Scott Boras and the First Year Player Draft

The MLB First Year Player Draft is just days away, and over a thousand players will be selected. The top picks in the draft, however, are who most fans are interested in, and there is one agent who has had a tremendous effect on those players and the draft itself. Tom Wright explains the relationship between Scott Boras and the First Year Player Draft.

While free agency reached the majors in the mid-1970s, the MLB draft remained impervious to the new financial realities until the early 1980s. The first pick of the 1965 draft, Rick Monday, signed for a bonus of $100,000; the first pick of the 1982 draft, Shawon Dunston, signed for just $35,000 more. The draft was by no means a fair system, but without a union or leverage, draftees were largely indentured servants, forced to settle for whatever they were offered from drafting teams.

Things began to change in 1983. That year, the Twins drafted Tim Belcher, a promising young pitcher (and future MLB mainstay) with the first pick of the draft. The Twins were notoriously cheap at the time, and they opened the negotiations with a lowball offer of $90,000, slightly below what top picks had been receiving for twenty years. After some brief negotiation between Belcher and the Twins, Belcher consulted with his agent and came to a surprising conclusion: he would simply refuse to sign with the Twins. Instead, the young pitcher decided to take his chances in the supplemental draft in January, where the Yankees chose him first and signed him for the more reasonable sum of $125,000. Thus, modern draft negotiations were born.

Belcher’s agent, by the way, was a 31-year-old former ballplayer named Scott Boras.

If Marvin Miller is the architect of MLB free agency, Boras is clearly the architect of the rights of the modern draftee. Five years after engineering Belcher’s refusal to sign with the Twins, Boras negotiated a record-smashing, $235,000 bonus for draftee Andy Benes. Just one year later, he negotiated the first million-dollar contract for a first-round draft pick (Ben McDonald), and two years after that came the first million-dollar signing bonus (given to infamous draft bust Brien Taylor). The list of “firsts” and “highests” in draft bonus history now reads like a collection of Boras’s greatest hits, including the first major league contract for an amateur in draft history (McDonald), the first major league contract to a drafted high schooler (Todd Van Poppel, who signed a $1.2 million deal the year after McDonald) and eight of the ten largest signing bonuses of all time (including the most lucrative contract in history – Stephen Strasburg’s $15.1 million deal). Boras forced numerous rule changes in MLB’s draft structure, affecting everything from whether a GED makes one eligible for the draft to how much money each player in the draft can make to how long teams have to send a contract proposal. In the process, he has changed the draft from an orderly assignment of amateurs to a more equitable (if contentious) process in which 18 year-olds can become millionaires.

So how has Boras done it? He’s used a cavalcade of techniques. 

How Boras Broke The Draft

Creating leverage. One of Boras’s first realizations was that if he could find a way to give his players leverage, he could make them a whole lot more money.

If you have followed a major league team, you are aware that Boras’s favorite technique for creating leverage is to invoke the mystery team, a team that he isn’t allowed to name but is definitely interested in your player and wants to sign him to a big contract, so you had better pony up some more money. In the draft, though, this doesn’t work, since players can only sign with the team that selected them. Instead of threatening teams with the specter of other interested teams, then, Boras exploited the only credible threat he had: he began to tell teams that his players would simply walk away from negotiations. They will pursue other options, even if those options are less lucrative in the short term, in order to be drafted by another team the following year.

Now, for a college junior or high school senior, such a threat is credible since the player can go play in college and enter the draft again at a later date. For college seniors, though, there is no such recourse, since a senior in college can’t threaten to go back to school. So Boras came up with a novel idea; he began to declare that draftees would sign with independent league baseball teams if negotiations were unsuccessful.

Of course, this whole independent league gambit seemed crazy. “What player is going to forsake an MLB team to go toil for some independent team in the hinterlands?,” thought drafting teams. Then players actually started doing it. J.D. Drew spent a summer enjoying the balmy weather in Minnesota as a member of the St. Paul Saints, Jason Varitek signed with (but never actually played for) the Saints as well, and Luke Hochevar spurned the Dodgers for a season with the Fort Worth Cats.

These independent league gambits were stunningly effective. Drew was offered $3 million by the Phillies before he went to St. Paul; in the following draft, he signed with the Cardinals for almost $9 million. Varitek forced the Mariners to up their offer from $400,000 to $650,000, and Hochevar’s $2.98 million offer from the Dodgers turned into a $5.3 million offer from the Royals.

Occasionally, Boras has even managed to create leverage the old-fashioned way: by finding loopholes to make his clients free agents. In 1996, he noticed a clause in the CBA that granted free agency to draftees if the drafting team didn’t tender a contract within 15 of days of the draft; he exploited that loophole to win free agency for clients Matt White and Bobby Seay, the 7th and 12th picks in the draft, respectively. He also snuck Landon Powell through the draft and into free agency by encouraging him to get a GED in his junior year of high school; no MLB team realized that he was eligible for the draft, and hence no team picked him. Boras has often stated his belief that the draft massively suppresses the value of amateur players – after White and Seay signed for $10.2 million and $3 million respectively, it’s easy to see why he would make such a claim.

