Players Union Needs to Stop Complaining, Start Focusing On What's Important

This irks me: “We have concerns about the operation of the post-2009 free agent market,” new union head Michael Weiner said Tuesday in a telephone interview with The Associated Press. “We have been investigating that market. Our investigation is far along but not yet complete.”

Ok, Mike, I'm assuming you're not talking about Scott Boras and his clear conflict on interest, because, well, you seem to have no interest in regulating agents. And I'm sure you're not talking about the treatment/salaries of minor league players, since, well, you don't seem to have much interest in their well-being. So what exactly are you talking about?

Oh, right, Mike...you're talking about players (read: high-paid veterans) whose salaries--as your union cited recently--is actually up. This in a time where the economies of all your American League Central cities from Cleveland to Detroit seem to be in shambles. I'm not crying for the owners, but let us not shed a tear for these poor players either. I'm not getting involved in the convoluted baseball labor negotiations but I have a feeling that big-market owners, small-market owners, and the (veteran) players are all making out just fine.

And this all started because Jim Edmonds and Jermaine Dye had a hard time finding work? Boo hoo. Maybe teams are realizing that signing defensively challenged, over-the-hill players is not a good use of funds. Maybe there is more (read: better) information available to teams and they are giving out more offers that are consistent to what they read--like FanGraphs telling us that Jermaine Dye was worth negative $1 million in 2009 and negative $2.4 million in 2007. I don't always agree with FanGraphs values, but maybe teams are realizing that giving these guys $5 M guaranteed is a waste of funds. Good for them. As FOX Sports' Ken Rosenthal writes: "Employees seek to earn as much possible. Employers seek to pay as little as possible. That’s how free enterprise works. If the owners simply are showing more discipline in free agency, the players have little basis for complaint."

Listen, it may be true that teams colluded and maybe an investigation will uncover something egregious. But I agree with Sabernomics' J.C. Bradbury: I'm not buying it. The Econ education in me leads to me to cling strongly to Bradbury's opening argument:

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Damon (finally) gets a 2-year offer

Ken Rosenthal is reporting that the Detroit Tigers have made a 2-year, $14 million offer to Johnny Damon, matching the offer that the Yankees made to him before they eventually signed Nick Johnson.

This obviously trumps the 1-year, $4-4.5 million offer Damon got from the Atlanta Braves, who do play closer to Damon's offseason home in Orlando. Not that Scott Boras would allow Damon to take a 1-year deal in the National League over a 2-year deal in the American League because of the city's proximity to his home, but still.

The other deal on the table is the Tigers' offer of 1 year at $7 million, but that seems unlikely as Damon has been seeking a multiyear deal all along.

Since it seems unlikely that any team will outbid Robert Illitch's two-year offer, expect Damon to take it. As a result, in 2010 the Yankees will feature Curtis Granderson in CF, while the Tigers get Johnny Damon in LF. As far as outfielder switcheroos go, I'm happy to have Granderson!

The only remaining question is: why, Illitch, why? What did the nice people of Detroit do wrong?

UPDATE: Rob Neyer proposes platooning Damon (vs. RHP) with Ryan Raburn (vs. LHP) in left field. That may be the best fit for Damon in Detroit, but it seems like $7 mil per year is a lot to spend on an aging, part-time player, doesn't it?

Guest Post: Another Point of View on Scott Boras

Our post on Scott Boras this week brought us more visitors than any other post we've ever done. It got picked up by Rob Neyer's SweetSpot blog on ESPN.com, David Pinto's Baseball Musings, Jay's Fack Youk, Jay Jaffe's Prospectus Hit and Run on Baseball Prospectus, and even made it to Camden Chat, a chatroom for Baltimore Orioles' fans. The comments, e-mails, and twitter responses were a mixed bag, but mostly favored my opinion.

