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More extensions, less free agency
One of the game’s rising young stars recently told me he was concerned about the flurry of contract extensions in baseball. The player didn’t want to be identified, but his thoughts intrigued me, in no small part because he is a candidate for an extension himself.
The player’s point was this: Free agency helped make the players union into a powerhouse. But now, with fewer top players reaching free agency, who is going to drive the top of the market? Shouldn’t players feel a sense of responsibility to those who came before them and those who will follow?
Fair questions, particularly if you look at the next two free-agent classes, which are almost devoid of stars. But when I expressed the player’s concerns to the head of the union, Michael Weiner, and a prominent agent, Scott Boras, I didn’t get the answers I expected.
Neither views the trend as necessarily a problem.
Boras, a staunch advocate of players determining their values on the open market, said he is more disturbed that some players are jumping into extensions without being fully informed of the pros and cons by their agents.
Others on the players’ side are more worried about the effect of draft-pick compensation on free agency as well as a potentially mammoth issue — the players’ declining share of the sport’s rapidly growing revenues.
Weiner, meanwhile, said he was fine with the ever-growing number of extensions and dwindling quality of the upcoming free-agent classes (Jacoby Ellsbury, Brian McCann, Shin-Soo Choo and Tim Lincecum will be among the biggest names available next offseason if, as expected, Robinson Cano re-signs with the Yankees.)
“As long as players are using their Basic Agreement rights in considered fashion, that’s all we ask for,” Weiner said. “They can do that through an extension as easily as through free agency.”
The union historically has viewed free agency as the best way to “raise the bar” for future salaries. But the top recent extensions — $220 million for Joey Votto, $180 million for Justin Verlander, $175 million for Felix Hernandez — help accomplish the same thing.
Extensions for younger players can be more problematic, particularly when the players agree to club options that further delay their free agency. Anthony Rizzo, for example, agreed to two club options in his new seven-year, $41 million contract with the Cubs, and now is eligible for free agency at 32 instead of 30. Then again, teams often will not award extensions unless the players accept such options.
The clubs are getting smart; it’s more efficient to lock up a young player during his peak years than sign a free agent, who by the time he hits the market usually is a depreciating asset. Players such as Rizzo benefit, too. Here is a kid who is 23, battled Hodgkins’ lymphoma in 2008 and spent nearly three months in the minors last season. He’s going to turn down $41 million?
Another point: While players often sign extensions at a discount, Kyle Lohse can attest that draft-pick compensation, in certain instances, forces free-agent players to sign for discounts, too. Thus, the harsh reality of the new compensation rules is yet another reason for certain players to jump into extensions.
Boras actually sees both sides — Jered Weaver, Elvis Andrus and Carlos Gonzalez are among his clients who accepted extensions in recent years. But the agent said certain players are getting questionable advice from agents who, in his opinion, are not capable of negotiating adequate deals.
“The biggest problem the union faces is that there should be more criteria and practical experience before agents can be qualified to represent players with the decisions at hand,” Boras said. “A large number of players believe that a social relationship is the primary foundation — in other words, ‘I like the guy,’ rather than qualifications.
“So much about free agency is about the level of information a player has. It becomes very complicated, very strategic. You’re talking about existing and future markets. You’re talking about current and future performance. You’re talking about a player’s wants, needs and preferences. Information is so important to an informed decision.”
Boras, an attorney, said his effectiveness as a negotiator stems from his legal training as well as his background as a minor leaguer with the Cardinals and Cubs. But it’s not as if player representation is turning into the wild, wild West, with renegade agents negotiating indefensible deals.
Union regulations do not require agents to be attorneys, according to a source. Even the lack of an undergraduate degree can be overcome if an applicant — say, a former player or an accomplished businessman such as Jay-Z — demonstrates certain life experience.
Precautions, though, are built into the regulations. Agents must consult with the union if representing arbitration-eligible players or negotiating a contract that will cover arbitration years. And if an agent has not done arbitration, he must consult with an attorney who has.
In other words, extensions such as Rizzo’s do not happen without input from the union. And let’s not overlook the elephant in the room: Less prominent agents fear losing clients to bigger fish like Boras, motivating them to strike quick deals and protect their commissions.
Yet, is there really any harm in all this?
Financial security can help a player relax and perform at a higher level. If Rizzo develops into a perennial All-Star, his $41 million will only amount to his “first fortune.” Players such as Troy Tulowitzki and Ryan Braun signed monster extensions before their initial long-term contracts were even complete.
Still, free agency helps escalate salaries more rapidly.
Verlander, for example, would have created an even better foundation for a future free agent such as David Price if he had waited to hit the open market after next season and signed for $30 million rather than $25.7 million per year. At the other end of the scale, a youngster such as Matt Moore delayed his right to become the next Price by two years when he signed a five-year, $14 million deal with three club options.
No one is going hungry, which is why the union is fine with the status quo. The bigger issue could be down the line, if the players decide they’re not getting a big enough slice of the pie. The NFL, NBA and NHL each guarantee their players a percentage of league revenues while operating with salary caps. It’s difficult to imagine the baseball union ever going for such a plan.
The money is still flowing. Just differently from before.