The SoapBoxers

Earlier this week, the Red Sox signed shortstop Marco Scutaro. Scutaro (who has a wicked awesome name) was a “type A” free agent who was formerly with the Toronto Blue Jays. As compensation for losing him, the Blue Jays are entitled to the Red Sox’s 2010 first round draft pick, as well as a sandwich pick between the first and second round (sandwich picks are mysteriously invented and inserted into the draft – very strange).

There is, of course, a twist. If the Red Sox sign a type A free agent with a higher Elias rating than Scutaro, the team losing the higher ranked player would get the first round pick (and a sandwich) and the Blue Jays would get the Red Sox’s second round pick and a sandwich. And if the Red Sox signed TWO higher ranked players, the Blue Jays would get Boston’s third round pick and the sandwich.

Something similar happened to the Blue Jays last year. They lost type A free agent A.J. Burnett to the Yankees, but got their compensatory pick pushed back to the third round when the Yankees signed higher rated players Mark Teixeira and CC Sabathia.

In my opinion, the Scutaro signing is the tip of the iceberg for Boston. I think they will go after Matt Holliday very strongly. This would mean that the Cardinals would get their first round pick, and that Toronto would get their second round pick as compensation for Scutaro. Sacrificing a first round pick for a player of Scutaro’s ability seems to be overpaying for the talent. Sacrificing a second rounder seems like a fairer price. Not only that, but Boston would be able to boast a stronger team when they try to woo Holliday.

Clearly, Toronto doesn’t want Boston to sign Holliday, since this would decrease their compensation for Scutaro. In fact, it would be in their best interest to attempt to steer Holliday (and other players rated higher than Scutaro) away from Boston and onto the rosters of other teams.

How would they do this? One thought would be to engage Holliday (or, more likely, his agent, Scott Boras) in discussions, perhaps by making an offer that is not exactly a lowball, but not at the level it will take to sign him either. When the talks reach their inevitable impasse, direct the conversation to topics that make the Red Sox look bad and other suitors look good. Alternately, Toronto could simply leak disturbing rumors to sources in the press.

I don’t mean to suggest that the Blue Jays actually will use these tactics. I really don’t think they will. But the fact of the matter is that the current system would reward them if they were somehow able to sabotage Boston’s signings.

I don’t know what the solution is. Allowing each team to sign only one type A free agent doesn’t seem feasible. Nor would pushing back a compensatory pick into the future (for example, giving Toronto Boston’s 2011 first round pick for Scutaro if they signed Holliday).

Quite honestly, the entire system of compensatory picks is flawed and in need of a serious overhaul. Some of the statistics used in the Elias ratings are problematic.  For example, fielding percentage is one of the stats used to rank catchers.  Catchers are credited with a putout when a pitcher strikes out a batter.  This means that catchers on teams with high strikeout pitchers will have a better fielding percentage than a comparable catcher on a team with groundball pitchers – simply because they have a higher number of “chances”.  Perhaps a worse flaw is that the rating system does not adjust for age. In reality, a 27 year old has more value than a 39 year old with the same stats.

The system is starting to catch a few players who are unrealistically rated as type A. After they decline arbitration, they realize that no team wants to sign them because while they happen to be a fine baseball player, they aren’t worth a first round pick. The current collective bargaining agreement expires in 2011 – perhaps that would be a good time to tear down the current system and build a new one in its place.

We are on the cusp of the baseball free agent signing season. This means that the vilification of player agent Scott Boras will soon begin in earnest. For those who are somehow unfamiliar with Mr. Boras, he is the premier agent in baseball, representing a cadre of superstar players including Matt Holliday, Alex Rodriguez, Mark Teixeira, and many others.

To say that Boras is a tough negotiator is akin to saying that Warren Buffet has a decent nest egg for his retirement – a gross understatement. Boras is tough as nails, willing to use any tactic as leverage for getting maximum value for his client. His clients rarely give their team a “hometown discount”. Boras client often sign at the very last minute – and often don’t sign, electing instead to return to college (if they are eligible).

