with no organisational leadership? Unless the Red Sox immediately sign Epstein to a long term extension, you're not going to find a single executive that thinks he has a future in baseball to, in essence, gamble his entire career for a cup of coffee running a team whose minor league system is collectively known as nuclear winter. Because ultimately that's all anyone gets with Epstein looming on the horizon. So, again, what's the marginal value of the oranisation floating rudderless for another season?

Edited by nighthob, 18 October 2011 - 07:57 PM.


#113 walkoffblast

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Posted 18 October 2011 - 08:20 PM

They went into this with the assumption that the Red Sox would comply with MLB protocol and not stand in the way of an executive getting a better title, a higher spot on an organizational chart and more money (in layman's terms, a promotion).


Kind of like how they followed protoccol when they first were trying to lure him away ... oh wait.

Now that they find out that's not the case, then the only thing they can do is wait and see if the Red Sox are really that foolish or if they are bluffing. If they are, and you have to walk away to your next choice, so be it. The difference between Epstein and a young, hungry, saber-savvy GM is not that significant (as evidenced by Red Sox fans who have no probem with Cherington taking over).


I find it amusing that you cling to this ridiculous idea that the Cubs have any intention of walking away. If they were going to they would have done so long ago.

The Cubs are already willing to pay Epstein $18.5 million over five years (including assuming the conclusion bonus with Boston). Candidate B would likely cost, at most, $5 million for five years.

So the marginal cost of Theo Epstein is now $13.5 million to the Cubs.


Ok who do you think they should give up? Garza isn't likely to exceed 13.5 mil in surplus value next year. That might not be entirely fair though since it isn't spread over 5 years, so who do you suggest?

#114 Tyrone Biggums


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Posted 18 October 2011 - 08:27 PM

Kind of like how they followed protoccol when they first were trying to lure him away ... oh wait.



I find it amusing that you cling to this ridiculous idea that the Cubs have any intention of walking away. If they were going to they would have done so long ago.



Ok who do you think they should give up? Garza isn't likely to exceed 13.5 mil in surplus value next year. That might not be entirely fair though since it isn't spread over 5 years, so who do you suggest?


If you have read this thread, Kyle believes a mop up man and money...his opinion but the Cubs probably knew it was going to cost more than that when permission was granted...so this point is moot

#115 KyleTheCubsFan

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Posted 18 October 2011 - 08:38 PM

I think that you're undervaluing what Epstein brings to the table here, which is fine but what if McNutt flames out? Then you walk from Theo because of a prospect that had a ceiling, but never reached it. If it was only McNutt the Sox were asking for then this would be done already, plus I've read that some people believe hes better off as a reliever due to the fact, his secondary offerings are lacking. Its a sure thing for a lottery ticket, again its not like we're talking about Matt Moore or Minor or Teharan here.


What if McNutt flames out? What if McNutt becomes an above-average starter? What if he becomes an ace? What if Epstein comes here, can't reproduce his farm system success and can't build a pitching staff with free agents? What if Epstein comes here and wins five World Series?

All we can do is project the various likelihoods and assign values to them at this point.

#116 ivanvamp


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Posted 18 October 2011 - 08:39 PM

If you have read this thread, Kyle believes a mop up man and money...his opinion but the Cubs probably knew it was going to cost more than that when permission was granted...so this point is moot


Kyle also believes the Cubs must have a list of a bunch of people they'd happily take as an alternative to Theo. I mean, Kyle had Theo something like 6th on his list, so surely the Cubs must be satisfied with all the other options out there.............

#117 Tyrone Biggums


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Posted 18 October 2011 - 08:43 PM

What if McNutt flames out? What if McNutt becomes an above-average starter? What if he becomes an ace? What if Epstein comes here, can't reproduce his farm system success and can't build a pitching staff with free agents? What if Epstein comes here and wins five World Series?

All we can do is project the various likelihoods and assign values to them at this point.


This is why the Cubs don't pass up a sure thing, if they were just asking for McNutt then you would have had your press conference today. The Sox are holding out for something else...and its not more money.

#118 plucy

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Posted 18 October 2011 - 08:45 PM

The crowd grows restless...

http://www.suntimes....elebrities.html

http://www.chicagotr...,6176252.column

#119 nighthob

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Posted 18 October 2011 - 08:51 PM

What if McNutt flames out? What if McNutt becomes an above-average starter? What if he becomes an ace? What if Epstein comes here, can't reproduce his farm system success and can't build a pitching staff with free agents? What if Epstein comes here and wins five World Series?


McNutt is a lottery ticket. He has no plus secondary pitches. He could well turn into a solid major league starter. Or he could turn out to be Michael Bowden. In baseball the idea is to turn lottery tickets into established talent, not hoard them. If the result of the Cubs' hoarding of lottery tickets is another year of floating adrift, what's the likelihood that they can hang on to the only payer on their roster worth a damn at this point? Because it will take the remainder of his cost controlled years for them to turn that boat around the way this is going.

#120 KyleTheCubsFan

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Posted 18 October 2011 - 08:55 PM

I find it amusing that you cling to this ridiculous idea that the Cubs have any intention of walking away. If they were going to they would have done so long ago.


Why would they have walked away already? They have no need to, yet, and I doubt it will ever come to that.


Ok who do you think they should give up? Garza isn't likely to exceed 13.5 mil in surplus value next year. That might not be entirely fair though since it isn't spread over 5 years, so who do you suggest?


