I could see that being part of the equation, he's already paying 2 GMs. He should be kicking himself over the extensions, no one wanted to see that, yet he did it anyways and it clearly backfired.
Considering, a lot of us expected to be a down season(although not quite as bad as what it has become), I think Irsay may have felt it was a good time to test Pagano. See if he could get anything out of this team and he hasn't. Ballard is a first time GM, so he wasn't going to fight Irsay on getting his own coach this season and probably even less so after evaluating the team. The interesting part is Pagano would complain that Grigson was meddling in picking starting line ups, but now we can see why he did it. Not backing Grigson, it was the right move, but he knew that Pagano was terrible at evaluating talent. Ballard has left it alone, to keep the harmony and at the same time, give Pagano enough rope to hang himself.
At the end of the day, it was better Ballard didn't bring in his own coach. This season was most likely going to rough regardless and the last thing you want is a first year coach struggling because of the lack of talent. Next year will be a much better starting point. Not quite championship caliber, but good enough to contend for the division.