Which agencies negotiate the best contracts for their clients?

Naturally, the sector of sabermetrics that deals with player value found an earnest ally in baseball economics. Discussions about talent quickly sprouted into discussions about talent per dollar, arbitration years, and team revenue. And yet, there’s one constant that these discussions have almost universally shared—the team’s point of view.

If a solid player signs a below-market value contract, it’s regarded as a “win”. End of sentence. Not a “win for the team,” but a “win,” as if contract negotiations involved just the one party. Similarly, you’ll never hear Vernon Wells’ contract referred to as anything except “awful,” “burdensome,” or at best, “hefty.”

It makes sense, to be fair. We’re all fans, and most follow a team-first, players-second mentality. But why not look at it from the player’s point of view for once? More specifically, I’d like to take the opportunity to look at an oft-ignored, yet crucially important facet of baseball economics—sports agents.

While some players use independent agents, a large majority gravitate toward the vast resources that a large corporate agency can offer. Shown below are the 10 agencies with the largest amount of 2013 roster spots:

image

(There’s an important note regarding the accuracy of the roster data below.)

Avid readers of MLB Trade Rumors may recognize many of the agencies on this list. In particular, Boras Corporation (led by agent Scott Boras) has carved out a rather infamous reputation for squeaking out every ounce of negotiating leverage he can use, which continually seems to manifest itself in the form of shockingly large contracts for his clients. Boras Corporation is far and away the agency best known to the general fan, but there are a large handful of lesser-known agencies who can boast a comparably prestigious client list.

CAA Sports is a division of Creative Artists Agency, which is mostly known for representing an enormous amount of clients in the film, television, and music industries. ACES recently came up in the news for being the subject of an MLB Player’s Association investigation regarding its involvement in Melky Cabrera’s bizarre fake website steroid scandal. (The MLBPA sided with ACES and its position that the agency was not at fault.)

While we’re here, here are the ten agencies with the largest amount of 2013 WAR, using the ZiPS preseason projections.

image

It’s quite clear—while Boras Corporation and CAA Sports may not be the largest agencies in terms of total clients, they’re far and away the winners when it comes to the quality of the baseball talent they have.

The next natural step is total 2013 salary, again sorted by agency.

image

This chart is exceedingly similar to the last one, which makes intuitive sense. Better players get bigger checks. Boras Corporation and CAA Sports are, again, on a completely separate tier than all of the rest of the other agencies.

My last step brought me to the amount of surplus salary negotiated by each agency, but before I get there, I have to explain my process for finding each player’s salary baseline. Analysts far brighter than I am have figured out that baseball salaries are linear, in that a six-WAR superstar will, on average, make three times as much as a two-WAR role player. This relationship is straight, with a slope somewhere in the vicinity of 4.5 million dollars per WAR. This is the estimate I used for contracts paid to players who would otherwise be eligible for free agency. For example, Vernon Wells was projected by ZiPS to be worth 1.0 WAR this season. His expected baseline salary would then by 4.5 multiplied by 1.0, or 4.5 million dollars. His actual contract pays him 21 million dollars. I awarded the difference, 16.5 million dollars, to his agency, The Legacy Agency.

For young players who haven’t accrued enough service time to be eligible for free agency, I used the “40/60/80” rule for estimating arbitration salaries, which says that players eligible for salary arbitration tend to get 40, 60, and 80 percent of their open market value for their first, second, and third eligible arbitration years, respectively. It’s not a fantastic rule, and it’s certainly not ironclad, but it’s usually reasonably close enough that it’ll get us in the ballpark we need to be in. For new players not yet eligible for salary arbitration, I used the league minimum salary of $490,000.

image

There’s a reason Boras Corporation is known (and feared) among baseball fans. With a client list that includes Alex Rodriguez, Barry Zito, Jayson Werth, and Prince Fielder, Boras earns more money for his clients than any other agency. This may be one of the few times where a feared reputation is almost entirely deserved.

References & Resources

  • About the roster data: It’s unfeasible, and frankly, impossible, to have calculated this based on roster spots that are constantly changing every day, not to mention the millions of dollars that are headed towards injured players who are not on a 25-man or a 40-man roster. I can’t guarantee that the roster data is completely accurate, but I can explain how I got the numbers I have. I counted every contract that paid during the 2013 season for all players who either have the six years of service time necessary to be eligible for free agency, or for those who are otherwise on multiyear deals. For players not yet eligible for free agency who are going year-to-year, I counted a full season’s salary for those who were on their team’s opening day rosters. If no contract information could be found, I used the league minimum of $490,000.
  • All contract figures from Baseball Reference. Agency information from MLB Trade Rumors. ZiPS projection WAR from Fangraphs.
Print Friendly
 Share on Facebook0Tweet about this on Twitter0Share on Google+0Share on Reddit0Email this to someone
« Previous: When Waite Hoyt matched Mathewson
Next: The Roto Grotto: dispersal of hitter counting stats »

Comments

  1. Carl said...

    Dan,

    Fascinating subject.  I looked at things a bit differently.  The second graph shows that Boras’ clients have more projected 2013 WAR than CAA clients.  The third graph shows however that Boras’ clients are getting paid just a hair more than CAA clients.  Therefore, CAA clients are getting paid more per WAR than Boras clients and this year at least CAA is better than Boras.

    Your thoughts?

    Thank you,
    Carl

  2. Dan Lependorf said...

    Carl,

    That approach was something I tossed around in my head at first. You’re right in that CAA clients are being paid more per WAR, on average. The problem is that baseball salaries are not completely a free open market, and young guys who are not yet eligible for arbitration get the league minimum or close to it.

    Take Mike Trout, for example. He’s projected for a huge amount of 2013 WAR, yet his salary is barely a half million. If Boras had a larger amount of pre-arb players than CAA, his players would indeed be getting fewer dollars per WAR, but that doesn’t mean Boras is doing a worse job.

    When I can get to my dataset tonight, I’ll look it up, but I’d bet that Boras has a client list with a lower average service time than CAA.

  3. starkweather said...

    Off the top of my head I’d guess that it’s not even close, Dan. Boras is known for sussing out prospects and getting into an “advisor” role before the kids get drafted. He’s not just known for getting great contracts for free agents, he’s also the fly in the ointment of the draft.

  4. Dan Lependorf said...

    starkweather,

    That definitely makes a whole lot of sense. The Washington trio of Strasburg, Harper, and Rendon by themselves would push Boras’ surplus value through the roof, as they all got Major League deals above the league minimum right after the draft.

  5. Carl said...

    Dan, Starkweather,

    You’re both correct that Boras probably has more pre-arb clients than other firms.  In addition, the value of varous opt-out clauses are also a big item of value to clients that woudl not necessarily show up in 2013 salaries.

  6. Paul Moehringer said...

    Very fascinating article.

    Say what you want about Boras, but if your a veteran player with any sort of name value attached to you, Boras is not a bad guy to have in your corner.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Current day month ye@r *