You misunderstand. The Cubs are expending $13.5 million in marginal cost on Epstein just with his contract and taking over his conclusion bonus from the Sox. I'm not saying they should give $13.5 million in additional value to the Sox as well.

Pretend this never happened. Pretend that at the end of the 2012 season, you have to negotiate with Theo Epstein to be the GM of the Boston Red Sox.

How much would you pay for 5 years of Theo Epstein, knowing that your other option is a guy like Cherington?

When you've answered that, and subtracted what Cherington would make, you've declared your opinion of the marginal value of five years of Theo Epstein.

Take that value, subtract the $13.5 million the Cubs are paying him beyond what a generic GM would cost, and that's how much value it makes sense for the Cubs to give up for him.

If you think Theo Epstein would be worth $5 million a year for 5 years, then the Cubs can give the Red Sox to $11.5 million in additional marginal value before Epstein becomes a losing proposition. If you think Epstein is worth $4 million a year for 5 years, then the Cubs can give the Red Sox $6.5 million in marginal value before it becomes a losing proposition. Whatever number you come up with, if the Red Sox won't accept less than that, then there's no deal to be made. If they will accept less than that, then there is a deal to be made.

Take Matt Garza. Garza is under team control for the next two seasons. He has averaged a smidge over 3.2 WAR the last three seasons, with last season being his best. So let's project him for 6.5 WAR the next two seasons. A WAR right now is roughly $4.5 million on the open market. So that means Matt Garza's raw value would be projected at $29.25 million. He's got two years of arbitration coming up, so let's say that he makes $15 million between those two seasons. That leaves $14.25 million in excess value. At the end of those 6 years, he'd be a Type I free agent. The Hardball Times had an interesting article trying to define the value of the draft picks that come with compensation, and they came up with about $6.5 million for a tier I FA. So add that in, and the total marginal value of Matt Garza to the Cubs is $20.75 million.

So in order to believe that the Cubs should give up Matt Garza (and I'm not saying anyone said that), you'd have to believe that the market value of five years of Theo Epstein is ($20.75 million) plus (13.5 million), or $34.25 million. In other words, you'd want to see the Red Sox give him nearly a $7 million/year deal.

#121 KyleTheCubsFan

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Posted 18 October 2011 - 09:02 PM

However, I don't think you see the big picture here...yes of course the Cubs could get a good young up and coming GM, but how many of those flame out? Who says Rick Hahn (whom I think is semi overrated compared to a guy like Thad Levine in Texas) can do the same job as Theo and build the baseball operations department from the ground up? Do you give him control of the whole department as his first job? This is only half of the job, as the other half is the PR aspect of it, a rookie GM is more likely to wilt under the pressure of a rabid fan base than someone who has worked in a major market before. Look at Epstein's track record in regards to trades, aside from Gagne and Suppan what deadline deals came back to bite him? I will also say that the Suppan deal was in his first year as well.


The fact that Epstein did it with the Red Sox is no proof that he will do it with the Cubs. He's no more of a sure thing than anyone else. His trade record is excellent, his FA record is mixed (and being trashed a bit too much lately, overemphasizing a recent bad run), his draft record is excellent.

If you could absolutely promise me that he would replicate that success, then of course he'd be worth a lot more. But it doesn't work that way. Successful executives don't automatically repeat their success in new digs.

Just my opinion that you will probably disagree with, then I'll come back with the fact that The Cubs knew what they were getting into when they asked for compensation regarding Epstein, so they shouldn't be shocked that the Sox are asking for prospects over cash. Then you'll say something like well 6.5 million is more than fair, then someone else will chime in and say that the Sox owners have blown more than that on the SS position in the past 9 years. Sound about right?


I don't care about who is "shocked" or what is "fair." There is a level of compensation beyond which the deal no longer makes sense for the Cubs. If that level is less than the Sox are willing to take, then there's no deal to be had here. If the Red Sox are willing to accept compensation at or below that level, then they will make a deal. My bet is still on the latter.

Edited by KyleTheCubsFan, 18 October 2011 - 09:04 PM.


#122 Cellar-Door


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Posted 18 October 2011 - 09:08 PM

Why would they have walked away already? They have no need to, yet, and I doubt it will ever come to that.




You misunderstand. The Cubs are expending $13.5 million in marginal cost on Epstein just with his contract and taking over his conclusion bonus from the Sox. I'm not saying they should give $13.5 million in additional value to the Sox as well.

Pretend this never happened. Pretend that at the end of the 2012 season, you have to negotiate with Theo Epstein to be the GM of the Boston Red Sox.

How much would you pay for 5 years of Theo Epstein, knowing that your other option is a guy like Cherington?

When you've answered that, and subtracted what Cherington would make, you've declared your opinion of the marginal value of five years of Theo Epstein.

Take that value, subtract the $13.5 million the Cubs are paying him beyond what a generic GM would cost, and that's how much value it makes sense for the Cubs to give up for him.

If you think Theo Epstein would be worth $5 million a year for 5 years, then the Cubs can give the Red Sox to $11.5 million in additional marginal value before Epstein becomes a losing proposition. If you think Epstein is worth $4 million a year for 5 years, then the Cubs can give the Red Sox $6.5 million in marginal value before it becomes a losing proposition. Whatever number you come up with, if the Red Sox won't accept less than that, then there's no deal to be made. If they will accept less than that, then there is a deal to be made.

