Sports agent Alan Nero, formerly of CSMG and currently with Octagon Baseball, had a few quotes in an MLB.com article concerning arbitration.  He stated,

“Arbitration gives us the opportunity to compare people based on statistical comparables. Free agency is free enterprise. It’s based on the sole theory of economics, which is supply and demand. If there’s not enough demand, your value goes down. So [for those players], it would be more to their benefit to be statistically compared to other players, rather than be in an economic system that’s based on demand.

Marvin Miller was a genius. He knew that if he granted free agency to the clubs, that theory of economics would crush the marketplace. But when you have players that are protected by a system in which they have to be paid like comparable players, it gives them the metrics of salary increases that create a platform when they become free agents, and it lightens the supply of free agents, so that supply and demand is in their benefit. I think Marvin will prevail.”

Nero seems like a big fan of the current system of arbitration.  And he should be!  An arbitrator may not set the arbitration eligible player’s salary below 20% under what he received the year before.  At the same time, there is no proscribed ceiling.  Thus, a team cannot propose a figure below $4 million on a player who received $5 million last year, yet the player can counter by saying he is worth $10 million or more.

Statistics-based negotiations also take a lot of subjectivity out of the equation.  That said, there is much subjectivity in putting weights on different values.  What is more important, a pitcher’s K/BB ratio or his ERA?  That same question persists in free-agency; however, there are many other variables involved that may not be as important in an arbitration setting.

A few other important notes in the MLB.com article: 1) Players and teams can invest up to $100,000+ dollars just on the preparation and actual arbitration appearance, and 2) It is awkward to make players have to sit through hearing about their flaws.  Point #2 is actually one of the reasons I, and former CFL player Doug Brown, believe agents are necessary for players.

Don’t tell Creative Artists Agency (CAA) that the company is #2 to anyone in any sport.  They just don’t want to hear it.  Even in baseball, where Scott Boras is known as the king of the diamond.

Jon Heyman of Sports Illustrated reported earlier this week that in a phone interview with CAA baseball agent, Joe Urbon, the agent stated that Jason Bay is “the most complete player on the market.”  Quite a bold statement by Mr. Urbon, who was well aware that some guy named Matt Holliday is also a free-agent going into the 2010 season.  Should Bay be given the edge because he had to compete in a very tough AL East while Holliday went from a mediocre AL West to a soft NL Central?  It is true that Holliday did struggle quite a bit in the AL.  He only hit 1 homerun in the first month of the 2009 season

Boras’ response: “Holliday is the only young complete free agent player available.”  I added the emphasis.  Interesting sly tactic by Mr. Boras, who subtly noted that his client, Holliday is 29-years-old, while Bay is 31-years-old.  You better believe that this factor, alone, drives up Holliday’s price.

I think it is smart for Urbon to make comparisons between Bay and Holliday.  It will only drive up the price of his client.  Let’s just hope that this is not an Urbon vs. Boras competition that stems from past experiences like the notorious case of Tacoby Bellsbury!

The young Celtics PG has improved his regular season averages significantly each year in the NBA and in his third year averaged 11.9ppg, 5.3rpg and 8.2apg. However, Rondo truly proved his worth when it counts most, in the playoffs. With Kevin Garnett sidelined, Rondo stepped up and almost averaged a triple double in the Celtics series with the Bulls and Magic, by posting 17.6 points per game, 9.7 rebounds per game and 9.8 assists per game, and adding 2.5 steals per game.

After such a stellar playoff performance, Rondo seemed to be a cornerstone of the Celtics franchise, however some in the organization questioned his leadership as well as his attitude. It was then rumored that Rondo was being shopped around in potential off-season trades by Celtics GM Danny Ainge. Without the extension, Rondo would have became a restricted free agent this summer.

As the deadline approached, it looked as if there was a chance that the extension would not get done in time. The Celtics and Rondo’s agent, Bill Duffy, were afforded an extra few days to hash out this deal due to the fact that the Oct. 31st deadline fell on a Saturday, and therefore was moved to midnight of the next business day. Fortunately for Celtics fans, the organization improved their offer and Rondo signed hours before the deadline on Monday.

