In sports, it is always fairly clear who contributes to a win, and to what degree.
In my experience, business do a horrible job of measuring performance. It's 95% subjective.
In my experience, business do a horrible job of measuring performance. It's 95% subjective.
Teams pay salaries based on market price, not what actually contributes to wins. In an efficient market, these correlate, but sports contracts are by no means efficient.
The Padres' handed $144 million last winter to Eric Hosmer, who never projected to be much above average. There's still a ways to go.
Athletes get paid based on market rate, past performance, future potential, and a whole bunch of other factors (union agreements, budget, need, fan preference, health, cost of living, etc., etc.) they are not paid based on "contribute to win rate."
It's just like every other employee though. Lawyers probably don't contribute to the company's success more than the engineers, but lawyers are paid more because of the market rate.
In fact, since athletes have long term contracts that specify their pay no matter how well they play, and indeed, even if they play at all, their pay is even further removed from current performance than most other employees. It's not uncommon for an athlete to not play an entire season and still make millions of dollars, it's what fans called "dead money." Bobby Bonilla hasn't played baseball in the last 15 years yet he was paid $1.19 million this year by the Mets. That's twice as much as Jacob DeGrom was paid, who is a Cy Young finalist. Objectively Jacob DeGrom contributed to more wins than Bobby Bonilla.
Take a look at Rusney Castillo, he's being paid $72.5 million to pay minor league baseball. No minor leaguer is worth $70+ million. However, it's financially advantageous for the Red Sox to keep him in the minor leagues due to the luxury tax, so he remains overpaid.
https://www.bostonglobe.com/sports/redsox/2018/03/10/contrac...