Take Matt Garza. Garza is under team control for the next two seasons. He has averaged a smidge over 3.2 WAR the last three seasons, with last season being his best. So let's project him for 6.5 WAR the next two seasons. A WAR right now is roughly $4.5 million on the open market. So that means Matt Garza's raw value would be projected at $29.25 million. He's got two years of arbitration coming up, so let's say that he makes $15 million between those two seasons. That leaves $14.25 million in excess value. At the end of those 6 years, he'd be a Type I free agent. The Hardball Times had an interesting article trying to define the value of the draft picks that come with compensation, and they came up with about $6.5 million for a tier I FA. So add that in, and the total marginal value of Matt Garza to the Cubs is $20.75 million.

So in order to believe that the Cubs should give up Matt Garza (and I'm not saying anyone said that), you'd have to believe that the market value of five years of Theo Epstein is ($20.75 million) plus (13.5 million), or $34.25 million. In other words, you'd want to see the Red Sox give him nearly a $7 million/year deal.

Except the value of a GM isn't his salary minus the salary of a replacement, it is the amount of money he stands to make the team less his salary minus what a replacement t stands to make the team less salary. So if Ricketts thinks Theo will bring a championship within 5 years and we value the championship, plus initial excitement, renovation of Wrigley etc at say 100 million, then Theo has made you $80M. Say Ricketts' second choice is Rick Hahn' who has no experience, and as such probably a lower chance of winning a title within 5 years, so say 50% lower so he projects at an average of $50M less his $10M in salary. That gives you an expected profit of $40M. (this is before accounting for the chances of a GM making the team lose income (probably far more likely with Hahn, but I'm keeping this simple). Now is Theo worth $40M in compensation value? No probably not, but this is how the ownership would evaluate his value, not his salary. An executive running the company is judged on the performance and profitability of the company, not just his salary.

Edited by Cellar-Door, 18 October 2011 - 09:09 PM.


#123 untilthebombs

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Posted 18 October 2011 - 09:10 PM

Why would they have walked away already? They have no need to, yet, and I doubt it will ever come to that.




You misunderstand. The Cubs are expending $13.5 million in marginal cost on Epstein just with his contract and taking over his conclusion bonus from the Sox. I'm not saying they should give $13.5 million in additional value to the Sox as well.

Pretend this never happened. Pretend that at the end of the 2012 season, you have to negotiate with Theo Epstein to be the GM of the Boston Red Sox.

How much would you pay for 5 years of Theo Epstein, knowing that your other option is a guy like Cherington?

When you've answered that, and subtracted what Cherington would make, you've declared your opinion of the marginal value of five years of Theo Epstein.

Take that value, subtract the $13.5 million the Cubs are paying him beyond what a generic GM would cost, and that's how much value it makes sense for the Cubs to give up for him.

If you think Theo Epstein would be worth $5 million a year for 5 years, then the Cubs can give the Red Sox to $11.5 million in additional marginal value before Epstein becomes a losing proposition. If you think Epstein is worth $4 million a year for 5 years, then the Cubs can give the Red Sox $6.5 million in marginal value before it becomes a losing proposition. Whatever number you come up with, if the Red Sox won't accept less than that, then there's no deal to be made. If they will accept less than that, then there is a deal to be made.

Take Matt Garza. Garza is under team control for the next two seasons. He has averaged a smidge over 3.2 WAR the last three seasons, with last season being his best. So let's project him for 6.5 WAR the next two seasons. A WAR right now is roughly $4.5 million on the open market. So that means Matt Garza's raw value would be projected at $29.25 million. He's got two years of arbitration coming up, so let's say that he makes $15 million between those two seasons. That leaves $14.25 million in excess value. At the end of those 6 years, he'd be a Type I free agent. The Hardball Times had an interesting article trying to define the value of the draft picks that come with compensation, and they came up with about $6.5 million for a tier I FA. So add that in, and the total marginal value of Matt Garza to the Cubs is $20.75 million.

So in order to believe that the Cubs should give up Matt Garza (and I'm not saying anyone said that), you'd have to believe that the market value of five years of Theo Epstein is ($20.75 million) plus (13.5 million), or $34.25 million. In other words, you'd want to see the Red Sox give him nearly a $7 million/year deal.


The value of Epstein to the Red Sox organization, one where he established and nurture a forward thinking FO environment/culture of which few teams rival, as well as a slew of propriety player evaluator models, is not as great as it is to a Cubs' organization that lags a decade behind the industry's best. The Red Sox feel comfortable enough to let Epstein walk (with compensation) because they believe that their culture allows for the development of in house candidates, removing no one individual will disrupt their success. Thus the "marginal value" of Epstein to the Cubs is significantly greater than it is to the Red Sox.

#124 KyleTheCubsFan

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Posted 18 October 2011 - 09:11 PM

Except the value of a GM isn't his salary minus the salary of a replacement, it is the amount of money he stands to make the team less his salary minus what a replacement t stands to make the team less salary. So if Ricketts thinks Theo will bring a championship within 5 years and we value the championship, plus initial excitement, renovation of Wrigley etc at say 100 million, then Theo has made you $80M. Say Ricketts' second choice is Rick Hahn' who has no experience, and as such probably a lower chance of winning a title within 5 years, so say 50% lower so he projects at an average of $50M less his $10M in salary. That gives you an expected profit of $40M. (this is before accounting for the chances of a GM making the team lose income (probably far more likely with Hahn, but I'm keeping this simple). Now is Theo worth $40M in compensation value? No probably not, but this is how the ownership would evaluate his value, not his salary. An executive running the company is judged on the performance and profitability of the company, not just his salary.


