And why doesn't the added competition from the billions of extra population from which CEOs are drawn push salaries down?
https://press.princeton.edu/books/paperback/9780691120393/se...
I'm not sure who would be the general manager, how to replicate the functions of high school ball and the minor leagues, or how you could acquire the necessary data / stats... but I feel like there is some potential here!
He also pointed out there is a big "apples to oranges" problem even with the limited data available. In sports (but not business) you have lots of reliably tracked micro metrics in addition to final metrics (wins/revenue). The micro metrics are generated regularly (stats for each player for each game) and those metrics are portable across players (everyone is going for points, runs, blocks, whatever). In comparison, for CEOs you mainly have quarterly reporting of coarse financials (but nothing like employee morale, number of offices opened, etc.).
For that matter, the larger the company, the more viable CEO replacements exist among middle and upper management.
The CEO, though, is just one person and it's easy to pay a single person a lot of money.
In a company of 100,000 people, an extra $5,000,000 would only increase their salaries by 50 each; but, it could all go to the CEO and look gigantic.
CEOs are working in much more vague competitive environments.
- Sports is 11 people. Business is thousands.
- Sports people are literally recorded for every step they take. CEOs not so much.
- Attribution is whole different issue when you've got a years long strategy. By contrast in sports there's rarely a player left from the team of 10 years ago.
- Sports are made to be repeatable. Business evolves.
I'm just not buying your claim that sports stars can justify their extraordinary salaries while CEOs cannot.
No it isn't? You're comparing a literal where-was-Ronaldo-at-frame-768 with what the CEO does in his office all day. There's no way he's recorded in the same detail.
With sports you can say "this guy is the fastest, he will outrun everyone and that's useful". Or "this guy provided x assists". Or "this guy saved x number of shots". Players take shots many many times, so you can separate the good ones from the bad ones, due to high n.
There's no comparably clear measurement you can make on a CEO, because there aren't that many strategic decisions to make, and they aren't repeated. Once you've decided to buy that VR goggle startup, it won't be there anymore to tell you what would have happened otherwise. All you can have is a relatively small number of facts from which you can build a story.
> And attribution on sports success is also related to the other team members, the coach, the support given to the team, the infrastructure of the sport, the team doctors, etc. Sports teams definitely have years long strategies.
High number of observations and low number of team members in sports allows you to at least guess at replacement value. Eg LeBron really is better than the next guy, because we can see what happens when he's not there. And every game is comparable because it's set up that way. With business the landscape changes from the outcomes of the decisions, so it's pretty hard to figure out the counterfactuals.
Players do a lot of unrecorded influential moves, like team-building, mentoring, training, etc.
The game environment changes, too, as you're up against different teams, and teams evolve their strategy just like businesses do. The players change, the teams change, the strategies change, the other teams change, all on a constant basis.
Business is somewhere else on this scale.
But it was darn well worth it. The movie was a huge hit, and a big reason for that was Taylor's star power.
I'm sure they could have gotten an endless supply of starlets who would have done it for free, or even paid to play the role. But that wouldn't have been a good business decision for the producers.