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Thursday, March 27, 2014

Boras Corp. Loses Grievance Claim Against Beltran

Hope Scott has socked some pocket change away for such hard times.

The Boras Corporation—the powerful agency led by Scott Boras—has lost a grievance action that it brought against recent Yankees signee Carlos Beltran, report Bob Nightengale and Jorge L. Ortiz of USA Today. Boras had sought $1.3MM in damages from Beltran for leaving his agency in October of 2011, prior to inking a two-year, $26MM contract with the Cardinals.

The ruling by arbitrator Shyam Das held that Boras could not enforce the following provision in his contract with Beltran:

“You understand and agree that we invest substantial resources, time and effort in preparation for free-agent contract negotiations and salary arbitration hearings. Therefore, you agree that if you terminate our agency authorization during or after a championship season, and before the following championship season you sign a free-agent or arbitration-eligible contract (whether single- or multi-year), you agree to pay us 5% of the entire contract regardless of who negotiates it on your behalf.”

eddieot Posted: March 27, 2014 at 10:25 AM | 45 comment(s) Login to Bookmark
  Tags: austin jackson, carlos beltran, robinson cano, scott boras, yankees

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   1. Robert in Manhattan Beach Posted: March 27, 2014 at 01:25 PM (#4677844)
You understand and agree that we invest substantial resources, time and effort in preparation for free-agent contract negotiations and salary arbitration hearings.

You understand that those Heyman articles don't write themselves.
   2. Nasty Nate Posted: March 27, 2014 at 01:31 PM (#4677852)
A quote from Edwin Jackson in the article: "Come on, you can't have it both ways. You can't take away guys from another agency, but when your guys leave, sue them."
   3. Gonfalon Bubble Posted: March 27, 2014 at 01:34 PM (#4677853)
BREAKING: Jon Heyman reports that arbitrator Shyam Das is ugly and has a small dick.
   4. Joyful Calculus Instructor Posted: March 27, 2014 at 02:05 PM (#4677875)
Wow, whoever Beltran's lawyer is, hire that guy.
   5. Joe Kehoskie Posted: March 27, 2014 at 02:09 PM (#4677880)

I can't believe that contract clause got past the MLBPA in the first place.
   6. Sean Forman Posted: March 27, 2014 at 04:07 PM (#4677928)
I was curious why this went to arbitration. Was that a term of the contract? Term of Boras being a certified agent forced by the MLBPAA?

I'm also curious how many players actually have representation review these contracts. I would suspect it's pretty small or does the MLBPAA review these?
   7. Jim Wisinski Posted: March 27, 2014 at 04:12 PM (#4677937)
This is some classic Boras-speak:

Boras warned of dire consequences:

"It basically makes the agent an at-will employee. Is this what you want? You should be responsible for the work you do. We need accountability on both sides. ... The understanding of this rule is that it now promotes the vast majority of agents to take any deal they can get. The agents' conduct will be affected. This rule gives owners a lot more power. This is not in the best interest of major-league baseball players."


If we don't have these contract clauses that get me free money or make it less likely that players will take their business elsewhere then doom will fall upon everyone!
   8. Joe Kehoskie Posted: March 27, 2014 at 04:55 PM (#4677961)
I was curious why this went to arbitration. Was that a term of the contract? Term of Boras being a certified agent forced by the MLBPAA?

Player-agent disputes have to go to arbitration, per MLBPA regulations.

I'm also curious how many players actually have representation review these contracts. I would suspect it's pretty small or does the MLBPAA review these?

The MLBPA reviews them, but apparently not very well.

***
Boras warned of dire consequences:

"It basically makes the agent an at-will employee. Is this what you want? You should be responsible for the work you do. We need accountability on both sides. ... The understanding of this rule is that it now promotes the vast majority of agents to take any deal they can get. The agents' conduct will be affected. This rule gives owners a lot more power. This is not in the best interest of major-league baseball players."

Talk about shameless. This wouldn't be a problem if guys like Boras didn't make such an effort to poach players from rival agents.
   9. billyshears Posted: March 27, 2014 at 05:19 PM (#4677982)
I'm mostly with Boras on this one. Just how short a period can there be between the date on which you fire an agent and sign a new contract before you have to pay the agent his commission? Clearly there is a lot of work done in contemplation of free agency that an agent deserves to be compensated for. Do players pay agents on an hourly rate for that work? I doubt it. Full commission seems steep, but there should be some recognition that an agent doesn't earn his fee solely on the date the contract is signed..
   10. The Yankee Clapper Posted: March 27, 2014 at 05:25 PM (#4677988)
Clearly there is a lot of work done in contemplation of free agency that an agent deserves to be compensated for.