So if you believe that to be true, would you like to see the Red Sox offer Epstein a 5 year/$40 million extension?

#125 Tyrone Biggums


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Posted 18 October 2011 - 09:12 PM

Why would they have walked away already? They have no need to, yet, and I doubt it will ever come to that.




You misunderstand. The Cubs are expending $13.5 million in marginal cost on Epstein just with his contract and taking over his conclusion bonus from the Sox. I'm not saying they should give $13.5 million in additional value to the Sox as well.

Pretend this never happened. Pretend that at the end of the 2012 season, you have to negotiate with Theo Epstein to be the GM of the Boston Red Sox.

How much would you pay for 5 years of Theo Epstein, knowing that your other option is a guy like Cherington?

When you've answered that, and subtracted what Cherington would make, you've declared your opinion of the marginal value of five years of Theo Epstein.

Take that value, subtract the $13.5 million the Cubs are paying him beyond what a generic GM would cost, and that's how much value it makes sense for the Cubs to give up for him.

If you think Theo Epstein would be worth $5 million a year for 5 years, then the Cubs can give the Red Sox to $11.5 million in additional marginal value before Epstein becomes a losing proposition. If you think Epstein is worth $4 million a year for 5 years, then the Cubs can give the Red Sox $6.5 million in marginal value before it becomes a losing proposition. Whatever number you come up with, if the Red Sox won't accept less than that, then there's no deal to be made. If they will accept less than that, then there is a deal to be made.

Take Matt Garza. Garza is under team control for the next two seasons. He has averaged a smidge over 3.2 WAR the last three seasons, with last season being his best. So let's project him for 6.5 WAR the next two seasons. A WAR right now is roughly $4.5 million on the open market. So that means Matt Garza's raw value would be projected at $29.25 million. He's got two years of arbitration coming up, so let's say that he makes $15 million between those two seasons. That leaves $14.25 million in excess value. At the end of those 6 years, he'd be a Type I free agent. The Hardball Times had an interesting article trying to define the value of the draft picks that come with compensation, and they came up with about $6.5 million for a tier I FA. So add that in, and the total marginal value of Matt Garza to the Cubs is $20.75 million.

So in order to believe that the Cubs should give up Matt Garza (and I'm not saying anyone said that), you'd have to believe that the market value of five years of Theo Epstein is ($20.75 million) plus (13.5 million), or $34.25 million. In other words, you'd want to see the Red Sox give him nearly a $7 million/year deal.


I get your point on Garza, but applying WAR to a player who has never pitched above AA (McNutt) and struggled may I add...is flawed. You realize that in order to evaluate Theo's 5 years as opposed to what you would get out of McNutt would have to be done on a different time frame. Example, due to his struggles last year, the chances of Theo calling up McNutt mid season is slim...unless of course the guy has a come to jesus moment and all of a sudden reaches his ceiling of a middle of the rotation starter. A middle of the rotation starter that is cost controlled is a good chip to have, absolutely...but also put in an adjustment period of the 2013 season...IF everything breaks right and you're evaluating 5 years of Theo against 3 1/2 years of McNutt. Theo can find 5 more McNutt's or use some of Ricketts cash to buy prospects from other clubs (tried this when he first came to Boston). I think its bad business to hold up a deal over someone like McNutt. Reading everything I've read on multiple forums it seems as if people are looking at him as this untouchable arm that is on the cusp of being a blue chipper. What I see is someone who has had blister issues and had a nice step backwards last season.

The argument about the Cubs doing a favor to the Sox by giving compensation is moot, because the Cubs agreed to give compensation in the form of players before being granted permission on Theo. Plus the Sox have every right to ask because like it or not, Epstein is still under contract to the Sox. If you know this before hand and still decide to negotiate a contract then the sticker shock shouldn't surprise anyone.

Edited by Tyrone Biggums, 18 October 2011 - 09:21 PM.


#126 ivanvamp


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Posted 18 October 2011 - 09:14 PM

I don't care about who is "shocked" or what is "fair."


Yes you do. You've painstakingly laid out the marginal value of Theo in order to make the case that what the Sox are asking for is not equitable.

There is a level of compensation beyond which the deal no longer makes sense for the Cubs. If that level is less than the Sox are willing to take, then there's no deal to be had here. If the Red Sox are willing to accept compensation at or below that level, then they will make a deal. My bet is still on the latter.


This is correct. There is a level of compensation beyond which the deal no longer makes sense for the Cubs. Say, for example, something insane, like the Red Sox getting Garza, Marshall, and Castro. Obviously the Cubs would say no to that.

Similarly, there is a level of compensation which is so low that it makes no sense for the Red Sox to let Theo go. Say, for example, something insane, like a single prospect ranked #20-25 in the Cubs' apparently awful system.

So something in-between those two is what will result. You are of the opinion (misguided in my view) that the Cubs have a list of guys that they'll happily take if the Sox don't get more "reasonable" in their demands. I am of the opinion (misguided in your view) that the Cubs REALLY want Theo above and beyond any other candidate, and that if they don't get him, it'll be a very bitter pill for them to swallow.

