When pitchers and catchers report for spring training the winter of my mind officially ends. My seasonal affective disorder of endless nights fades to a new dawn of clarity and understanding. I begin to see baseball as a metaphor for business.
There is a significant problem in baseball right now with team owners not giving really great stars like Bryce Harper and Manny Machado long-term, big money contracts. The union is calling it collusion. The owners are mum.
2014 Detroit Tigers….
The Miguel Cabrera experience still has owners twitching. In 2008 at age 25 a future Hall of Famer was paid $152 million for 8 years to play for the Detroit Tigers. Moving forward to 2014 the Tigers decided Cabrera was their franchise player and awarded him a contract extension of 8 years for $248 million. Including the 2 years left on his 2007 contract this became a 10-year commitment for $292 million through 2024 at which time Miggy would be 41.
The interesting dilemma for Mike Ilitch, the Tigers owner and Dave Dombroski, Tigers general manager was the cohort of Tiger superstars on that 2014 team that were not given the big contract:
- Max Scherzer, RHP won 3 NL Cy Young Awards and 6x All Star selections and has a combined win/loss of 159-82 for the Washington Nationals.
- Justin Verlander, RHP- won 1 Cy Young, a World Series ring with Houston in 2017, MVP of World Series and has a combined win/ loss record of 204-123 for Detroit and Houston.
- David Price LHP- 1 Cy Young in 2012, won a World Series ring for Boston in 2018 and has a lifetime win/loss of 142-75.
- Rick Porcello, RHP – 1 Cy Young Award, World Series ring for Boston in 2018 and lifetime 135-106 win/loss record.
- JD Martinez- World Series ring in 2018, AL RBI leader in 2018 and 2x All Star
Became The 2018 Boston Red Sox
Dave Dombroski left Detroit to become the General Manager of the Red Sox in 2016 and promptly signed the nucleus of the 2014 Detroit Tigers- Price, Porcello and Martinez. They won a World Series in 2018.
General Electric in 2001
In a parallel universe another fabled franchise, General Electric, had just finished a world series parade of Jack Welch successes spanning 20 years and succession was almost an afterthought. The investment community was convinced Welch had set things on autopilot and long-term property for GE shareholders was similarly linear. Insert GE stock chart from 1980 to 2001.
Should I Wish Upon A Star?
I wonder if Miguel Cabrerea has ever met Jeff Immelt. They bear little resemblance other than being internal, “can’t miss” superstars each of whom got big contracts and proceeded to lead their franchises to the basement. In GE’s case they lost Gary Wendt who ran GE Finance and whom Jack Welch feared would overshadow other CEO aspirants who went into private investing, James McNerney who then became CEO of 3M and later Boeing, Robert Nardelli who became CEO of Home Depot and then Chrysler.
For the Tigers, the eventual loss of Verlander, JD Martinez and David Price without a world series trophy doomed a great American east franchise to perpetual rebuilding.
Maybe the “Moneyball” educated baseball owners are getting the message about giving long term contracts to can’t miss candidates. I am sure Board of Directors all over America are thinking about the Immelt effect as well.
When the star culture overtakes a team culture you get GE and the Tigers. Good stewardship often means having many high achievers under one roof. It is equally important for company Boards and baseball leadership to find a process for recognizing talent and then retaining it.