Although I understand the players’ demands and do not blame them for trying to get the money that they think they merit due to performance, $15,000 a day is a hefty price to pay to make a player’s voice be heard. There has to be a better way to deal with the problem of player compensation.

For Rookies

Institute a pay scale similar to the NBA’s system for incoming rookies. In this system, the salaries would be predetermined by the NFL and NFLPA. The first two years of the contract are guaranteed with a team option for the third and forth years, and it sets the price for a qualifying offer in the fifth year. I believe this is a fair system because usually after four years, a team can determine the development and the quality of the player it has drafted.

In cases where players break on to the scene with a great rookie season and have proved they can perform consistently at a high level with another good season (like Minnesota Vikings RB Adrian Peterson is poised to do), teams should add clauses to contracts where if certain performance levels are met, they will allow a contract renegotiation after the second or third year.

I believe that players who have not consistently proved that they can be top tier players should not receive top tier salaries like many rookies are demanding. Allowing teams to have an option on the third and forth years of the contract saves them from paying out huge, multiyear deals to first round players who bust. It also allows them to keep players who they believe are developing well on their teams. As I said earlier, I believe that the league should only allow contract re-negotiations in the first four years if a player meets performance clauses and proves he can consistently perform at a high level for multiple years that would warrant an extension.

For Veterans

I believe that every veteran player who has proved his worth to a team and shown he can be a productive contributor in the league should be rewarded in such a way. By instituting a pay scale for rookies, teams can make sure that they have enough cap space to compensate the players who have proved themselves, on and off the field, properly.

The same system should be used for veterans in the sense that teams should include clauses that after the first two years, and every year or two years after that depending on the length of the contract, if certain performance levels are met, the team will allow for a re-negotiation of the base/guaranteed salary and performance level incentives for the remainder of the contract, or a complete restructuring and extension of the contract. This again allows players who outperform expectations to re-negotiate their contracts for proper market value and protects teams from having to overpay for players who have not proven themselves worthy of premier contracts. Also for consideration could be a player option clause, where in the final few years of his deal, if a team wishes to pick up an option on a player, the player must also agree to the option or else he can become a restricted free agent.

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I think a contract system like the one I described above could help end a lot of the training camp holdouts that we are seeing currently, especially on the rookie end. By getting these players off their couches and back onto the practice field, all parties involved benefit. I believe as agents, it’s our duty to make sure that we negotiate contracts that give our players flexibility and the ability to get what they are worth without having to damage their relationships with their teams by holding out.

Obviously there are always players whose values are difficult to gauge who might warrant a holdout, like the Chicago Bears’ Devin Hester. Yet overall I think this system would help keep team owners happy by protecting them from overpaying players who have not earned the salaries they are expecting, and gives players who have truly earned an extension and increase in salary through performance their dues.

Am I missing something? Is there something like this already in place I’m not aware of? Please leave your thoughts and comments below, The Sports Agent Blog Community would love to hear what you have to say on the topic. Thanks!

What happens when an agent misses the deadline? In some cases, it may cost the agent his job with that particular client and may mark that agent as one to stay away from for many potential future clients. In this business, one has to be flawless, because there are so many other options for players to choose from.

Take for instance, David Joseph, former agent of superstar and current Dallas Cowboy, Terrell Owens. In 2004, Joseph did not file with the NFL by the free agent declaration deadline, which meant that Terrell Owens, by rule, would not be allowed to be a free agent in the ensuing year and would still belong to the San Fransisco 49ers (even though T.O. did not wish for such a situation). The problem eventually was solved, with the Baltimore Ravens losing out on obtaining T.O., but Terrell Owens finding a new home in Philadelphia. David Joseph, on the other hand, was left without his superstar athlete as T.O. turned to Mr. Ruthless (Drew Rosenhaus).

Poor David Joseph. Not everyone gets to be named “Tool of the Week.”

But miraculously, T.O.’s case is not isolated, as the agent for Dennis Northcutt made the same error in the same year! Still wondering why there are more registered agents than there are football players and why many of them represent 0 clients? Take advantage of the fact that many people become registered agents and poorly represent their clients. Do not be one of those people to forget an important deadline that greatly influences one of your clients.