This is a midnight tale, although not one to be confused with the ride of Paul Revere or Cinderella’s revelation. It’s about one man’s over-sized ego and the business of Major League Baseball.
The relationship between MLB and the players union is never easy. At best, it’s the equivalent of a boxing match, each man circling the other, eternally vigilant. Perhaps a better analogy would be a mating dance with a rattlesnake. Both sides are distrustful of the other, with good reason. Prior to 1995, the parties had eight work stoppages in 23 years. But with so much money in the game - an estimated $6.4 billion in revenue this year - the relationship during the past 15 years has been one of tolerance, the better to accommodate each party’s selfish financial interests.
Two years ago, the parties amended the Collective Bargaining Agreement to establish a new deadline for signing college and high school players taken in the June draft. Under the old deadline, teams had until players attended their first college class in the fall to sign their draft picks. Players who didn’t sign a contract would go into next year’s draft and the team would receive an additional draft pick the following year. The signing “deadline” wasn’t a deadline at all, with schools starting at different times and players enrolling in classes but failing to show up, negotiating all the while.
The new deadline set a firm date. Any player not signed by midnight on August 15 would go into next year’s draft. Turns out the “deadline” became the day agents initiated serious negotiations on behalf of their clients, thereby putting more pressure on clubs to up the ante or risk losing a future star.
Which brings us to this year’s draft. Vanderbilt third baseman Pedro Alvarez, the Pirates’ first-round pick and number two overall, was represented by none other than Scott Boras, the mega-agent who has been a thorn in the side of MLB for over two decades. When the clock struck midnight on August 15, the Pirates didn’t have an agreement with Alvarez. But the parties were so close that MLB, without notifying the union, granted an extension beyond the midnight deadline. By the early morning hours of the 16th, a verbal agreement had been reached: Alvarez would receive a $6 million signing bonus.
But Alvarez wasn’t the only player negotiating against the deadline. Prior to midnight, the Giants gave Florida State catcher Buster Posey, the number five overall pick in the draft, a $6.2 million bonus. When Boras found out that Posey’s bonus exceeded Alvarez’, he had Alvarez renege on the deal with the Pirates. Boras’ reasoning was simple: No way a number five pick (not represented by Boras) should receive more than the number two pick (represented by Boras). So Boras filed a complaint with the union, which in turn filed a grievance against MLB for violating the CBA.
Boras’ ego-driven attempt at revenge also jeopardized the contract of Kansas City Royals’ draftee Eric Hosmer, the third overall pick in the draft. MLB had granted Hosmer a 45-minute extension to the deadline before he eventually signed with the Royals for a $6 million bonus. Hosmer’s agent: None other than Scott Boras.
In the midst of the grievance hearing, MLB and the union began negotiating in earnest. Both sides had much to lose and little to gain from a long, drawn-out legal process that would further delay the careers of both Alvarez and Hosmer. The end result: Alvarez agreed to a contract with the Pirates for…a $6 million bonus, the same figure he had agreed to in August.
If Alvarez had signed in August, he could have been sent to the Minor Leagues, gaining valuable experience in the process. By starting his professional career in 2009, he may have cost himself a year on the other end, when he could be pulling down a salary in the $15-20 million range.
In the end, the Pirates got their man, albeit six weeks late, MLB promised to do what it had already agreed to do – adhere to the August 15 deadline, the union maintained the “integrity” of the CBA, and Boras did what he does best, represent his client’s interests, even when it isn’t necessarily in his client’s best interest.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University, teaches the Business of Sports at the University of Wyoming, and is a contributing author to the Business of Sports Network. Jordan can be reached at firstname.lastname@example.org.