Why? How many players switch agents during or after their walk year? Probably not that many, and fewer for the better agents, I'd assume. Seems like whatever work an agent does is overhead, not unlike the effort to sign-up new clients, which is all uncompensated if the player doesn't sign with his firm.
   11. Harveys Wallbangers Posted: March 27, 2014 at 05:26 PM (#4677989)
I'm mostly with Boras on this one. Just how short a period can there be between the date on which you fire an agent and sign a new contract before you have to pay the agent his commission? Clearly there is a lot of work done in contemplation of free agency that an agent deserves to be compensated for. Do players pay agents on an hourly rate for that work? I doubt it. Full commission seems steep, but there should be some recognition that an agent doesn't earn his fee solely on the date the contract is signed..

are you or have you ever been a consultant? because that is a consultant's argument

the boras clause is something along the vein that consultants insert on how if the company ever achieves 'x' goals within 'y' months/years of the consultants work with the company then the consultant should get compensated

didn't buy it there. don't buy it here.

give boras credit for wanting to get paid on other people's labor though. you don't ask you don't get
   12. Johnny Sycophant-Laden Fora Posted: March 27, 2014 at 05:29 PM (#4677993)
"It basically makes the agent an at-will employee. Is this what you want?


Well, I'm at "at will employee" so yes, I think baseball agents should all be at will employees meaning a player can fire them any time for any reason.
   13. Johnny Sycophant-Laden Fora Posted: March 27, 2014 at 05:33 PM (#4677996)
The understanding of this rule is that it now promotes the vast majority of agents to take any deal they can get.


the agent can't take any deal he can get- the player is the one who has to sign

The agents' conduct will be affected.

and so what's the point? Of course it will be, it gives an agent an added incentive to make his clients happy

This rule gives owners a lot more power.

no it doesn't

This is not in the best interest of major-league baseball players.

Ask Beltran about that- ask any player who wanted to can his agent, but was afraid to because of this clause.
   14. Harveys Wallbangers Posted: March 27, 2014 at 05:34 PM (#4677997)
I think baseball agents should all be at will employees meaning a player can fire them any time for any reason.

you and your crazy ideas.................
   15. PreservedFish Posted: March 27, 2014 at 05:42 PM (#4678000)
I'm mostly with Boras on this one. Just how short a period can there be between the date on which you fire an agent and sign a new contract before you have to pay the agent his commission?

If Boras actually handled the negotiations and was fired before Beltran touched pen to paper, then I agree. Otherwise I agree with the argument in #10.
   16. Joe Kehoskie Posted: March 27, 2014 at 05:43 PM (#4678002)
and so what's the point? Of course it will be, it gives an agent an added incentive to make his clients happy

No, it gives him an added incentive to do a club-favorable deal just to ensure he receives a commission check for the next x years, if he fears his client is about to leave for another agent. Boras is right about that. What Boras didn't bother to mention is that his predatory agency has been the biggest cause of this problem.

***
I'm mostly with Boras on this one. Just how short a period can there be between the date on which you fire an agent and sign a new contract before you have to pay the agent his commission?

It's not like Beltran used Boras to get 99 percent of a deal done and then fired him in an attempt to not pay the commission. By rule, player-agent contracts are at-will and for a maximum of one year in length. As he's often done with MLB, Boras was trying to make an end-run around the MLBPA's rules.
   17. Robert in Manhattan Beach Posted: March 27, 2014 at 05:56 PM (#4678008)
It basically makes the agent an at-will employee. Is this what you want?

It is and it should never have been otherwise.
   18. toratoratora Posted: March 27, 2014 at 06:02 PM (#4678011)
It basically makes the agent an at-will employee

And what's wrong with that?
   19. Yeaarrgghhhh Posted: March 27, 2014 at 07:01 PM (#4678037)
15 is right -- this should be a very fact driven inquiry. Obviously you can't fire your agent five minutes before signing a deal and refuse to pay him anything. But if a player isn't happy with the agent's work, goes to someone else, and signs a deal a week later based on the new agent's negotiations, the old agent shouldn't get a cut simply because he did some early leg work (especially if that leg work was counterproductive).
   20. Willie Mayspedester Posted: March 27, 2014 at 07:11 PM (#4678039)
There should be a negotiation fee worth X dollars per hour or Y% of the contract. Why wouldn't a player have an agent negotiate the deal then fire him right before signing and "negotiate" directly with the team and split the agent's commission with the team?

