The Last Time Scott Boras Screwed Up

As has been documented in some depth this offseason, the new collective bargaining agreement is bringing about consequences that might not have been fully understood — by the players, at least — at the time both sides were celebrating labor peace.

These latest developments weren’t entirely unexpected, however. Consider, for example, some previous statements by Scott Boras on the matter.

“The integrity of the game is at hand here,” Boras said. “Clubs are refusing to employ premium free agents for their true market value because of an artificial, collectively bargained process that does not help the game or the fans’ perception of the game. These players earned their free agency and played at very high levels to get it.

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“Like any players, they want to play baseball. But they’re also looking at the long-term aspect of their careers. This system has placed them not in free agency, but it’s placed them in a jail.”

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“The system they’ve been dealt has basically prevented them from free agency,” Boras said.

Notably, these comments weren’t uttered by Boras during this slow-moving winter. While they ring similarly to complaints about baseball’s “non-competitive cancer,” the words above are from four years ago. When multiple Boras clients got well under what was perceived to be their market value in 2014, changes to the CBA were blamed then, too. At the end of the 2011, the players and owners got together on a new CBA, valid through the 2016 season. Two big changes dealt with the MLB Draft, as follow.

MLB Draft Bonus Pools

Prior to 2012, MLB had recommended values for picks in the draft, but teams were allowed to pay players any amount they chose. That meant that top picks might be more likely to hold out and also that some of the best players might fall in the draft due to signability concerns. The worst teams weren’t necessarily getting the best players. Owners wanted to spend less and gain more certainty in the draft, and the players were willing to concede spending limits for players who weren’t even in the union yet.

The resulting agreement created the current system, where every pick in the first 10 rounds is assigned a slotted bonus. Teams are allowed to spread around their total bonus pool any way they deem fit, but harsh penalties ensure that teams won’t spend more than 5% above their allotment. On its own, the adjustment seemed like a minor one as it related to current major leaguers. When paired with another change to the draft, however, the new CBA severely hurt some free agents.

Free-Agent Compensation

Before 2012, the process for losing a free agent and gaining a draft pick was done in a complicated, arcane manner using Type-A and Type-B free agents who might have been with their teams only a few months. The rating system was also not a reliable barometer of how good or sought after those players might be.

The solution was relatively simple: teams could make a qualifying offer to a player who had been with the team at least one year. If the player declined the offer and signed with another team, the team losing the player would receive a draft pick at the end of the first round. The team signing the player would lose their first pick in the draft so long as it wasn’t a top-10 selection. Like the bonus-pool provisions, the changes appeared to be a simplification of the existing rules, but in concert, these alterations caused some free agents to lose considerable value in the open market.

Prior to 2012, if a team lost a draft pick, nothing would prevent that team from spending more money on later, harder-to-sign picks. In the last CBA, losing a first-round pick meant not only losing the opportunity to select in the first round; it also removed the financial firepower to sign other top-level talents. It wasn’t just a pick that was being lost. It was an entire draft strategy. As that bonus-pool money became more valuable, there was a large cost in signing a free agent with a qualifying offer — as well as a big disincentive for teams to bring back their own free agents.

In 2012, specifically, the ramifications of the new CBA weren’t felt by players very keenly. The top free agent, Zack Greinke, had no compensation tied to him. Josh Hamilton had no problem getting a big contract from the Angels, who’d shown their disregard for draft picks the season before when they signed Albert Pujols and C.J. Wilson. The Braves signed B.J. Upton but weren’t docked a pick because they were losing Michael Bourn at the same time. Boras was able to steer both Bourn and Nick Swisher to Cleveland because Cleveland’s first-round pick was protected.

There were a few warning signs that winter, however. Kyle Lohse received a solid $33 million guarantee from the Brewers, but he had to wait until the end of March to find that deal. Adam LaRoche had to settle for a two-year contract with the Nationals, and Rafael Soriano received only a two-year pact after a very good year with the Yankees. It was the next year the market crashed.

