Steinbrenner And Torre Are Both Stupid!

Now that I have gotten your attention, take a moment after your read this and post a comment. Let me know what you think of Karma Capitalist. Now, back to the Yankees.

It has been widely reported that Joe Torre turned down the offer of a one year contract to coach the Yankees for $5.0 million plus incentives -- a pay cut from his soon to expire 3 year $19.2 million contract.

There is much talk about how the Steinbrenner clan manages the Yankee franchise like a big business including their newly discovered "pay for performance" philosophy. However, they have forgotten one of the most important lessons of management -- effective succession planning. And on Torre's part, he may be making one of the biggest mistakes a "CEO" can make -- letting ego dictate his decisions and putting his interests ahead of the interests of the team and their customers (the fans).

There is way too much ego involved in running the Yankees these days. Torre's ego is the least of it. As Steinbrenner the dictator fades, his gang of "I want to be next in charge" lieutenants are angling for the throne. And based on the Torre situation, a similarly disruptive transition awaits Yankees' fans on this appointment as well.

It could have been managed better. Steinbrenner could have offered Torre a two year contract and appointed a deputy such as Don Mattingly as clear successor. Tyler Kepner and Ben Shpigel of the New York Times put forth this scenario in their SportsThursday column. link

This story is about money. The $1 billion valued Yankees' franchise. Their $200 million payroll. Joe Torre and the $7.5 million he made this year -- more than twice the amount paid to Lou Pinella, the second highest paid baseball coach.

One would hope that old men like Steinbrenner (77) and Torre (67) would be long past measuring their value in financial terms. Clearly they are not. How do you calculate Torre's near term, intangible value to the Yankeess within a pay for performance framework. You can't. You use judgment -- an asset Steinbrenner has never amassed in all that he owns.

The decision about who should coach the Yankees next year should have been about building on the Torre legacy and laying down a foundation for a new one. And mitigating the risks of such a transition.

Too bad it didn't work out that way. Too bad for Yankees fans.