(As an extreme example of the agent getting screwed)

EDIT: for clarity
   21. ptodd Posted: March 27, 2014 at 11:01 PM (#4678046)
I have to say I am on Boras side here. It is quite common for any agent to have a contract and a penalty for early termination. In RE for example the standard agents contract will state that the seller must pay the commission on a sale to them if they break the contract and the sale is made during the contracts validity. Only way around that is to negotiate a break clause. The rationale is the work the RE does in the beginning in listing the house and the open houses.

Most people also have contracts with Verizon et all that requires you to use them for 2 years or pay a penalty if you break early. Beltran entered into a contract with Boras, much like he enters into a contract with the Yankees. Nobody forced him to sign it. If he is not happy with the Yankees he can't do anything but play out his contract, unless he negotiated an optout.

““This case is about what is or is not permissible under governing MLBPA regulations …” Das wrote. “The MLBPA, as the exclusive collecting bargaining representative, gets to decide what is in the best interests of the players it represents.”:

Das as you remember was fired by MLB for siding with MLBPA on the Braun case.
Boras did not sign a contract with MLBPA, but with Beltran. How could MLBPA regulations be binding over a contract Beltran signed with Boras. If that’s the case, shouldn’t MLBPA take responsibility to ensure that players abide by their regulations?

I would like to see the wording on the MLBPA regulations and if they had provided this to all the player agents.

Boras might want to get Arods lawyer. I think he has a good case against the arbitrator.
   22. The District Attorney Posted: March 27, 2014 at 11:07 PM (#4678047)
Obviously you can't fire your agent five minutes before signing a deal and refuse to pay him anything. But if a player isn't happy with the agent's work, goes to someone else, and signs a deal a week later based on the new agent's negotiations, the old agent shouldn't get a cut simply because he did some early leg work (especially if that leg work was counterproductive).
By this language, you could fire Boras in April 2013 and still have to pay him for the contract you sign in March 2014. So... yeah.
   23. PreservedFish Posted: March 27, 2014 at 11:11 PM (#4678048)
I have to say I am on Boras side here. It is quite common for any agent to have a contract and a penalty for early termination.


But is this what happened?
   24. 'zop sympathizes with the wrong ####### people Posted: March 27, 2014 at 11:24 PM (#4678049)
I'm also on Boras's side. "Tail" / "deal-away" provisions are a pretty standard feature of engagement letters for professional retentions with commission-based comp. There's no reason why they wouldn't be reasonable in this context, with appropriate carveouts.
   25. Steve Balboni's Personal Trainer Posted: March 27, 2014 at 11:32 PM (#4678051)
I think Boras' case would be much stronger if...it was not being made by Scott Boras.
   26. steagles Posted: March 28, 2014 at 01:26 AM (#4678067)
it seems like there's a serious conflict of interest for boras here.
things i would like to know:
1, has this clause always been in his clients' contracts?
2, if not, then when was it first used?
3, is it in every client's contract, or just ones his clients don't read?
4, do his clients have independent representation when signing this contract?
5, does he advise his clients to seek independent representation in signing this contract?

   27. valuearbitrageur Posted: March 28, 2014 at 02:19 AM (#4678073)
Most people also have contracts with Verizon et all that requires you to use them for 2 years or pay a penalty if you break early.


I'm guessing you can't think of any contracts you would find objectionable.

"Your honor, it is clear my servant agreed to the indenture, for you can see his neck has not yet felt the kiss of my sword."
   28. 'zop sympathizes with the wrong ####### people Posted: March 28, 2014 at 07:50 AM (#4678092)
I find it interesting you compare Beltran, a millionaire many times over with numerous agents clamoring to represent him, with an indentured servant.

It's essential to remember that nearly every engagement in a similar context in other fields would have a tail. There are other ways to handle the issue identified by Boras - for example, upon switching, a player might be obligated to pay a flat fee penalty or a fee for services already rendered based upon a prenegotiated hourly fee - but they're much more cumbersome than a tail. That's why everyone uses it. Try hiring an investment bank to help you raise money for your business without one, or an agent to sell your commercial property, etc...
   29. Hal Chase School of Professionalism Posted: March 28, 2014 at 09:32 AM (#4678120)
The MLBPA reviews them, but apparently not very well.


