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SBJ/March 26 - April 1, 2001/Labor Agents
Boras' marketing firm takes both sides
Published March 26, 2001
Agent Scott Boras isn't exactly known for enriching baseball's coffers. More like bleeding them dry, what with the $252 million contract he negotiated for client Alex Rodriguez.
But Impact Sports Marketing, the agency Boras formed with Reed Bergman in 1997 to help his athletes get endorsements, is actually directing millions of dollars each year to the league office by leading major corporate sponsors to baseball's door.
Representing corporations on a consulting basis while also negotiating marketing deals for athletes, all while being a staunch advocate for the sport of baseball, Boras' company has orchestrated several three-way deals. Sometimes, it's hard to tell which party comes first on Impact Sports' priority list.
In the case of Radio Shack's sponsorship deal with Major League Baseball and endorsement agreement with Rodriguez signed last month, Impact represented both Rodriguez and Radio Shack and, according to one rival sports marketing firm, seemed rather gung-ho on generating business for the league.
Boras, who cringes when labeled an enemy of the game, quickly takes to being called a supporter of the league in this role.
"Companies are sometimes not aware of what sponsorship opportunities are available," he said. "Their first contact with baseball is through our marketing of the athletes. The next step is to go to them and say 'If you think baseball is something that works for you, we also have another element that might work on a broader scale.'"
That has made Boras and his partner, 33-year-old marketing whiz Bergman, popular men in at least one floor of the league office.
"They have been pushing their clients not only to do deals with the athletes but also to do authentic programs," said John Brody, a director of MLB's corporate sales and marketing department. "They are a baseball business and have gone beyond just representing athletes."
Of course, when companies become consulting clients of Impact Sports and hire the firm to manage their league sponsorship, they end up paying the firm at both ends — for the athlete and for the advice.
Bergman and Boras dispute any idea of conflict, saying clients know that Impact's first allegiance is to the athletes.
"There's only conflict if there's nondisclosure," Boras said. "Our primary goal and our only goal is to serve the interests of the athletes first. If a company comes in and says 'Who would be the best person for the company?', we have obvious biases based on our clientele. They're aware of that. They know we're going to pitch our clients before we pitch anyone else."
If anyone's complaining, it's not Impact's clients. The company won't disclose revenue figures, but Bergman said it has doubled its intake every year.
One reason Impact Sports has managed to work around any potential conflicts and keep all sides happy, according to virtually everyone who has ever worked with the company, is through the talents and vision of Bergman.
When negotiating a playing contract, Boras is a shark who will use every bit of leverage he has to turn a losing pitcher like Darren Dreifort into an $11 million-a-year tycoon. But when bringing his athletes together with corporations and bringing those same companies to Major League Baseball, he turns to Bergman, known more as a diplomat than a devil.
Bergman actually describes himself as a "Yente," the name of the matchmaker character in the musical "Fiddler on the Roof."
He has used athlete deals as a bridge to create a budding consulting practice, first doing work for Sprint PCS and the Southeast supermarket chain Ingles, and later running a major golf tournament in conjunction with the ESPYs and becoming the primary sports marketing agency for Radio Shack and some divisions of ConAgra.
"Our philosophy is twofold," said Bergman, who oversees a staff of six in Atlanta, while relying on Boras' California office for backroom support. "First and foremost, we want to maximize the off-field opportunities for Scott Boras Corp. players. Athlete representation will always be our core business. Second, we are also a full-service sports marketing agency for corporations, whether it be handling sponsorship negotiations, endorsements or hospitality."
He was the architect behind both the Radio Shack deal and another league sponsorship signed in recent weeks by ConAgra Foods, which also has endorsement deals with Boras athletes.
The ConAgra business came along when Bergman met Steve Silk, head of ConAgra's hot dog business, at an appearance Alex Rodriguez was making in Seattle on behalf of Hebrew National. Silk appreciated that an agency representative was there to make sure things went smoothly. He appreciated it more when he and Bergman started brainstorming and came up with the idea to relaunch the Armour brand as "Armour Stars" and hire some of the top major league players to lend testimonials.
Within months, Impact not only had signed ConAgra as a consulting client, but also had several Boras players (and a few other players) signed to deals with Armour.
"Reed's been at the core of it," Silk said. "Not only coming up with the original idea but getting the stable of players."
A year later, ConAgra would sign a deal with MLB, spending $1 million a year to be presenting sponsor of the league's traveling "Road Show."
It came together smoothly. In Silk's words, "There wasn't a lot of back and forth. We were all pretty agreeable."
If Bergman has a weakness, it may be that he's too eager to get clients signed to MLB sponsorships.
When Radio Shack was close to signing its MLB deal last winter, the company's media-buying agency brought in a major sports marketing firm's consulting unit for a second opinion, according to a source involved.
The consultant said the deal on the table needed some amending, and that it looked as if it had been designed by MLB, not Radio Shack, as the inventory it included was not in line with Radio Shack's strategic needs. (Bergman called that criticism "sour grapes" on the part of a competitor.)
But if Impact invites criticism, it's not for being too kind to MLB, it's for what some call the inherent conflict of interest that arises when representing both athletes and the companies that pay them as endorsers. The same criticism has been levied at IMG and other full-service agencies for years. But it's hard to find any other agency that has such a high percentage of its consulting clients paying athletes represented by the same agency as Impact does.
The ESPYs golf tournament, for example, was hosted by Boras client Greg Maddux, who also is a spokesman for Ingles. Rodriguez, Maddux, Barry Bonds and Kevin Brown are Armour Stars.
"It does raise conflict issues," said Ray Clark, the CEO of The Marketing Arm, an Omnicom-owned agency that also represents corporations and athletes but is now spinning off its athlete division for that very reason. "The question becomes: Do you have a tendency to advise [corporate clients] into areas where you own content, in this case athletes?"
Clark said that 99 percent of the time, clients didn't have a problem with his company representing athletes, but he felt that objections were going to come up more frequently as The Marketing Arm grew.
Bergman points out that in most cases, the endorsement deals came first, and the consulting relationships grew out of those arrangements.
Boras said that when a consulting client wants to sign one of his athletes, the company is generally offered the player's basic fee — take it or leave it. There's no negotiation involved, so Impact doesn't have to worry about sitting on both sides of the table.
Impact's consulting clients don't seem to believe they are playing second fiddle at times, or getting slanted advice.
"Sometimes I think about this and talk about it," said ConAgra's Silk. "The job Reed and Impact have is very challenging, because clearly they have corporate clients who need to be satisfied and have players who they represent. In the end, Impact has simply operated for the mutual best interest of the parties. They've done a wonderful job of walking that line."
Tony Frederico, vice president of Ingles Markets in Asheville, N.C., said that even if Impact's primary allegiance is to its athletes, the company has done such an effective job not only of conceiving promotions but also managing them so that any potential conflicts are of little concern.
"I'm sure the athlete is first and foremost, but I have to be a close second to make the deal work," Frederico said. He hired Impact after signing Maddux as a spokesman and being so impressed with the player's representative.
"When you find the guy across the desk from you that beats the living heck out of you, you want him on your side," Frederico said. "Reed puts quality stuff together that's managed and organized properly. When I saw all that I said, 'I need you on my team.' "