The Dan Duquette Dilemma and the Value of GMs

Because Duquette is under contract as a valuable asset to the Orioles, the team should not let him leave for Toronto unless it receives proper compensation.  Is letting Duquette take the Toronto job the right thing to do? Can we know what the value of Duquette or any GMs really is?  What would fair compensation for the Orioles be if they let Duquette walk? We'll look at all those questions below.

1) Is Letting Duquette Go The Right Thing to Do?

Argument 1

“It’s standard practice in MLB to let your employees leave for a promotion. This is a promotion.”  Dave Cameron, Fangraphs chat 1/21/15.

What is standard practice should not determine what is best.  Somewhat recently, it was standard practice to evaluate players on batting average and home runs, and pitchers on ERA and wins; now those practices are looked at as foolish.  Somewhat recently, it was standard for teams to keep their infielders in their historically ordinary position regardless of the situation; now shifts are commonplace.  As understanding evolves, standard practices change; to be in justified, a practice should be superior to alternatives, not just standard.

The practice at issue is not one applying to all employees.  It doesn't even apply to players: a player of one team under contract cannot leave if another team would give him a larger role or pay him more.  All non-player employees are also not created equal: what is standard for a low-level employee is not standard for a general manager-- in other words, rank matters.  When defining the practice more appropriately as whether a team lets and should let a general manager take a promotion and raise, the best practice becomes clearer.

Baseball is a business-- the owners are out to win games and make money, not sing Kumbaya.  Thus, the more an employee impacts wins and the bottom line, the less likely the team should be willing to let him go freely.  Because a general manager has more of an effect than low-level executives, the best practice for a general manager offered a promotion will be different from what is best for other team employees.  At some point, the cost of doing the employee “a solid” becomes too high.  The Orioles have understandably determined that they've reached that point at some level below that of the general manager.

Argument 2

“Do you want to work in a job where a competitor wants to give you a promotion and a big raise and you’re not allowed to go?” Dave Cameron 1/21/15 Fangraphs chat.

Contracts are the result of negotiations between at least two parties.  Duquette signed an extension which guaranteed him a certain amount of money through 2018, no matter his performance.  In exchange, Peter Angelos consented to be obliged to compensate Duquette whether he performed poorly or brilliantly.  Because contracts are guaranteed in baseball, teams are stuck with the bad contracts and employees are stuck with the good ones.  Just as Duquette may want to leave when offered a better position, Angelos would certainly want to be able to unilaterally terminate bad contracts.  But neither party can, due to the negotiated tradeoff of a guaranteed deal.  So, yes, it makes perfect sense that an employee should be willing to trade some degree of freedom in exchange for the contracted guarantees.

Argument 3

The Orioles Should let Duquette Go To Avoid the Repercussions of Keeping Duquette Against His Will

Duquette reportedly wants the Toronto position-- who wouldn’t want a promotion and raise?  Reports state that the resulting environment in the organization is “toxic.”  However, if the Orioles firmly stand their ground, and unequivocally state that no compensation will be enough to land Duquette, then Duquette would likely move on and continue to perform his job well.  He is a professional who has always honored his contracts.  There likely would not be an impact on the Orioles future hiring if they refuse to let Duquette go to Toronto; there is low enough supply and high enough demand for general manager positions, rendering any such position desirable for most qualified candidates every time one opens.

In sum, the Orioles should feel no need to let Duquette go without proper compensation.  But what is proper?

The Value of Duquette and GMs

Despite the recent sabermetrics revolution, the methods of evaluating a general manager’s value have not developed in kind.  Nevertheless, it makes sense to attempt to determine a general manager’s worth in much the same way as one would attempt to evaluate a player’s worth: how many wins will he create for the team above his replacement, and at what cost? Duquette is under team control through 2018 at a reasonable set cost, which makes that part of the equation easy. Determining how many wins Duquette (or any general manager) is worth, though, is acomplex undertaking.