Is there anything the MLBPA is doing well these days?
   30. billyshears Posted: March 28, 2014 at 11:09 AM (#4678184)
By rule, player-agent contracts are at-will and for a maximum of one year in length. As he's often done with MLB, Boras was trying to make an end-run around the MLBPA's rules.


The concept of "at-will" is in conflict with the notion of a contractual relationship, unless the contract or some superseding authority provides otherwise. So, a player-agent contract can't be at-will "by rule" unless there is a superseding authority that makes it so. I grant that MLB guidelines concerning player-agent relationships would be a superseding authority, but I haven't seen any such guidelines that makes the player-agent relationship at-will (other than this ruling, and it's not clear on what, if any provisions of MLB player-agent guidelines this ruling is based).

I agree that this clause seems overly punitive, and shouldn't be enforced as written, but there should be an analysis of the facts and circumstances to determine what compensation, if any, to which Boras is entitled. If Beltran alleged that Boras did not perform his obligation under the contract, he could terminate the contract for cause, and Beltran would not have to honor the penalty provision of the contract in any case (if his termination for cause was justified). If two individuals have a contract, and one performs under the contract, the other party shouldn't be able to terminate the contract contrary to its terms with no repercussions.
   31. base ball chick Posted: March 28, 2014 at 11:24 AM (#4678197)
so a ballplayer needs to hire a SECOND lawyer to read his contract with his agent?

the clause is ridiculous. it means that boras puts in there that if you switch agents, no matter when, he gets an additional cut of the contract, even if he has done no work whatsoever.

i am not getting how not having this clause, which sounds like a reserve clause, benefits the owners.

of course i am not a lawyer, so i would appreciate it if one of youse would please explain.

and "because it has always been done", or "all the other agents are doing it too!!!!" is not an excuse
   32. Never Give an Inge (Dave) Posted: March 28, 2014 at 12:26 PM (#4678255)
I agree that the Boras clause is a pretty standard component of contracts with a success-based commission. That said, if it was in violation of the MLBPA regulations, Boras should have known that.

Well, I'm at "at will employee" so yes, I think baseball agents should all be at will employees meaning a player can fire them any time for any reason.

Yes, but you have to be paid a salary or hourly rate for your work before you get fired. I don't think a typical player/agent arrangement provides for that, but I could be wrong.
   33. Johnny Sycophant-Laden Fora Posted: March 28, 2014 at 02:07 PM (#4678311)
I have to say I am on Boras side here. It is quite common for any agent to have a contract and a penalty for early termination. In RE for example the standard agents contract will state that the seller must pay the commission on a sale to them if they break the contract and the sale is made during the contracts validity.


The legal validity/enforceability of those provisions is a matter of some legal dispute (In NY they are generally enforced)

Most people also have contracts with Verizon et all that requires you to use them for 2 years or pay a penalty if you break early.

1: The idea usually is that they GIVE you a phone in exchange for a 2 year contract
2: Again the legal validity/enforceability of some of those provisions is a matter of legal dispute.

People can negotiate contracts that contain damages provisions in the event of breach, but those provisions have to bear some relationship to actual "damages" otherwise they are deemed to be an unenforceable penalty - unless this was a situation where Boras actually negotiated all or some of Beltran's contract OR he could show that he took a reduced rate/agent's % in exchange for that clause he wouldn't fair any better before a judge than he did before Das.
   34. Johnny Sycophant-Laden Fora Posted: March 28, 2014 at 02:39 PM (#4678328)
Yes, but you have to be paid a salary or hourly rate for your work before you get fired.


Yes, yes, you do, but that's not what Boras' provision does.

What Boras' provision functions as is a poision pill- it penalizes a player for leaving Boras it doesn't compensate Boras for work done in the past.

   35. Tripon Posted: March 28, 2014 at 02:56 PM (#4678341)
Carlos Beltran wouldn't have dropped Scott Boras if he felt he could have still gotten the best contract for him. Looking at this off season, I can't say he made a mistake switching agents. Stephen Drew and Kendrys Morales probably wished they switched too.
   36. if nature called, ladodger34 would listen Posted: March 28, 2014 at 04:32 PM (#4678413)
Looking at this off season, I can't say he made a mistake switching agents. Stephen Drew and Kendrys Morales probably wished they switched too.