None of our arguments can change a few basic facts:

(1) Theo is *obviously* the Cubs' #1 choice, otherwise they'd have gone after someone else.
(2) Theo is still under contract with the Red Sox, and thus they have total control in this situation here. It might not make them happy to keep Theo under these circumstances, but they can do it and there's nothing the Cubs can do about it.
(3) The Red Sox can easily afford to pay Theo what the remainder of his contract calls for, even if they're not happy about doing it.

Those three facts lead me to the conclusion that the Red Sox have the leverage here and that ultimately, the package will end up closer to what the Sox want than what the Cubs want to give. And obviously they threw out Garza as a really ridiculous high-end starting point....no way they thought the Cubs would agree to that.

I don't really see how the Cubs have any leverage here.

#127 Tyrone Biggums


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Posted 18 October 2011 - 09:19 PM

So if you believe that to be true, would you like to see the Red Sox offer Epstein a 5 year/$40 million extension?


Kyle, you seem to be using the Garza thing as a crutch. The Cubs can sign Epstein to whatever contract they want...they can go out and sign him to 10 years 100 million if they want...the fact still remains that if the Sox signaled what type of compensation they were looking for ahead of time then every single argument is moot. It doesn't matter how much you want to de-value Epstein or treat McNutt as a blue chip prospect...the fact is the Cubs had an idea of what it would cost for Epstein and they still decided to go along with it. I don't care how many arguments and points you make...this is the main point in the matter...if the Cubs knew this ahead of time it doesn't matter what KyleTheCubsFan...myself or anyone feels is fair value.

#128 untilthebombs

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Posted 18 October 2011 - 09:20 PM

The Mariners got an All Star from the Rays for Lou Pinella. And we're arguing over whether or not Epstein is worth a Double A prospect who showed signs of struggling in his most recent season, in his K/rate no less. If I'm Ricketts, of course I'll try to argue the Red Sox down until whatever arbitrary deadline may exist, but with no doubt that I'll pull the trigger if the Sox don't back down.

#129 Tyrone Biggums


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Posted 18 October 2011 - 09:21 PM

The Mariners got an All Star from the Rays for Lou Pinella. And we're arguing over whether or not Epstein is worth a Double A prospect who showed signs of struggling in his most recent season, in his K/rate no less. If I'm Ricketts, of course I'll try to argue the Red Sox down until whatever arbitrary deadline may exist, but with no doubt that I'll pull the trigger if the Sox don't back down.


-This

#130 untilthebombs

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Posted 18 October 2011 - 09:24 PM

Gotta add as well that players with marginal replacement value routinely get paid what Epstein will get paid. That proportional salaries are even being argued is absurd. The Red Sox light the amount of money that they'd have to pay Epstein if not traded on fire on a yearly basis trying to have a decent pen. The money is this situation is irrelevant.

#131 PrestonBroadus Lives

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Posted 18 October 2011 - 09:25 PM

So if you believe that to be true, would you like to see the Red Sox offer Epstein a 5 year/$40 million extension?



The market wouldn't require that and you know it. Just because the cost of a GM is currently pretty low it doesn't necessarily mean that their value is equally low. In addition to that, this isn't even an open market situation. Realistically, the Red Sox would allow Theo to talk to one or two teams in the offseason before they decided enough was enough and that they had to move on with Theo in tow if no deal was reached. I wouldn't be surprised at all if Theo was able to get a few teams into a bidding war for his services if he became a free agent after 2012.

You also can stop with the $4.5 million for a win too. That's not a static number, it's just a general number used to determine the value of a player. For a team like the Red Sox or Yankees, the value of one extra win is closer to $6 or 7 million. For the Cubs, it's much, much lower. I'm not trying to be insulting when I say this, but I don't believe the Cubs will even be close to being a playoff team in 2013. Based on your projection, that's when McNutt should be ready to contribute to a major league club. His value to the Cubs that year will not be anywhere close to $4.5 million, and that's even if you assume he plays at a 1.5 WAR level (a rosy projection imo).

#132 ivanvamp


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Posted 18 October 2011 - 09:26 PM

The Mariners got an All Star from the Rays for Lou Pinella. And we're arguing over whether or not Epstein is worth a Double A prospect who showed signs of struggling in his most recent season, in his K/rate no less. If I'm Ricketts, of course I'll try to argue the Red Sox down until whatever arbitrary deadline may exist, but with no doubt that I'll pull the trigger if the Sox don't back down.


I mean, good grief, the Cubs are 100% committed to Epstein. For crying out loud, there are stories out now that they're already working to build his staff, even including Jed Hoyer, who HIMSELF is still under contract with the Padres. There is ZERO chance that Ricketts ultimately backs out of this. He's way, way too far in at this point, no matter what Kyle believes.

(but again, apparently I'm making this entire scenario up in my own head...none of this corresponds to reality at all)

#133 Tyrone Biggums


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Posted 18 October 2011 - 09:28 PM

I personally would love it if the Sox came out of the deal with Calderio and another low level guy

Or Chris Carpenter and Cashner...hey they're both middle relievers right now :)

#134 Cellar-Door


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Posted 18 October 2011 - 09:34 PM

So if you believe that to be true, would you like to see the Red Sox offer Epstein a 5 year/$40 million extension?

No, because pay scales for Executives are low compared to value to the team, while pay scales for players is high compared to their value to the team. However Ricketts clearly thinks based on his contract offer that Epstein is one of the very best at his job, and the idea of comparing players to executives based on salary is stupid. If I can pay a guy $20M over 5years and get far more monetary return off of him than a pitcher I pay $25M then he is more valuable than the pitcher not less.

