SBJ/April 18 - 24, 2005/SBJ In Depth

How Scott Boras scored big in baseball free agency

Scott Boras spent 18 hours a day meeting with Major League Baseball general managers at their annual gathering in November, gauging their interest in his stellar class of free agent players. Then he began putting together what he calls his chessboard.

He spreads the names of the 30 MLB clubs across the top of a grid and lists his superstar free agent clients down the side.

In the boxes of this grid, he puts Xs. “You have little, modest and strong interest levels,” Boras said. “And then we go through each club and diagnose where we are going to go. And then we start meeting with our players.”

Boras has yet to top his own feat of negotiating the largest contract for any athlete, the $252 million deal for Alex Rodriguez in 2000. But rival agents said that this past free agent season Boras seemed to hit the zenith of his power over the big-league baseball market.

“He is the big dog,” said one veteran baseball player agent, who asked not to be quoted on the record saying anything nice about Boras. “I can’t remember the last time there was one agent or agency that dominated the offseason like this.”

Boras negotiated more than $400 million in his six top deals, including the Dodgers’ signing of pitcher Derek Lowe to a four-year, $36 million contract and the Red Sox re-signing Jason Varitek to a four-year, $40 million contract.

But what made Boras especially powerful was that he had the two premier free agents in the market, Carlos Beltran and Adrian Beltre, in addition to Magglio Ordonez and J.D. Drew. Those are four players who have the ability to be the third or fourth hitter in a lineup.

Sitting in the conference room of the Newport Beach, Calif.-based Scott Boras Corp. on a sunny March afternoon, Boras explained how he placed all those players on all those teams.

Musical chairs

The chessboard is hidden somewhere in this 19,000-square-foot building that Boras owns and is remodeling. Boras won’t let outsiders look at it.

Boras gets asked a lot whether representing several premium free agents of the same type, like Drew, Beltre, Beltran and Ordonez, could be a conflict of interest for an agent. But Boras, who has an answer for everything, says that, to the contrary, representing those four players gave him an advantage in the free agent market.

“The more information you have, the better decisions [you] have,” Boras said. “Because often teams let you know what player they are going to move on first.”

Who moves first and when is extremely important in the baseball free agency game. Boras likens it to a game of musical chairs. “The first thing is: You better know the music,” he said. “And the second thing is: You better know how many chairs there are.”

Boras has a staff of about 15 researchers whose job it is, among other things, to know how many chairs there are.

“Their job is to understand the major leagues from a variety of levels,” Boras said. “We have an economic team that studies the economics of baseball. We have one team that is totally devoted to the statistical understanding of players and their success points and weaknesses.”

Researchers keep tabs on things like a baseball club’s revenue, from season tickets to sponsorships to broadcast contracts. They also compile data on every player trade and every player injury. Every one, Boras said.

Big numbers for Scott Boras
Scott Boras did well for his free agent clients during the most recent offseason. The average annual salary for free agents who signed new contracts since the end of last season declined by more than 2 percent. Boras’ six players got a bump of more than 70 percent.
 
Carlos Beltran
New York Mets
J.D. Drew
L.A. Dodgers
New deal, total dollars: $119 million New deal, total dollars: $55 million
New deal, average annual value: $17 million New deal, average annual value: $11 million
Change* (%): +$8 million (88.9%) Change* (%): +$6.8 million (161.9%)
Magglio Ordonez
Detroit Tigers
Derek Lowe
L.A. Dodgers
New deal, total dollars: $105 million New deal, total dollars: $36 million
New deal, average annual value: $15 million New deal, average annual value: $9 million
Change* (%): +$1 million (7.1%) Change* (%): +$4.5 million (100.0%)
Adrian Beltre
Seattle Mariners
Jason Varitek
Boston Red Sox
New deal, total dollars: $64 million New deal, total dollars: $40 million
New deal, average annual value: $12.8 million New deal, average annual value: $10 million
Change* (%): +$7.8 million (156.0%) Change* (%): +$3.1 million (44.9%)
* Average annual value of new deal compared with 2004 salary
Note: Salary information does not account for any playing incentive bonuses.
Sources: USA Today, SportsBusiness Journal research. All photos by Getty Images.
Just like investment bankers who put together a “book” for a company they are going to sell, Boras’ staff compiles bound books on each of his free agent clients, listing their most impressive statistics. Another book, about 500 to 600 pages thick, details the economic strength and baseball needs of all 30 major league clubs.