Waiting. Much like a student writing a term paper, Boras has a penchant for dragging things out until the very last possible minute. Boras knows that for a MLB team, the pressure for signing a first-round pick is high; he leverages this pressure by simply waiting, knowing that teams, if forced to wait around, will often begin to bid against themselves. This July, check out two things: 1.) how many draftees wait until the last week or the last day to sign, and 2.) how many of those procrastinators are Boras clients. You will undoubtedly find that the second category makes up a large percentage of the first.

Boras used this strategy to perfection in the infamous 2009 draft, when he let negotiations for the top three picks (all Boras picks) all go down to the wire in a successful bid to extract maximal amounts of money from drafting teams. With first pick Stephen Strasburg, Boras eventually got the Nationals to bid against themselves – they raised their offer by about $2.5 million over the last hour and eventually agreed to a $15 million deal just two minutes before the deadline. Second pick Dustin Ackley signed his deal with the Mariners about 15 minutes before the deadline, inking a $7.5 million deal plus up to $2.5 million in incentives for reaching the majors. Earlier in the process, Boras had indicated that he wanted “Mark Teixeira money” (i.e. $9.5 million) for Ackley; since Dustin would later earn about $2 million of the incentives plus the $7.5 million base, it seems that Boras got pretty much everything he asked for. Third pick Donavan Tate signed on the last day as well, but at least he came to an agreement earlier in the day – apparently, Boras was content with a $6.5 million deal that merely made Tate the highest-paid high schooler in draft history.

Giving cover to the player by taking the blame for rancorous negotiations. For a new draftee, there’s one very obvious disincentive to playing hardball in negotiations: the fans hate it. Many fans resent the idea that major leaguers make millions of dollars, and they particularly resent the idea that an 18-to-22-year-old who has never played a day of professional baseball would turn down more money than most of those fans will see in a lifetime. The risk of being excoriated by the press and the fandom is real, and some players can be cowed into lesser deals so as not to seem greedy.

Boras, though, takes the heat off the player. He tells the player that he, the agent, will handle all negotiations and that the player should stay out of the limelight and make milquetoast statements like, “I’m just looking forward to getting on the field!” Now obviously, no player asks for representation from Boras without knowing that the agent will fight for every last cent, but Boras acts as such an effective lightning rod that the fans somehow overlook the player and blame Boras for the protracted negotiations. How many people remember Jason Varitek as the player who dragged his teams through interminable negotiations three times (once when drafted by the Mariners, once when he made the Red Sox wait around until Christmas in 2004, and once when he held out until February in 2009) despite the fact that only one team was bidding in each instance? No one? Exactly.

Giving cover to teams by setting unreasonable expectations. Back in 2009, Boras negotiated a massive deal for Stephen Strasburg, convincing the Nationals to offer over $15 million to a man who had never thrown a pitch in professional baseball. Strasburg’s deal wasn’t just a new record for a draftee; it shattered the old record, besting Mark Prior’s previous record by almost $5 million.

After such lopsided negotiations, you might expect press reactions to range from “the Nationals were robbed!” to “the Nationals were seriously robbed!” And you would be wrong. Most periodicals described the deal as one that was fair to both sides or perhaps even a win for the Nationals. Keith Law said that both parties made “the deal that had to be made.” Dave Cameron at Fangraphs even wondered whether Boras might have “lost a step.”

How on earth did this happen? How did a deal that was 50% larger than the biggest contract in history become viewed as a fair deal to both sides or a victory for the signing team? It’s simple. Early in the process, Boras told the press that Strasburg was worth $50 million. That’s fifty, as in a five and a zero. Obviously, there was no way that $50 million was anywhere close to what Strasburg was going to make, but Boras repeated that number so often that the press began to expect something of that magnitude, and when Strasburg signed for “only” $15 million, many members of the press decided that the Nationals had somehow pulled one over on Boras.

This “overstating of worth” is a common tactic on Boras’s part. In 2004, Boras repeatedly told the press that Jered Weaver was worth $10.5 million (the amount that Mark Prior received). Weaver eventually received “only” $4 million, nowhere near the initial price tag but still more than anyone else in that year’s draft besides fellow holdout (and fellow Boras client) Stephen Drew. In fact, this is such an effective tactic that Boras often uses it in free agent negotiations as well – you might remember Boras doing this with Alex Rodriguez (who signed with the Yankees for the “bargain” price of almost $300 million even though no one else was offering anything close to that) or Daisuke Matsuzaka (who “settled” for $52 million despite the fact that literally no other team was allowed to negotiate with him).

