SABR

Pollis: If You Build It: Rethinking the Market for Major League Baseball Front Office Personnel

Editor's note: SABR.org is pleased to publish SABR member Lewis Pollis's senior honors thesis at Brown University, "If You Build It: Rethinking the Market for Major League Baseball Front Office Personnel." This topic formed the basis of Pollis's research presentation at the 2014 SABR Analytics Conference. (You can listen to his presentation and view his PowerPoint slides at the bottom of this page.)

By Lewis Pollis

Recent advances in research and technology have allowed teams and fans alike to quantify the values of Major League Baseball players in terms of concrete estimates of how many wins and how much money they are worth to their teams. Yet there has been no like movement to seriously study MLB teams’ front offices and quantitatively evaluate the baseball operations employees whose research, advice, and decisions shape their teams’ compositions and strategies long but whose salaries imply that their effects on their teams’ win-loss records are generally insignificant.

This paper begins by exploring and critiquing the theory behind and empirical manifestations of the labor markets for baseball operations employees and MLB players. I then test the most important assumption on which the rationality of the current non-player labor market hinges — that there is little meaningful variation in individual value among front office personnel — by using concrete transaction data and random effects modeling to estimate the variation in player-investing skill at the general manager level.

I find that a single standard deviation of player-investing ability at the GM level (including the contributions of employees working under the GM) is worth nearly eight wins a year, which would have had a market value of $53 million in the 2013 free agent market. Given that the highest-paid executive in the game is paid less than $4 million, this suggests the existence of a massive inefficiency in the market for GMs. Finally, I explain how my findings could be generalized throughout the ranks of an MLB front office and how they change the way teams should conceive of and act in the non-player labor market.

LEWIS POLLIS is a senior at Brown University, concentrating in economics (for which he wrote this thesis) and political science. He has written for several publications, including ESPN Insider, Baseball Prospectus, and Beyond the Box Score, and worked as a baseball analytics intern for the Cleveland Indians. He will begin a baseball operations internship with the Cincinnati Reds in June 2014. In 2013, he was the recipient of a Yoseloff Scholarship to attend the SABR Analytics Conference and he won a SABR Analytics Conference Research Award for Contemporary Commentary.

 

This page was last updated April 29, 2014 at 9:11 am MST.

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