Edited by Cellar-Door, 18 October 2011 - 09:34 PM.


#135 KyleTheCubsFan

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Posted 18 October 2011 - 09:42 PM

Then we'll simply have to disagree on the specific value of Epstein. I want one GM from the small pile of awesome available GMs, and I don't believe Epstein is anything special from that pile. I hope the Cubs agree with me.

#136 untilthebombs

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Posted 18 October 2011 - 09:47 PM

Then we'll simply have to disagree on the specific value of Epstein. I want one GM from the small pile of awesome available GMs, and I don't believe Epstein is anything special from that pile. I hope the Cubs agree with me.


To be fair, to which they've shown no signs.

#137 Cellar-Door


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Posted 18 October 2011 - 09:54 PM

Then we'll simply have to disagree on the specific value of Epstein. I want one GM from the small pile of awesome available GMs, and I don't believe Epstein is anything special from that pile. I hope the Cubs agree with me.

out of curiosity who is in this pile of awesome available GM's, because all I see out there is awesome GMs under contract, and guys who MIGHT be awesome GMs but mint also be failures. I can see the argument for taking the big chance, but assuming that any of the freely available guys are anywhere near as safe a bet as Epstein is not reasonable.

#138 KyleTheCubsFan

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Posted 18 October 2011 - 10:33 PM

Yes you do. You've painstakingly laid out the marginal value of Theo in order to make the case that what the Sox are asking for is not equitable.


No, I've painstakingly laid out the marginal value of Theo in order to show that I don't believe the argument that the Cubs have to pay what the Red Sox are asking, nor would it be in their best interests. Whether it's equitable for the Red Sox didn't enter into that part of the argument.

Similarly, there is a level of compensation which is so low that it makes no sense for the Red Sox to let Theo go. Say, for example, something insane, like a single prospect ranked #20-25 in the Cubs' apparently awful system.


I guess if we're stipulating that the Red Sox can use Epstein to some positive effect in 2012, then yes.

None of our arguments can change a few basic facts:

(1) Theo is *obviously* the Cubs' #1 choice, otherwise they'd have gone after someone else.


We don't know that they didn't. When the organization wants to be leak-proof, it's leak-proof. Again, see an unpopular GM being fired for a month without anyone knowing. I reject this being a "fact."

(2) Theo is still under contract with the Red Sox, and thus they have total control in this situation here. It might not make them happy to keep Theo under these circumstances, but they can do it and there's nothing the Cubs can do about it.


Correct.

(3) The Red Sox can easily afford to pay Theo what the remainder of his contract calls for, even if they're not happy about doing it.


Correct.

Those three facts lead me to the conclusion that the Red Sox have the leverage here and that ultimately, the package will end up closer to what the Sox want than what the Cubs want to give. And obviously they threw out Garza as a really ridiculous high-end starting point....no way they thought the Cubs would agree to that.

I don't really see how the Cubs have any leverage here.


If you believe that the Cubs want Epstein badly enough and the Red Sox don't care if they eat Epstein for 2012, then yes, that all makes sense.

#139 KyleTheCubsFan

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Posted 18 October 2011 - 10:34 PM

To be fair, to which they've shown no signs.


And I've seen no signs to the opposite. Unless Ricketts comes out tomorrow and declares his undying love for Theo Epstein and says he can't possibly live without him, or the Cubs agree to demands that I would consider excessive, then we'll all just have to go with our best educated guess of what the organization is thinking.

#140 KyleTheCubsFan

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Posted 18 October 2011 - 10:38 PM

out of curiosity who is in this pile of awesome available GM's, because all I see out there is awesome GMs under contract, and guys who MIGHT be awesome GMs but mint also be failures. I can see the argument for taking the big chance, but assuming that any of the freely available guys are anywhere near as safe a bet as Epstein is not reasonable.


I don't consider Epstein a particularly safe bet. He's not taking the entire scouting and development department of the Red Sox with him, and that's where his success has come from. I hope he can replicate it in a new organization that looks vastly different from the 2002 Red Sox. I think he probably can. But I also think that almost any competent GM would be able to pilot the Cubs to long-term success in their current division.

Going into the offseason, I had my "Awesome Pile" list, in order, as Friedman, Cherington, Hahn, Coppollela, Epstein, Beane. I thought there might be some value in aiming for someone who hasn't already been a GM because past success is sometimes overrated. Ricketts presumably knows baseball circles better than I do at this point, so I have faith in him to come up with further candidates in the same mold if he needed to. All in all, I believe the GM position to be a smidge overrated, and I simply was glad that Ricketts was choosing the right type of GM rather than hoping for any specific one.

Edited by KyleTheCubsFan, 18 October 2011 - 10:40 PM.


#141 ivanvamp


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Posted 19 October 2011 - 05:10 AM

No, I've painstakingly laid out the marginal value of Theo in order to show that I don't believe the argument that the Cubs have to pay what the Red Sox are asking, nor would it be in their best interests. Whether it's equitable for the Red Sox didn't enter into that part of the argument.


LOL. Ok. Because it sure looked to me like you were making every effort to argue that the compensation the Sox were (I guess) asking for wasn't equitable for the Cubs, based on the marginal value (as you calculated it) of Theo, Garza, etc. It sure looked like you were saying that Garza was worth X on the open market, and that X was more than Theo's value of Y, and because X is greater than Y, it isn't a fair trade for the Cubs, and thus it wouldn't be in their best interest to do it.