But I believe that the point of the blogosphere is to have different opinions expressed--that way one can form their own beliefs. So in that spirit, after I received an e-mail by Andrew, a lawyer from Canada, telling me why I was wrong, I asked if he would be willing to pen a blog post to use as a counterpoint. Now, to let you know ahead of time, I have nothing against Scott Boras, who is--as Andrew points out--"Ruthian" at what he does. Actually, once I graduated high school, the profession I was most interested in was becoming a sports agent. But I did want to bring up what I saw as an appearance of a conflict of interest, in my opinion. Andrew disagrees and now I'm going to yield him the floor so he can tell you why in this guest blog

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Andrew and I disagree, but I thank him for giving me the platform to do so.

Ill-informed fans hate Boras. I don't understand why. The owners--you know, those kind folks with their anti-trust exemption who fought to keep baseball segregated and colluded with regularity--certainly shouldn't have songs sung for them. I didn't even take econ 101 and I know that player salaries aren't tied to ticket prices.

I am enthusiastically pro-market. Part of the market, though, is a paying talent what it can command, and thereby creating incentives for individuals to excel. One is entitled to be compensated for producing, and that's especially important when one's career is as short as a pro athlete's is. If I were a great baseball player, I would want to be represented by Scott Boras--but I would also understand what it means to hire him.

When one hires any professional, one has to determine what one's priorities are. Surely even the least lucid of us can realize that depending on where one finds oneself on that professional's food chain, one may have more or less access and service. I hope, for her sake, that I am not within the top 100 of my accountant's priorities. At the risk of stating the obvious, there is a significant benefit in hiring someone who is good at what he does. Being good at what one does is, generally, the result of experience and working hard. If one wants an agent who has forgotten more about free agency and negotiations than many will ever learn, then one accepts that this expertise comes at a price--this agent has a lot of other clients. If one wants to be showered with attention, one should find an up-and-coming agent with a tiny book.

I am confident that Boras tells the client, "I work a certain way--I don't give hometown discounts, and I always strive for top dollar. I win far more than I lose, but there is risk in this approach. However, it's the only way that I operate. If you want to stay with your small market team, the 'PA can give you a list of certified agents." What Boras offers, quite simply, is the opportunity for a player to maximize his earnings.

To force a pun, that's baseball. If one wants to sign early and stay in Minnesota or Milwaukee, one should pick a different agent. If one doesn't want to play hardball, one mustn't sign with Boras. If one has a change of heart, a contract for agency can be terminated. One of the results of Boras' strategy is that his players rarely sign early. There is risk in this approach, but it works a surprising amount of the time. Boras is Ruthian, but the Babe made outs more than 50% of the time.

In some cases, I'm not sure that there is any value in having an agent. Schilling obtained template contracts from the 'PA and saved paying a commission. If Mauer, wants to stay in the Cities, there would be a lot of merit to simply hiring a good corporate lawyer to negotiate and review the terms of his contract on an hourly basis. Even at $1,500.00/hr, and even if the process takes 100 hours, Mauer would still realize a significant savings over a paying a commission of a few percent of the total contract.

Alleging that a lawyer is knowingly and purposely putting himself in a conflict of interest is a serious allegation. I disagree strongly with Jack Marshall's argument, though I credit him for acknowledging that the issue is disputed. It would an unequivocal conflict if Jeff Moorad continued to represent players while running a team. He would be on both sides of the negotiation for parties that are adverse in interest. That is entirely different from a situation where Boras acts for two parties that are in theoretical competition, but aren't adverse in interest. Free agency is to a great extent a zero sum game. There are a set number of everyday spots that are open each off-season (though occasionally a team will 'make room'). While Damon and Holliday are both outfielders, I reject the suggestion that they competing with each other. Would Holliday have accepted a 2 year, $26 million offer? By all appearances, Damon was actually competing with Randy Winn.

The key to Boras fulfilling his fiduciary duty is that he advises each client of the risks of free agency, and of his style of negotiation. I cannot fathom that Boras doesn't do that, and the risks that his clients incur are a result of their tactical approach. Whether Boras represents Damon alone, or 100 outfielders, the risks for Damon are constant--someone else willing to play for less may take a job that could have gone to Damon.

