In 2000, Mike Hampton, a star pitcher, signed the largest contract in sports history up to the time. The compensation was $121 million over eight years. As it turned out, however, Hampton had only one truly successful year out of the eight. He was a great ballplayer, but he was not worth the negotiated amount. In baseball—and in soccer, too1—hiring great players at high salaries is a bad business decision.
Billy Beane, the general manager of the Oakland Athletics, was one of the first major league baseball executives to understand that traditional scouting methods lead to overpaying for skills that don’t reliably contribute to success. Beane’s objective was to make the best possible use of the A’s limited salary budget by winning games as cheaply as possible.
