The following comes from an article I wrote for SB Nation Tampa Bay:
A lot of writers have talked this to death, but the decision on the Theo Epstein compensation should come soon, and it could have implications for the Tampa Bay Rays - not only because the Red Sox are in the same division, but this compensation could involve a former Rays pitcher.
Baseball commissioner Bud Selig is now in charge, and my impression is that he wants to make this compensation a 'penalty' more than a 'trade' for the Cubs. Everywhere I read, is see quoted that the Cubs promised "significant compensation" for Theo, but the man involved seems to think otherwise.
Back when it all first happened, Theo had this to say about the situation:
"If you wanted to look at precedent, you'd say, 'Well, whether I'm worth nothing, or something,' -- you would probably get some opinions on that if you ask your callers -- the bottom line is when executives change teams there is no compensation. There have been a handful of instances where there is compensation, and that compensation has been pretty reasonable. If you look when Andy MacPhail, who had won two World Series, left on a lateral move from Minnesota to Chicago back in '94, his compensation was like the 30th ranked prospect in the Cubs system and a little bit of cash."
The problem with Theo's analogy is that MacPhail (which is a perfect name for a Cubs executive) went from GM of the Twins to President of the Cubs after winning two World Series with his old team. Theo has also gone from GM to President after two World Series, so the move appears to be the same on paper. If you believe Epstein and MacPhail are equals. But how much is the mind of Theo Epstein worth?
The MacPhail compensation was also nearly 20 years ago, back when Roger Clemens was earning $5 mil to pitch for the Red Sox as the highest paid guy on the team. You should be shocked by that number. Baseball and the concept of compensation was completely different in the early 90's.
Another assumption worth making is that we cannot quantify players and executives by the same $ amounts. Reading over Dave Cameron's article on the compensation, he notes Buster Olney saying baseball execs make between $800k and $2.5 million - and points out that baseball executives are severely underpaid for the talent they bring to an organization. If Theo is on the upside of that executive pay scale, because of his talent, why shouldn't Boston expect a player that is on the upside of the player pay scale - or at least one that should be, based on his talent?
My point is, Epstein is among the best in the game, and the Sox lost one year of his contributions to the organization. If the Red Sox are getting a player in return, this is apples and oranges. If Epstein really is one of the best executives in baseball, the best compensation is to ask for a player that is worth one year's production by of the best players in the game. So how could we break this down? Let's try Wins Above Replacement.
In 2011, the best players in the league were around 8 or 9 Wins Above Replacement. Jacoby Ellsbury led 2011 with 9.4 WAR, followed by Matt Kemp - 8.7, Jose Bautista - 8.3, Dustin Pedroia - 8.0, and Ryan Braun - 7.8. Worth noting, a baseball player is worth about $3 mil per Win Above Replacement on the market. Therefore, using WAR as our guide, the Red Sox should be asking the Cubs for at least 8 WAR or $24 mil. Then again, because money is not a good quantifier of talent for executive compensation, let's continue to use WAR instead of dollars.
The Cubs have limited options in matching a compensation of 8-9 wins. Aramis Ramirez led the Cubs with 3.6 WAR in 2011, but his contract expired and he is no longer with the team. Alfonso Soriano is available and has three years remaining, but he dropped to only 1.3 WAR last year from 3.1 in 2010. He was worth 0.0 WAR in 2009. There is no telling if he could add up to 8 or 9 WAR required in three years, which is likely an underpay in talent. Asking for a player like Starlin Castro or Darwin Barney is also unreasonable because neither player will be a free agent until 2017. Who else is valuable with the Cubs? Geovany Soto was worth 2 WAR last year, but he has two years left, that adds up to only half the compensation Boston deserves.
What about prospects? A prospect doesn't seem to match up for the situation very well either:
Keith Law's midseason top 50 prospects list, posted in July, didn't have a single Cub on it, and neither did Kevin Goldstein's list. There were two-and-a-half-months of minor league baseball played after those were published, but none of their major prospects did much to give you the idea they would crack the next top 50 from those two. (Marc Normandin)
What about current pitchers? The best Chicago has to offer is former Tampa Bay Rays pitcher Matt Garza, who was worth a career high 5.0 WAR in 2011. In 2010 he was worth only 1.6 WAR, and 3.1 WAR in 2009. He never had a FIP below 4.00 until last season, when he pitched a 2.95 FIP. By the numbers, Garza was excellent.
2011: 3.32 ERA, 2.95 FIP, 8.95 K/9, 2.86 BB/9, 0.64 HR/9
If we project Garza to come down from his high next year, assume that he will retain his improvements from last year, and assume that his luck will stay consistent (around .300 BABIP), we can assume Bill James's projections will be accurate, and that his numbers look like this:
James: 3.70 ERA, 3.77 FIP, 7.78 K/9, 2.9 BB/9, 0.93 HR/9
Which also projects Garza around 4-5 WAR. Considering that Garza has two years remaining, his production would add up to 8-9 WAR, which could be fair compensation for Theo Epstein.