Announcing his demands in advance. In mid-2000s baseball, certain teams had money and would pay top dollar for prospects, while other teams would try to Moneyball their way into a cheap yet successful draft class. Realizing this, Boras decided that the best way to get large contracts for his draftees was simply to avoid being drafted by poor teams. Therefore, he began to make outrageous salary demands before the draft had even happened, knowing that these demands, combined with Boras’s unwillingness to settle for lesser dollars, would keep all but the richest teams away. In 2001, Boras convinced the Phillies that he was serious about a huge deal for client Mark Teixeira; the Phils passed on the young first baseman and let the Rangers select him with the fifth pick of the draft (the Rangers signed him to a $9.5 million deal). In 2004, Boras’s effect was even more dramatic, as his demands for Weaver dropped the pitcher from a top-three pick to the 12th pick of the draft. Larger still was the effect Boras had in 2007, when he demanded (and eventually received) a $7 million deal for Rick Porcello, dropping Porcello from a top-two pick all the way to the 27th pick of the draft. The “Boras effect” was a well-understood phenomenon that could knock top-three picks to the bottom of the first round and low-first/high-second round picks all the way down to the 14th round (see Nick Adenhart in 2004).

MLB Fights Back: A Hard Cap Solution

Ultimately, this last tactic was the straw that broke the camel’s back. The whole point of the draft is that it allows bad teams to get better; if rich teams can simply dominate the draft the way they can the free agent market, there’s no point in having the draft at all.

MLB finally struck back in 2012, setting up hard caps on signing bonuses for draftees. In the new system, each team has a fixed amount that they are allowed to spend on their pool of drafted players (the exact amount depends upon which picks the team has), and any team that goes their amount over will be fined and/or docked future draft picks (a fine for being less than 5% over; loss of the next two first-round picks and a fine for being more than 15% over). Now, instead of simply asking teams for fair value, each player is basically asking for a slice of a predetermined pie.

How has Boras responded to this? As of yet, he hasn’t. Boras has been good at getting his players more than the MLB’s suggested slot values, but there’s no doubt that he is looking for something a bit more significant for his clients.

A Solution to the Hard Cap Solution?

Is there anything Boras can do? The answer may lie in MLB’s international free agent system.

Much like in the amateur draft, teams that sign amateurs from the international pool are subject to hard caps on how much they can spend; generally, these caps run from about $2 to $5 million, depending on the team’s finish in the previous year. The penalties for teams that exceed these caps are similar to the penalties for overspending in the draft, ranging from fines to significantly hampered participation in subsequent years’ pools.

In 2014, the Yankees were given an international amateur free agent cap of about $2.2 million. However, when the pool opened for business, the Yankees went on a spending spree and ended up overspending the cap by, oh, $12 million or so. All told, the Yankees signed 9 of the top 25 international amateur prospects that year. The Red Sox quickly followed suit, eventually blowing through their cap number by about $30 million (thanks in large part to the signing of Yoan Moncada). The penalty? A 100% fine on all monies spent over the cap, plus the loss of the right to sign any player for more than $300,000 in the two following years.

Did flouting the system pay off for the Yankees or Red Sox? Almost definitely. The Yankees and Red Sox realized that one great haul was better than three okay ones, so they went all in on one year of signings at the expense of the other two. Moncada alone is a top-five prospect in the game – the Red Sox could have spent years lurking around the international pool and never come close to pulling in a top-five prospect.

Could something similar happen in the draft? In other words, could the next Stephen Strasburg announce that he’ll only sign for $40 million dollars, fall to a team like the Yankees or Dodgers, and then sign for the declared amount? It’s certainly possible. A team that consistently picks at the bottom of the draft (or, worse, a team that consistently forfeits its first pick in order to sign free agents) could decide that one great pick, plus the right to sign significantly over-slot deals later in that draft, is worth the cost of two bottom-of-the-first round picks in subsequent drafts. This obviously hasn’t happened yet, in part because Boras hasn’t represented anyone as hyped as Strasburg was, but if another Strasburg or Bryce Harper or Mark Prior hits the draft, things could get very interesting…

Tom Wright wrote our Island of Misfit Teams series and defended the legacy of Bud Selig.

Check out Tom’s first book, Trolling Euclid: An Irreverent Guide to Nine of Mathematics’ Most Important Problems.

Follow us on Twitter @SoSHBaseball.

About Tom Wright 22 Articles
Tom Wright is a Red Sox fan who decided to move closer to the Sox single-A affiliate in upstate South Carolina, where he now resides. By day, he teaches math to enterprising young college students at Wofford College; by night, he’s a writer and a jazz saxophonist. His first book, Trolling Euclid: An Irreverent Guide to Nine of Mathematics’ Most Important Problems, came out in February and is now available on Amazon.

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