But I guess you weren't doing that. I guess you were arguing something else. My bad.


Let's think of your argument in these terms. According to (http://baseball.abou...am-Payrolls.htm), "The average salary for the 844 players on opening-day rosters and disabled lists was about $3.3 million, up 0.2 percent from 2010, according to the AP analysis on March 31, 2011." The average player.

The average Cubs player this past year made $5,228,361. Now, looking at their roster, I'm trying to find a guy who earned around $5.2 million, give or take $500k. Here's the list:

Marlon Byrd ($5.5m)
John Grabow ($4.8m)

Ok, so those two guys represent the "average" player salary for the Cubs. Here's their stat line:

Byrd - 119 g, 9 hr, 35 rbi, 96 ops+, 1.7 WAR
Grabow - 58 g, 4.76 era, 1.52 whip, 82 era+, -0.6 WAR

Thus, the Cubs were willing to pay approximately $5 million a year for guys who are essentially replacement level (Byrd a little above, Grabow a little below). You could do this with every team.

Do you really think that, over a 10 year stretch, a good GM is going to impact the franchise more than a middle reliever like Grabow? Of course he will. And yet they're "only" offering Theo, one of the most successful GMs in the game, $3.5 million a year. Less than John (82 era+, -0.6 war) Grabow.

Here's the point: you cannot equate executive salaries with player salaries. They're apples and oranges.

Edited by ivanvamp, 19 October 2011 - 06:15 AM.


#142 jdm2008

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Posted 19 October 2011 - 06:11 AM

YOu are completing misunderstanding this marginal value concept. Marginal value has nothing to do with someone's salary. Salary is determined by the going rate. If the sox had to pay 35 million for 34.5 million dollars of value in a gm they would not have a gm because they would not make any money. This argument you are making is not logical.

Why would they have walked away already? They have no need to, yet, and I doubt it will ever come to that.




You misunderstand. The Cubs are expending $13.5 million in marginal cost on Epstein just with his contract and taking over his conclusion bonus from the Sox. I'm not saying they should give $13.5 million in additional value to the Sox as well.

Pretend this never happened. Pretend that at the end of the 2012 season, you have to negotiate with Theo Epstein to be the GM of the Boston Red Sox.

How much would you pay for 5 years of Theo Epstein, knowing that your other option is a guy like Cherington?

When you've answered that, and subtracted what Cherington would make, you've declared your opinion of the marginal value of five years of Theo Epstein.

Take that value, subtract the $13.5 million the Cubs are paying him beyond what a generic GM would cost, and that's how much value it makes sense for the Cubs to give up for him.

If you think Theo Epstein would be worth $5 million a year for 5 years, then the Cubs can give the Red Sox to $11.5 million in additional marginal value before Epstein becomes a losing proposition. If you think Epstein is worth $4 million a year for 5 years, then the Cubs can give the Red Sox $6.5 million in marginal value before it becomes a losing proposition. Whatever number you come up with, if the Red Sox won't accept less than that, then there's no deal to be made. If they will accept less than that, then there is a deal to be made.

Take Matt Garza. Garza is under team control for the next two seasons. He has averaged a smidge over 3.2 WAR the last three seasons, with last season being his best. So let's project him for 6.5 WAR the next two seasons. A WAR right now is roughly $4.5 million on the open market. So that means Matt Garza's raw value would be projected at $29.25 million. He's got two years of arbitration coming up, so let's say that he makes $15 million between those two seasons. That leaves $14.25 million in excess value. At the end of those 6 years, he'd be a Type I free agent. The Hardball Times had an interesting article trying to define the value of the draft picks that come with compensation, and they came up with about $6.5 million for a tier I FA. So add that in, and the total marginal value of Matt Garza to the Cubs is $20.75 million.

So in order to believe that the Cubs should give up Matt Garza (and I'm not saying anyone said that), you'd have to believe that the market value of five years of Theo Epstein is ($20.75 million) plus (13.5 million), or $34.25 million. In other words, you'd want to see the Red Sox give him nearly a $7 million/year deal.



#143 Eisman57

  • 2 posts

Posted 19 October 2011 - 07:16 AM

Full disclosure, Cub fan here. I notice many of the recent posts are referring to Theo's value in GM terms. It is my understanding the Cubs are elevating him to 'President of Baseball Operations' reporting directly to owner Ricketts. Can anyone offer-up an example of a GM having his career blocked by a franchise enforcing the terms of an existing contract? Is Lucchino willing to step down and relinquish his title to Theo? This is looking more-and-more like a cynical and vindictive manuver designed to punish Theo ala Francona. The Cubs would be wise to hire Theo's choice for GM and leave the PoBO position open through next season. The Cubs could then hire Theo, compensate him for his patience, and hand the Red Sox a big fat bag of nothing.

Garza? Castro? ...please.



#144 KyleTheCubsFan

  • 88 posts

Posted 19 October 2011 - 07:32 AM

YOu are completing misunderstanding this marginal value concept. Marginal value has nothing to do with someone's salary. Salary is determined by the going rate. If the sox had to pay 35 million for 34.5 million dollars of value in a gm they would not have a gm because they would not make any money. This argument you are making is not logical.


His value is what he does. His cost (salary, compensation, etc.) is determined by market forces. His marginal value is the difference between his value and his cost.