By July 31 of last season, Boras’ research team had compiled a list of what Boras calls “the inners and outers,” which are “those teams who are competitive and those who need a complete restructuring.”

Long before free agency started, Boras’ researchers had compiled a list of 14 teams that needed an impact player like Beltre, Beltran, Drew or Ordonez, and a subset of nine teams within that 14 that could afford it. That information went onto the chessboard.

In addition to Boras’ four there were three other players, Carlos Delgado, Richie Sexson and Troy Glaus, who could fit the same bill of being the third or fourth hitter in the lineup. So there were seven players, and nine teams who wanted and could afford them, Boras said. Supply and demand.

Boras kept updating all this information on his chessboard throughout the winter “with the understanding that there is always a surprise in the marketplace,” he said. “There is every year for almost every player. There is some club who we thought would be in that is not. And some club that we didn’t think would be in, is in, because they are making a trade.”

Boras won’t reveal the identities of the 14 teams that wanted a three-four hitter, or the nine teams that could afford it. But he said, “There was a definite club for Adrian Beltre that was a real surprise. A club we didn’t think would be at all interested in him and they offered him a huge contract. We turned that offer down.”

All about choices?

Boras has been called “the most hated man in baseball” and the “Darth Vader of baseball” for his ability to get record-breaking contracts and, in the process, rip baseball stars from their fans’ favorite teams.

Boras said he is not about getting his clients the most money. Rather, he wants to offer them choices. “I would say 50 to 60 percent of my clients do not take the highest offer,” he said.

The idea that Boras turns down the top dollar more than half of the time was met by snorts of disbelief from some rival agents, but Boras insists he is serious.

“Adrian Beltre did not take the highest offer,” Boras said. “J.D. Drew did not take the highest offer. And Jason Varitek, we did not even take Jason Varitek to the market. We did not talk to one other team about Jason Varitek because we felt it would be disingenuous to his career as a Boston Red Sox and being captain of the team.” (Varitek was made team captain as part of his deal.)

Boras said his free agents in the past also did not take the highest offer. “Do you want me to go down the list?” he said. “Bernie Williams, Greg Maddux, not the highest offers. Charles Johnson, not the highest offer.”

Not only that, but in some cases what his clients took, compared to what they could have received, was not even close, he said.

“Maddux took, what, 30 percent less,” he said. “Thirty percent less to play in Atlanta. Bernie Williams probably took 10 to 15 percent less to stay in New York. Kevin Brown took less to play in Florida.”

Rob Manfred, MLB executive vice president of labor relations, said he would have no way of knowing if more than half of Boras’ free agent clients turn down the highest offer. “At the end of the day, all I know is what they signed for,” said Manfred. “And it is certainly my impression that his clients take top dollar. I think if you look at his track record, you will see that in a number of markets he has gotten the biggest dollar, longest-term contract and that had an inflationary impact on the market. That is just a fact.”

That is, too, a bit of a back-handed compliment for an agent, whose job it is to maximize his client’s value.

Pieces in place

Five other major baseball player agents were interviewed for this story. None wanted to go on the record about Boras, and all had various criticisms of him. For example, it’s often been reported that Boras is the only agent with a research machine, when other major agencies do research. (SFX Sports has an economist for every major sport.)

But no matter how much his rivals criticize him, most admit that his work — on balance — is outstanding. In this past free agent season, he played the game of musical chairs pretty well.

Boras said that one of the things that surprised him about the free agent market last winter is that Beltre, who signed with the Seattle Mariners on Dec. 16, went first. “I expected pitching to go first,” he said. But Beltre got some strong offers early on, including two offers higher than the Mariners deal.

Within a week of Beltre signing that five-year, $64 million deal, two other three-four hitters, Sexson and Glaus, signed with teams. “So now of those seven players, only four are left,” Boras said.

Does that create a panic in the market?

Boras keeps bound books for each of his free agent clients, listing their most impressive stats.
“I think for some teams it does,” Boras said. “If you are the Dodgers and you lose Adrian Beltre, you have to go out and find 30 to 40 home runs and 100 RBIs and a guy who is going to play a premium position. So they moved quickly and got Drew and somebody to hit in the middle of their lineup.”