Not surprisingly, many teams – and their fans – despise Boras, blaming him for any of all of the problems with the game today. I take exception to that characterization. Boras’ role is not that of some benevolent fan ombudsman. His role is to represent the interests of his clients and ensure that they receive the best possible package of financial and non-financial benefits. He would be derelict in his duties (and a possible target of malpractice suits) if he were to leave money on the table “for the good of the game.”

One thing that seems to get overlooked in the Boras bashing is that salaries for baseball draftees lag behind salaries for top NFL picks. Stephen Strasburg’s contract – paying him $15.1 million over four years (a pro-rated 2009 salary, as well as 2010-2012) – was the subject of much debate over the summer. Many were outraged at the value of the contract.

On the flip side, top NFL draft pick Matthew Stafford (who is just a few months older than Strasburg) signed a six year contract that is worth $72 million (plus an additional $6 million in incentive bonuses) – with $41.7 million in guaranteed money. [Note: unlike baseball contracts, football contracts are not fully guaranteed].

Stafford is definitely a fine football player. However, he is not of the same relative caliber of Strasburg, who is widely regarded as a once-in-a-generation talent. Yet Stafford will walk away with $41.7 million even if he becomes a complete bust (like Ryan Leaf, Akili Smith, Tim Couch, etc before him). If Strasburg busts, he’ll get $15.1 million. So, remind me again why the Strasburg deal is a big travesty and the Stafford deal is business-as-usual?

Baseball teams have long enjoyed the luxury of having more control over a player’s salary than any of the other major sports. For the first hundred years of professional baseball, teams had complete control. Baseball’s “reserve clause” made it possible for teams to re-sign players at whatever salary they wanted. The players were bound to the team for life, so they had minimal leverage. They could refuse to sign a contract, but they couldn’t sign with any other team. Finally, in 1975, the reserve clause was struck down, paving the way for free agency.

In today’s system, players are drafted (or signed as undrafted free agents) by major league teams. They are then signed to what is most often a minor league contract. Essentially, this pays them peanuts during most of their minor league years. The MAXIMUM salary for a player in their first minor league season is $1100/month. They only way for the players to earn any substantial money during their early minor league years is by getting a signing bonus with the contract. For first round picks, this can mean millions of dollars. For players in the later rounds, this can be a few thousand dollars, or nothing at all (usually for players who have no college eligibility remaining, and thus minimal leverage).

After a player reaches the Major Leagues, they are under the team’s control until they have accumulated six seasons of service. Note that this does not simply mean they have been in the Major Leagues during six seasons – it means that they have been on the active roster (or disabled list) for the equivalent of six full seasons. Most often, a player does not become a free agent until after their seventh Major League season (or later).

Players with fewer than three years of service (other than a subset of players we’ll discuss later) can be renewed by their team at a minimum salary, regardless of performance. A player could win the MVP in his rookie season and not get a substantial raise – and could make substantially less than the crappy veteran relief pitcher who has the neighboring locker.

Players with three years of service – as well as the players who are in the top 16% (in terms of service time) of players who have more than two years of service – are eligible for salary arbitration. The player and team submit offers to an arbiter. The arbiter listens to arguments and chooses one of the offers and sets it as the player’s contract for the following year. The arbiter MUST choose one of the numbers – he cannot choose a number in the middle. Players in their arbitration years earn more than in previous years, although they typically earn less than the market rate for their skills.

Finally, after accumulating six years of service – at which point the player is often knocking on the door of age 30 – the player is allowed to become a free agent and may sign with any team.

If a late round pick – one of those guys who signed for a minimal signing bonus – happens to blossom and become a good player (something that happens more often than you might think), he may have spent 4-6 years in a team’s minor league system, and then another six years at the major league level. Finally, after 10-12 years working for a team, he finally had the ability to actually negotiate a contract.

If you waited twelve years for the opportunity to negotiate a contract with your employer, you’d probably want someone like Scott Boras helping you out.