#145 KyleTheCubsFan

  • 88 posts

Posted 19 October 2011 - 07:34 AM

Here's the point: you cannot equate executive salaries with player salaries. They're apples and oranges.


Well, then we are faced with two choices.

1) We can believe that executive compensation is an incredible market inefficiency that nobody at the moment is willing to exploit. We've got teams beating the bushes for every possible small edge, but nobody thought that maybe they could afford to triple executives' salaries and still come out way ahead because GMs are so incredibly underrated.

2) The market is more or less correctly pricing executives' salaries because, unlike players, they are not all that scarce relative to the openings available for them.

I believe No. 2 is correct.

Edited by KyleTheCubsFan, 19 October 2011 - 07:34 AM.


#146 ivanvamp


  • one campus at a time..


  • 4394 posts

Posted 19 October 2011 - 08:42 AM

Well, then we are faced with two choices.

1) We can believe that executive compensation is an incredible market inefficiency that nobody at the moment is willing to exploit. We've got teams beating the bushes for every possible small edge, but nobody thought that maybe they could afford to triple executives' salaries and still come out way ahead because GMs are so incredibly underrated.

2) The market is more or less correctly pricing executives' salaries because, unlike players, they are not all that scarce relative to the openings available for them.

I believe No. 2 is correct.


It's something different entirely. In the non-sports world, executives that can hire and fire employees tend to make a lot more than the employees they hire and fire. A GM hires and fires players, so he exercises the same control that a non-sports corporate executive does, and in that sense is far more responsible for the future of an organization than the players are. And yet he makes less.

It is a strange situation but I believe it has to do with this: in non-sports businesses, the workers tend to *make* the product, but in sports, the players *are* the product. It is still the executive's job to assemble the workers, and in that sense he is more valuable than the workers (players), but he doesn't make as much money.

#147 untilthebombs

  • 253 posts

Posted 19 October 2011 - 09:16 AM

Well, then we are faced with two choices.

1) We can believe that executive compensation is an incredible market inefficiency that nobody at the moment is willing to exploit. We've got teams beating the bushes for every possible small edge, but nobody thought that maybe they could afford to triple executives' salaries and still come out way ahead because GMs are so incredibly underrated.

2) The market is more or less correctly pricing executives' salaries because, unlike players, they are not all that scarce relative to the openings available for them.

I believe No. 2 is correct.


MLB isn't truly a free market and can't be treated as such.

#148 PrestonBroadus Lives

  • 206 posts

Posted 19 October 2011 - 10:07 AM

Well, then we are faced with two choices.

1) We can believe that executive compensation is an incredible market inefficiency that nobody at the moment is willing to exploit. We've got teams beating the bushes for every possible small edge, but nobody thought that maybe they could afford to triple executives' salaries and still come out way ahead because GMs are so incredibly underrated.

2) The market is more or less correctly pricing executives' salaries because, unlike players, they are not all that scarce relative to the openings available for them.

I believe No. 2 is correct.



Isn't this exactly how the Cubs lured Theo away from the Red Sox to begin with, paying him $2 mil above his current salary? Regardless, the market sets the price and the price isn't always directly tied to value. It could be correct that a price of $3.5 mil in this current market is what Theo should earn, but that doesn't mean the market itself is correct in calculating that cost for Theo given his value. You're trying to make the two points mutually exclusive, but they just aren't.

#149 KyleTheCubsFan

  • 88 posts

Posted 19 October 2011 - 10:12 AM

Isn't this exactly how the Cubs lured Theo away from the Red Sox to begin with, paying him $2 mil above his current salary? Regardless, the market sets the price and the price isn't always directly tied to value. It could be correct that a price of $3.5 mil in this current market is what Theo should earn, but that doesn't mean the market itself is correct in calculating that cost for Theo given his value. You're trying to make the two points mutually exclusive, but they just aren't.


Close.

The key concept you are missing in that post is opportunity cost. His value has to be measured against not only what it costs to get him, but the opportunity cost of getting him. His value can't be measured in a vacuum, it has to be measured against the opportunity cost. In this case, the opportunity cost of hiring Epstein is passing on a number of other competent executives.

If we stipulate for a second that the market value of a GM doesn't truly reflect his actual value, that the market is radically undervaluing executives relative to their value, then why should the Cubs be the team to pay their true value when they could (like everyone else) pay market value?

Oh right, because all of us Cubs fans will be furious if they don't. We hate seeing our team be run with efficiency and ruthlessness.

#150 stevebsfan

  • 43 posts

Posted 19 October 2011 - 10:20 AM

The one thing I'm getting from this, the Cubs owners are looking like pieces of shit.

In general, I hate when teams try and just take people who are under contract.. I felt bad for the A's fans when we tried it, and deep down relieved when Beane turned us down. However, I wasn't that annoyed because we were at least willing to compensate the A's, while the Cubs are being babies over that aspect.

Sure, just take our GM and give us a few prospects who will be lucky to ever see Pawtucket, that sounds fair! Do you want us to throw in Henry's wife as eye candy for the office? Why stop at Henry's wife? Let's throw in some players.. but not shitbums like Lackey. Let's give them Pedroia and Gonzalez. Red Sox are apparently a charity in the eyes of the Cubs, so why not, right?

I was originally going to root for Theo to turn that franchise around, but if this keeps up, I'm going to hope he fills the team full of Lackey's and Crawfords and destroys any chance they get for another 10+ years.

Screw the Cubs.