Thirteen players received qualifying offers in the 2013-14 offseason, including three Yankees players: Robinson Cano, Curtis Granderson, and Hiroki Kuroda. Unlike the present-day Yankees, the 2014 version abandoned any pretense of getting under the competitive-balance tax. After missing the playoffs, New York was happy to only lose one draft pick, bringing back Kuroda while signing Carlos Beltran, Jacoby Ellsbury,and Brian McCann despite the qualifying offers attached to each. The team also brought in Masahiro Tanaka to ensure they would not miss the playoffs again. Robinson Cano signed with the Mariners and Granderson went to the Mets, both of which clubs had protected first-round picks protected. The Rangers swapped out Nelson Cruz for Shin-Soo Choo. Mike Napoli returned to the Red Sox.

Cruz, Stephen Drew, Ubaldo Jimenez, Kendrys Morales, and Ervin Santana all remained unsigned and attached to draft-pick compensation into mid-February. Jimenez took around $50 million from the Orioles in late-February. Baltimore also signed Cruz to just a one-year deal around the same time for well below the qualifying offer of $14.1 million. Ervin Santana waited until mid-March and took a one-year deal for roughly the qualifying-offer amount. Drew and Morales kept holding out so Boras could work his magic. The trick never came.

Drew signed a prorated version of the qualifying offer with Boston in May, receiving about $10 million for his services. He had a terrible season with the Red Sox and Yankees, and has earned about $12 million on one-year deals in the three years since. Morales agreed with the Twins for about $7.5 million after the 2014 draft, when no compensation was required to sign him. Like Drew, he was also terrible in 2014, but he signed a two-year deal with the Royals followed by a three-year deal with the Blue Jays, earning around $50 million after that lost season. Both Drew and Morales were hurt by the new system of free-agent draft-pick compensation, hard draft bonus-pool caps, and Boras’s inability to see it coming. They all took a risk, and it backfired in each case.

The following year saw more of the same. The pick-protected Red Sox were the big spenders — on Hanley Ramirez and Pablo Sandoval, in this case. In 2015, we actually saw three players accept qualifying offers for the first time, including Boras client Matt Wieters.

Given the problems these provisions created for players, changing the rules was a big deal for players. As a result of the most recent CBA, penalties have been softened for signing free agents with qualifying offers; the gains for losing a free agent have been lessened, as well. In order to receive a pick after the first round, a team would need to be a revenue-sharing receiver and lose a player signed for more than $50 million. Most other teams receive a pick after round two, with teams over the competitive-balance tax amount receiving a pick after round four. In no situation can a team lose their first-round pick. In addition, players cannot receive a qualifying offer more than once. The slotted bonuses were smoothed out so earlier picks weren’t quite as valuable.

The new rules have done a pretty good job of lessening the damage to players in free agency on that issue, it seems. This year, meanwhile, it appears as though a different, slightly altered provision is wreaking havoc on free agency. The competitive-balance tax seems to have taken out two of the biggest spenders in free agency, and little has been done to encourage teams to accelerate the rebuilding process. The growth of the tax threshold has been very slow over the years compared to revenue, while greater penalties for transcending that threshold incentivize organizations to “reset” their payroll — which is what the Dodgers and Yankees have done this offseason. If, for example, those two teams had pursued Yu Darvish, then Darvish himself would have benefited from the competition, also leaving behind more competitors for other free-agent pitchers. With those teams out, however, there has been decidedly less competition for free agents.

Four years ago, two Scott Boras clients were left without a spot when the season arrived. This year, there are a lot more players waiting for the offer they will accept — and a lot of those players are Scott Boras clients. Maybe Boras needs to adjust to the market, as Travis Sawchik has suggested. Maybe, if he continues to hold his ground, teams will give in. We don’t yet know how things will play out as winter turns to spring. Hopefully, for everyone involved, this year goes better than it did four years ago — and hopefully, four years from now, we aren’t spending a lot of time discussing how a few changed provisions in the next CBA are slowing down the marketplace.