First, any general manager inherits a team and a system that might not be reflected in the previous years’ records. For example, Duquette inherited Andy MacPhail's Orioles core, a team which had not yet begun to succeed.  Second, the impact of a general manager is muddied by any changes in player development, scouting and coaching.  Third, because of the limited data points, luck plays a substantial role.  For example, the Orioles reportedly had similar offers to Kendrys Morales and Nelson Cruz, last year and would have taken whichever had accepted first, with markedly different results.  Fourth, general managers may face payroll constraints that differ from those of their predecessors.  The list could go on.  None of these examples is meant to suggest that Duquette hasn't done a great job in Baltimore-- he has had success, and he deserves credit.  They merely illustrate that it is difficult to isolate the expected effect of a general manager on a team’s performance.

Despite these limitations, though, everyone would likely agree that a good general manager can consistently create more wins than his theoretical replacement.  This article attempts to provide some initial support for that theory.  To do so, I'll take a brief look at three GMs: Billy Beane, Pat Gillick and Dan Duquette.  Beane and Duquette seem obvious, and I selected Gillick because of my fondness for his time in Baltimore and the fact that he has worked for a number of teams.  To examine these executives, I'll compare the wins per year during their tenures as GM against the team’s wins before and after their tenure, resulting in a +/- wins per year.  For strike-shortened seasons, I have used the 162-game pace for wins.

Billy Beane: +6.5 wins/year

Billy Beane took over as GM in 1997, and the Athletics have averaged just over 86 wins a year in his 18-year tenure. In the 18 years before he took over, the Athletics averaged approximately 79.5 wins a year.  Thus, the Athletics have been 6.5 wins better per year with Beane as GM.

Pat Gillick: +5.9 wins/year

Toronto was an expansion team in 1977, so there's only the one year of data before Gillick took over.  Given that the expansion team struggled in its first few years, Gillick’s effect may be understated.

Dan Duquette: +5.1 wins/year

While Duquette’s numbers could be overstated due to taking over an Orioles team that had been terrible but was ready to succeed, they could also be understated due to his replacement GM in Boston being the highly-regarded Theo Epstein.

It is worth repeating that these numbers are riddled with noise, but they provide a reasonable argument that good GMs can create significant WAR.  If Duquette is worth five wins a year, he would be expected to create 20 wins over his replacement in the four remaining contract years, and at a very low cost.  For a value comparison, Adam Jones, Jordan Zimmermann and Miguel Cabrera all were worth just under five WAR in 2014, according to ESPN.

What is Fair Compensation?

Because general managers have likely been historically undervalued, past compensation does not determine what fair compensation should be.  Because a win is a win, there is little reason to care if it is created by a player or the general manager.  Thus, fair compensation for Duquette should be an asset with four years of cheap control that will create 20 wins.

The name that recently has come up in rumors is Jeff Hoffman, the 9th overall pick in the 2014 draft. Looking at the recent 9th selections in the draft, this compensation seems too low for a cheap 4 year, 20 win asset.

http://www.mymlbdraft.com/9th-overall-mlb-draft-pick/90609/

The best trade comparison may be Josh Donaldson, because he was recently traded and likewise is under team control for four years.  Steamer projects him at 5.6 WAR in 2015, and given that he is 29 years old, that is likely to decline a bit over the term, for a four-year total around 20 WAR.  The Athletics received Brett Lawrie, a major league infielder with a high pedigree, along with three of Toronto’s better prospects.  And Donaldson will cost significantly more over that four-year period than will Duquette, so Donaldson is arguably less valuable.

Despite being fair, this compensation is unlikely.  First, general managers’ values are likely still understated.  Second, Duquette may be less valuable to the Blue Jays in terms of wins, given that Toronto already has a general manager. Third, such compensation would likely lead to fan outrage in Toronto.  Fourth, both teams are in win-now mode, making such compensation fairly difficult to calculate and part with.  Thus, if a deal gets done, it likely will take a compromise from both teams.

Conclusion

While the proverbial finger is oft pointed at the Orioles for failing to let Duquette leave or at Duquette for wanting to go, neither is to blame, because neither created the situation-- this scenario all comes from tampering.  But because it is impossible to undo what's already happened, whether or not a deal is ultimately struck will likely come down to whether the Blue Jays are willing to part with some kind of significant piece to compensate the O's for losing a solid top executive.