I wonder how another agent (or even Boras) will handle this until they fix that qualifying offer stuff.
   37. Never Give an Inge (Dave) Posted: March 28, 2014 at 06:38 PM (#4678446)
What Boras' provision functions as is a poision pill- it penalizes a player for leaving Boras it doesn't compensate Boras for work done in the past.

Well, it compensates Boras; none of us knows how much work he did for Beltran prior to termination. The purpose of these clauses is to protect the agent from doing a ton of work for no compensation. As 'zop mentions earlier, investment banking engagement letters have similar clauses for similar reasons, and if they didn't you'd find more banks requiring ongoing retainers in addition to the success fee.
   38. Tripon Posted: March 28, 2014 at 08:37 PM (#4678461)
Well, it compensates Boras; none of us knows how much work he did for Beltran prior to termination. The purpose of these clauses is to protect the agent from doing a ton of work for no compensation. As 'zop mentions earlier, investment banking engagement letters have similar clauses for similar reasons, and if they didn't you'd find more banks requiring ongoing retainers in addition to the success fee.


Can a person make an inference that the work Boras provided wasn't good enough to keep Beltran as a client?
   39. joeysdadjoe Posted: March 28, 2014 at 09:24 PM (#4678469)
What Boras' provision functions as is a poision pill- it penalizes a player for leaving Boras it doesn't compensate Boras for work done in the past.


I'd be willing to bet Boras has benefited from poaching players and vulturing a contract commision much more than the other way around.
   40. billyshears Posted: March 28, 2014 at 11:30 PM (#4678509)
I'd be willing to bet Boras has benefited from poaching players and vulturing a contract commision much more than the other way around.


So? I'm amazed how many here are willing to disregard the provisions of contracts entered into voluntarily because Scott Boras is kind of a dick. Where are the libertarians when you need them?
   41. peewee Posted: March 29, 2014 at 02:00 AM (#4678527)
IANAL but a quick reading of the MLBPA Agent Regulations makes it pretty apparent that Boras has no case, players can change agents almost anytime they want and for any reason, and the clause in the contract violates MLBPA regulations.

6(K) Except as provided in Section 6(L), a Player may revoke a Player Agent Designation at any time...

6(L) Any Player who is unsigned for the next Major League Baseball season...may not revoke a Player Agent Designation or terminate a Player Agent Representation Agreement after October 15th of any year or the fifth day after the last day of the Player’s season, whichever is later, and before February 22nd of the next year, unless the Player first consults with the MLBPA.

6(M) No Player Agent Representation Agreement shall provide for liquidated damages or shall specify a remedy for a Player’s termination or breach of the Agreement.
   42. Tripon Posted: March 29, 2014 at 03:43 AM (#4678530)
So? I'm amazed how many here are willing to disregard the provisions of contracts entered into voluntarily because Scott Boras is kind of a dick. Where are the libertarians when you need them?


As peewee pointed out, Boras was acting in bad faith to begin with, so he can't be surprised that he lost.
   43. JLAC is engulfed in a harmless burst of flame Posted: March 29, 2014 at 05:18 AM (#4678533)
Tail provisions are garden-variety. Bad faith is the furthest thing from this.

What amazes me is not the dislike for Boras, but how it had become twisted around into a seemingly widespread belief that a guy who got $153 million for Jacoby Ellsbury, is bad at his job.
   44. billyshears Posted: April 03, 2014 at 02:18 PM (#4678549)
As peewee pointed out, Boras was acting in bad faith to begin with, so he can't be surprised that he lost.


Bad faith aside, my position has always been (see #30) that if this provision of the contract was in contravention with MLBPA guidelines, MLBPA guidelines should prevail. Thanks to peewee for finding those provisions.
   45. Johnny Sycophant-Laden Fora Posted: April 03, 2014 at 02:37 PM (#4678575)
Looking at #41 I think that the odds of Boras winning this grievance were always pretty iffy, like less than 1%, and Boras being Boras he HAD to know that, so what was the deal, why did he do this? He's now not only lost whatever coercive effect these provisions had on his clients, he's also undoubtedly made his clients and prospective clients somewhat leery of him-

what's his upside? He gets a $mil from Beltran? That's be a pyrrihic victory at best- he'd lose at least that much in the future when he loses out on recruiting a client because the guy's thinking, "Boras? Isn't he the guy who sues his own clients?"
A co-worker of mine suggested that grieving Beltran was a test run for going after Cano's money...

as YC would say, this looks like an unforced error by Boras

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