The other live matter on the issue of conflict of interest is the fluid nature of being a sports agent. I can't speak for law societies/state bar associations of which I'm not a member, but Ontario and Alberta are quite clear that we have to distinguish to our clients when we are qualified to give professional advice as lawyers, and when we aren't. One gives legal advice when one explains the impact of a team opt-out clause for a pre-existing injury, as the Sox have in their contract with J.D. Drew. Whether or not a client is prepared to sign a contract with the full understanding of that clause isn't a legal question, it's a business decision. It's similar to deciding whether to give up a total money or years in exchange for a no-trade clause. I'd be very interested in seeing some documentation from Boras' dissatisfied clients, because I can't fathom that someone this competent wouldn't set out his advice and qualifications in writing.

The point that Andrew raised certainly warrants discussion. The real issue, though, isn't that "conflict of interest exist(s)" but rather that players should consider what their priorities are in an agent, and how much risk they are comfortable assuming. Certainty comes with a price tag.
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Thank you to Andrew for that guest post

Hot Stove Coal: Scott Boras Has a Clear Conflict of Interest With Johnny Damon

"And suddenly it was all pretty clear. The answer was fewer clients. Caring for them, caring for ourselves, and the games too. Starting our lives, really." - Jerry Maguire

Johnny Damon is having a bad off-season. Originally looking for a 4-year deal at $10 M+ a year, Damon seems as he will have to settle for a one-year deal at around $5 M. For a guy that made $13 M a season the past 4 seasons, this is a huge drop in earnings. I know most won't feel bad for Damon--he will make over $100 M just from playing baseball, his Sanford investment losses notwithstanding--but the fact is that he should have been paid more this off-season and may have gotten it had he had another agent. Scott Boras may be the best agent in the business, but unless a player is a top free agent, they may get lost in the Boras shuffle. That's why I feel that Damon should not have relied on Scott Boras this past winter and may pay big time for doing so.

Matt Holliday and Johnny Damon were two out of the best three outfielders (and probably in the top-5 of all positional players) on the market. Scott Boras has both OFs as clients. Matt Holliday--like Boras client Mark Teixeira the year before and Alex Rodriguez two years ago--received top dollar to sign. Boras created a market out of no place for both A-Rod and Holliday and made the teams that signed them almost bid against themselves. He walked away with a hefty payday because his best clients got paid. They always seem to get paid. It's his medium- and lower-profile clients that get shafted. As Craig Calcaterra of NBC Sports wrote:

Ultimately I think Boras' biggest mistakes come in the smallest of places, not these high profile affairs. Places like Johnny Damon's contract this year, whatever it will be. In the welfare of his lower-profile clients like Joe Crede and Hank Blalock and Jarrod Washburn who likely have to deal with (a) an aversion on the part of front offices to deal with them because of who their agent is; and (b) the fact that they cannot possibly rate in the top ten of Scott Boras' daily priorities given the other guys he represents, even before taking arguable conflicts of interest into account.

Ah, and how about that conflict of interest? Let's talk a bit about that because I think that's in the heart of the matter. Let's say the Cardinals showed a great interest in signing Damon this winter instead of Holliday. Let's say they offered Damon 3-years and $30 M which is way above what anyone else is offering. Let's say that Damon was happy to go to the Cardinals and he wanted badly to sign. Why wouldn't Boras want to sign this contract for his client? Because it would hurt Holliday which would hurt Boras' wallet. The same would be true if Damon had signed early (pre-Nick Johnson signing) for 2-years and $20 M with the Yankees, a team he seemed to want to return to and had a true fit.

Why is this? Well if Damon would have signed with the Cardinals, who would be offering $120 M for Holliday? Not the Mets who got Jason Bay for about half that. Not the Yankees who weren't in on Holliday at all. Not the Red Sox who seemed to value inexpensive defensive upgrades like Mike Cameron. Not the Tigers, As, Braves, Cubs or any other team looking for a cheap alternative in LF.