The Dodgers have been criticized by some in the media for letting Beltre go and then going out and paying what some thought was too much for Drew.

Of the Dodgers’ behavior, Boras would only say: “Understanding the free agent market and timing of it is a huge part of the process. Seattle was extremely aggressive and two other teams were very aggressive with Beltre. And because of their aggressive behavior, they got the player.”

Two of the clubs that lost out on Beltre then became bidders for Drew, Boras said, but Beltran was out of those clubs’ price range. Right before Christmas, Boras finished Drew’s five-year, $55 million deal and Varitek’s four-year, $40 million deal. Boras then turned his attention to his biggest star, Beltran.

“We had Drew at $11 million who essentially had one good season,” Boras said. “We had Beltre at $13 million who had one good season. And then we approached Beltran, who had five out of six excellent seasons [and] had come off a postseason performance that was exemplary, historic. He was obviously the guy who would be above all these other contracts.

“I knew that negotiation was going to be all about January the eighth, because that is the last day that Houston could sign him under the free agent rules. And the other clubs, if you are going to compete against Houston, you are not going to make your offers on Beltran until you know you have to.”

The really serious offers on Beltran didn’t start coming in until Jan. 4, Boras said. Boras ended up negotiating the Beltran deal with the New York Mets from midnight Jan. 8 until 8 a.m. the next day. Beltran signed a seven-year, $119 million deal.

Ordonez was the last of Boras’ big free agents to go, because there were questions about his medical condition. Boras set up workouts for teams to look at him in Florida and California. Ordonez ended up signing a seven-year, $105 million deal with the Detroit Tigers on Feb. 7.

Boras said he ended up logging between 60,000 and 75,000 air miles traveling for about six weeks this past winter. That included 12,000 miles flying to the East Coast and back to the West Coast twice in the two days before Christmas.

Boras flew to New York to meet with the Yankees to discuss Beltran on Dec. 22. He flew back to Los Angeles to do Drew’s deal on Dec. 23. He flew to Boston on Dec. 24 to announce Varitek’s deal, and then back to Orange County the same day in time for a late Christmas Eve dinner with his family.

Planning ahead

Boras has 15 MLB Players Association-certified agents working for him, but he negotiates all the major league contracts personally. Which leads to the question of who is the heir to Boras’ throne?

“We have a process if anything were to ever happen to me,” Boras said. “We have a succession plan.” Boras said he is “developing more than one” young agent to continue his success, but he won’t name them.

In any case, Boras doesn’t plan on retiring anytime soon. “I am working until I am 80 years old,” he said.

Some rival agents say that several factors in place portend the possibility that Boras could again have another big year in dominating the free agent marketplace.

Players must wait until they have six years of major league service before becoming free agents, and Boras’ big year this year is due in part to his work in recruiting good young players six years ago. (Last year he represented two players who were widely reported to be the best players in the 2004 draft, Jered Weaver and Stephen Drew, although both still had not signed with the team that drafted them at press time for this story.)

In the last five years or so, Boras seems to be signing more veteran players who were formerly represented by other agents. Ordonez, for example, signed with Boras shortly before doing his free agent deal.

Additionally, Boras’ young players have a habit of signing one-year deals and turning down multiyear, multimillion-dollar contracts from their teams before they hit their sixth year in the league, agents say. That means they are eligible for free agency at the youngest possible age, with a greater potential for long, bright futures.

That’s true, Boras said. Beltran, for example, turned down a three-year, $24 million deal a couple of years ago that would have carried into his first year of free agency. “If he had accepted that contract, he would have been in Kansas City this year, making $9 [million] or $10 million,” Boras said. Instead, Beltran has a contract paying an average of $17 million a year.

Lastly, some of Boras’ past free agents have the opportunity to get another bite of the apple, through options in their contracts, Boras said. Alex Rodriguez could become a free agent in three years, and Drew could become a free agent in two years. Beltre will be a 30-year-old free agent, Boras said.

“We always feel we are going to have, usually, three to four premium guys, and this year we had six,” Boras said. “We certainly have the players in our existing clientele to have that happen again.”

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