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					 MLB Management in 21st Century
How MLB General
 Managers Must
  Bring People,
  Evaluations,
Innovations, and
 Organizational
  Development
    Together


               Jason Powers, MBA 550
                  Our Topics


 People & Money
 The Balance Sheet
 Goals & Models
 Valuation of Talent
 Innovative GM Thinking
 37-second Marketing Course
                              People MGMT:
                           Often defined by DA Money
Billionaire Owners


Millionaire Players


   Sports Agents


GM/Field Managers


   Coaches/Scouts


Media: Cynical, Divisive



   Fans: Obsessive
MLB Players Salaries Profile
       Houston Astros 2013 Balance Sheet
                   Nati
                   onal
                   Me                                                 Equ
                   dia                                                ity
Assets:           Con                       Liabilities &
                                                              ($2
$202.1            trac
                    ts
                                            Equity:           4.5
Mil               ($50                      $202.1           Mill
              Venue Naming
                  Milli                     Mil               ion
                                                         25 MLB Players
                 Rights
                   on)                                                 )
                                                                ($60.6 Million)
              (Currently: $6.1
                 Million)                                     ~180 Minor Leaguers
                                                                  ($25 Million)
        Team Merchandising &
        MLB Online ($15 Million)                       Ballpark Upkeep & Debt Service: ($45
                                                                     Million)

       Local Media & Advertising                              GM ($3.5 Million)
              Contracts
                                                          Field Mgr. ($2.5 Million)
              ($35 Million)
                                                       Media & Promotions ($30.5 Million)
Fan Base: Ticket Sales & Concessions ($96
                 Million)                       Scouts/Team Develop/Ballpark Operations ($10.5 Mil)
               Goal #1: Profit Model (Owners)

                     Revenues/Profits                        R2= .596. Not
                                                         Surprising that greater
                                                         population equals more
                                                                revenues
                                                             (JC Bradbury)
Ballpark Appeal      Home Attendance
Advertising Rights




   National             Marketing of     General Manager,
Media Contracts       Team Successes      Field Manager
                      (Local/National)       & Scouts

                                                            Trades          Goal #2:
                                                            Field MGMT
                                                              Develop
                                                                             Win
                         Community                                         Championships
                        Involvement      Team Drafting
                          & Players      & Publicity
                         Connection
                         Goal #2: Win Model (Fans)
Goal #1:                           Championships
 Make                                                                  R2=.88+
                                                                     Runs Scored2
Money           To Create           Make Playoffs
                                                            (Runs Scored2 +Runs Allowed2)
                Brand to                                     Pythagorean Expectation
                Market

                                  Regular Season Wins                 Runs Allowed:
Runs Scored:
Offense R2=.90+                        Trades                         Pitching/Defense
                                                                      R2 <=.70
                                    Field MGMT
                                    Development

 Slugging     On-Base
                                                            Pitching:         Fielding:
  Ability     Ability
                                                            Keeping           Catching
    1x           3x             Sabermetric Analysts        it in the park    the ball
                               Bill James: Pythagorean
Base Stealing/Running
No correlation to Wins
                               Voros McCracken: DIPS
                             Pete Palmer: Linear Weights    Power              Positioning
                            John Dewan: Fielding Analysis   Control            Quickness
                               Tom Tango: FIP Statistic     Command            Decisions
                                                            Variation          Arm
               Valuation: Talent Diamond


• Defense Spectrum: SS-2B-CF-3B-RF-
  LF-1B-DH (C = separate breed)         6       3       5
• The Talent Diamond:
  q Catchers – call game, deter base
     stealers, strong mentally and          1       2
     physically
  q Shortstops – quick, instinctual,
     most opportunities outside
     catcher on defense                 4                7
  q Centerfield – can turn RUNS into
     outs; often leaders on team
  q 2nd Base – ability to turn double
                                                        Defense Spectrum
     plays, work with SS, speed
                                                        Talent Diamond
     position

  q Pitchers – Without them,
    impossible to win
                  Player Development:
                       Basic Facts

 Scouts or Statistics: not just stop watches/ radar guns
 5 Tools: Power, Average, Speed, Arm, Glove
  § Pitchers hard to project; lefties are at a premium in MLB
  § Hitters develop by 24-25 years, pitchers usually later
 Patience at plate improves w/ age, power wanes after 35
 June Draft: 50 Rounds fills rosters on 6 Minor league teams
 Minor League talent fuels trade offers, else:
  qHuge ($100 mil+) long-term contracts
    § pitchers fail more frequently than hitters
    § Both tend to underperform if past peak age (graph)
           Player Development:
     Performance Curve (Ray Fair, Yale)




                                           Decline Factors
             Improve Factors               Foot Speed
             Batting Skills                Arm Strength
             Confidence                    Power (Sluggers)
             Patience/ Feel for game       Injury Recovery




Athletes peak performance occurs at 27-28 years old; fall off varies by sport
                             Innovation:
                            Sabermetrics



                                     Statistical
                Problem
Define    (Solved with talent?)
                                    measurement
                                       lacking



Measure    Create New Data        Track New statistic        Video          Elias Sports Bureau




Analyze   Regression Analysis        Graph Data           Rank Players       Identify Outliers



          ID players w/better     Determine Value of
Improve         results                statistic
                                                        Economic Benefits



                                    Monitor Minor       Create /Redefine
Control    Acquire by Trade
                                      Leaguers            WIN Model
                      Innovative Baseball
                     General Management
                      Trades = Arbitrage


 Develop Minor
 League Talent:                               Franchise
 • Low-cost                                   Marketing
 • Long-incubation



Negotiate Risks w/
Type-A Free                                 Manage Owner:      The Pool of Money
Agents:                                     Models Discussed
                                                               Is only so large:
• Long-term no-nos                                             Ask Yankees now.
                     Trust Scouts/Player
                        Development
                     • Devise Sabermetric
                             System
37 Second Marketing Course
                                Resources
National Media Contracts:
http://online.wsj.com/article/SB10000872396390444914904577617453702554324.html -
Baseball Strikes Rich Deal ($5.6 Billion over 8 Years)
http://www.hollywoodreporter.com/news/mlb-fox-turner-deal-375739 - Major League’s
$12.4 Billion Dollar Bonanza is Official (ESPN, Fox, Turner Sports total for 8 seasons)
Player’s Salaries:
http://espn.go.com/mlb/team/salaries/_/name/hou/houston-astros - 2013 Player’s Salaries
Cost of Attendance:
http://www.fancostexperience.com/ - Cost of attending an MLB game (for 30 teams)
Ballpark attendance:
http://espn.go.com/mlb/attendance/_/year/2012 - 2012 MLB Attendance
Naming Rights & Operating Income:
http://www.ballparks.com/baseball/national/bpkaus.htm
http://blog.chron.com/ultimateastros/2013/03/27/forbes-astros-rank-16th-in-mlb-with-
team-value-of-626-million/
Franchise Success Models:
Bringin’ Gas & Dialin’ 9: A Seven Score Addiction to the National Pastime (Unpublished)

				
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posted:11/28/2013
language:English
pages:14