And if Damon signed for $10 M a season for two seasons with the Yankees before Holliday signed (a possibility at the time), it may have set the market for leftfielders in the market. The Cardinals may have said: "well, we like Matt, but he's not worth $120 and we know the Yankees aren't going to outbid us. Jason Bay looks like he'll get a maximum of $70 and we believe Holliday is better so we'll offer you $80 M for 5." Can Boras really say no? What leverage does he have in this situation? Maybe he could get it up another $10 M, but that's still $30 M less than what he signed for (and less money dedicated to older years).

Now why does this hurt Scott Boras? It's simple math. Let's say that Boras makes 5% for all his services to his clients (totally made up number). And let's say that he signs Holliday for $120 M but Damon only gets $5 M (a realistic view right now). That's $125 M for his clients so a nice payday of $6.25 M for Boras and co. If Damon signs early for $20 M and Holliday signs for $90 M (the high in our example), that's $110 M for his clients so only $5.5 M for the agency*. That's not even counting the lesser OFs he reps who could have made more money in other places if the jobs had been left open.

*Side Note: Even if Damon had gone back at one-year and $10 M early in the off-season his long-term value may still have been higher. Even though he'd be a year older, he'd potentially be hitting the market after two seasons of hitting homeruns in the rightfield wind tunnel at Yankee Stadium and could hit the market again with those inflated numbers. Damon is subpar fielder but I think here was the ultimate E-7 for Damon and Boras

The truth is that in this environment, I don't blame Boras for steering certain clients to certain teams. I have a Masters in economics but anyone who took Econ 101 will know that this is called "Opportunity Cost". Investopedia defines opportunity cost as: "The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action." The opportunity cost of finding Damon a contract early was that Holliday and Boras would suffer. Boras goes to where the greatest amount of money sits, creates a market for his client, inflates his stats, and finds a way to get his top guys, top dollars. When Damon was a free agent 4 years ago, he did the same thing with him. This year, though, he doesn't have the leverage (because of the economy, Damon's age/defense, the lack of George Steinbrenner, and team's needs) and I don't believe he has the time. That's why I quoted the Jerry Maguire mission statement/memo and mostly this part: The answer was fewer clients. Caring for them.

But a true conflict of interest lies here as well. Jimmy Scott's High and Tight talks about former major league catcher Craig Paquette who switched agents from Boras when he felt he wasn't getting the attention he deserved and felt there was a conflict of interest. Scott says, in the agents defense:

Now the agent is going to deny there's a conflict of interest.  He'll talk about his fiduciary duty to his client, stating he's actually putting the interests of his clients above his own.  And, from his perspective, he's probably trying to do that.  An agent's job is to get his clients jobs, first and foremost.

Yes, that is true, but his job is also to get his client the best deal possible. Andruw Jones and Alex Rodriguez (supposedly) both went around Boras when they felt they needed to speak for themselves and sign with the team with which they wanted to sign. Former Yankee pitcher Brian Boehringer, within that same Scott article says that he's appealed to the MLB Player's Assocaition to regulate or at least look into this issue (he says they have not because he is not a "Alex Rodriguez or Derek Jeter"). And Jack Marshall of Hardball Times says that the legal profession has something to say about it as well:

I regard Boras’ activity as an agent as the practice of law, though this is an unsettled matter and not all legal ethicists agree. A non-lawyer can be an agent, but the role of sports agent is one of several hybrid roles, including lobbying and estate and tax planning, that are often regarded as the practice of law when performed by a lawyer. And if the agent ever gives legal advice—and it strains credulity to believe that Boras does not—then there is no doubt: the agent is, for all intents and purposes, acting as a lawyer. As a lawyer, he is bound by the lawyer’s ethics rules.

As a lawyer, Scott Boras is absolutely violating the conflict of interest rules. He is defying a basic conflict problem called the Zero-Sum Conflict...

The remedy for conflicts of interest is often informed consent. If both clients completely understand the implications of hiring the same lawyer to sue the same client with limited resources, can’t they just decide to trust the lawyer and hire you anyway?

The answer is no. The Model Rules of Professional Conduct for lawyers, specifically Rule 1.7, declare that the waiver of all parties is sufficient to waive the conflict only if the lawyer reasonably believes that the representation of one client won’t interfere with the representation of the other. In this situation, you can’t reasonably believe that, because it is impossible. To the extent that you help one client, you hurt the other. It is an unwaivable conflict.

Marshall draws the conclusion that an obvious conflict of interest exists, but I went to our on-site Legal expert--newly-sworn-in lawyer, Jay--for some clarification and thoughts (his emphasis, not mine):

RPC 1.7 would still apply. In this case, we know that Boras represents both Damon and Holliday. Therefore, this arrangement would qualify as a concurrent conflict of interest under Rule 1.7(a)(2) because "there is a significant risk that the representation of one or more clients [Holliday] will be materially limited by the lawyer's responsibilities to another client [Damon], a former client or a third person . . ."

However, it may or may not be unethical, in light of Rule 1.7(b), which states that "Notwithstanding the existence of a concurrent conflict of interest under subsection (a), a lawyer may represent a client..." if 4 things are established:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or the same proceeding before any tribunal; and
(4) each affected client gives informed consent, confirmed in writing.

It really is a judgment call. Does Boras reasonably believe that he can provide competent and diligent representation to both Damon & Holliday, in this free agent market in 2010? Maybe, maybe not. Have both Damon and Holliday given informed consent in writing to Boras? I have no idea.

All I know is that the law probably doesn't prohibit Boras from representing both ballplayers (that's subsection 2). And I also know that the two clients haven't asserted claims against each other before a tribunal. So it really comes down to RPC 1.7(b)(1) and (4).

Honestly, Andrew? Given the current free agent market, you could make a good argument (both for and against) that Boras is violating the Rules of Professional Conduct.

My thoughts? I can't see how this is not a clear conflict of interest, even if it may be allowed under the Rules of Professional Conduct and it is certainly unethical (I know, amazing, a blogger accused Boras of being unethical). Boras' representation cannot be effective under these circumstances and I think this winter's example of Johnny Damon should be a rallying cry to reform the process (probably-future-Hall-of-Famer Bert Blyleven agreed on NBC Sports). The problem is that Boras' isn't going to rally to change it and as Boehringer ran into, lesser-profile players aren't going to influence the MLBPA to change their rules. But the poster boy for this movement could be Johnny Damon. Damon is a well-known player who has played the past 8 seasons in the bright lights of Boston and New York. His rallying cry could change things.

Or the simpler version is that players may have to be more diligent about changing agents when they see this conflict of interest exist. Players switch agents for a lot of seemingly greedy reasons (see Aroldis Chapman), but this would seem to be a great reason to switch agents. Players have sat out a year under Boras' advice and then blamed him afterward. Pedro Alvarez lost valuable developmental time last year when Boras was negotiating every last dime out of the Pittsburgh Pirates and lost some good-will from fans as well. If I had a lawyer or an advocate of any kind who I believe didn't have my best interest in mind, I would think about kicking them out the door, no matter how many miracles they've done in the past or how much they've promised me I could make. But I fear that the draw of the millions that Boras has brought in for his past clients continues to fuel future clients to follow in the same, treacherous path.

Update: Glenn, our other recently minted lawyer, shares his opinion as well:

I pretty much agree with everything Jay said, but think of this from a more practical perspective. Most players are represented by the same small group of agents and so most agents are, technically-speaking, conflicted out from representing many of their clients. Of course, this system shows no sign of changing.

But, on the same note, when clubs deal with the same agent for multiple players over the years, it makes for a great working relationship between the GM and the agent which, of course, benefits the agent's clients. An agent can advise his client on what GMs or what teams may be a good fit for that client based on the agent's past dealings with those teams for other clients. So, other than the technicality, there can be pros to letting these conflicts exist.

And honestly, although the language of the rule states black and white what is a conflict and how that conflict can be waived, even with law firms, many conflicts are brushed aside.