Envisioning the New Age Baseball Agency

Players like Jose Ramirez could prompt agents to market their clients differently in the future. (via Erik Drost)

Major League Baseball is an ever-evolving behemoth with independent organizations bargaining for collective rights often to the detriment of the players it employs. Inside this power vacuum, fight for control between players and ownership is the pursuit of small or cutting-edge advantages, ones which information like advanced statistics and immense data collection provides. While teams often pursue the advantages provided by sabermetrics for the purposes of competitive advantage against other organizations, the advent of large data analysis and programming units inside major league front offices has come at a cost to the players, as well.

The dangers are manifested in different areas, but the informational asymmetry with which teams operate can serve only to injure players on the whole:

And here we arrive at a point of concern: while analytical work in baseball offers tremendous insight and can even benefit individual players, it appears that organizations have a significant advantage over players in their access to data and their capacity to use that data in decision making.

Now, if this analytical work were limited merely to assessing player value or estimating the possible range of a player’s outcomes, the informational asymmetry would represent less of a concern. However, as teams and public analysts continue their pursuit in the direction of health-risk modeling, the impact on players is increasingly serious.”

I disagree with the author–myself, humorously–in that estimating the range of player outcomes or player value is actually a distinctly dangerous possibility.

But the current reality is that while a few players like Daniel Murphy, Cody Allen, and others believe in the power of advanced statistics, they are not being wielded to their aid in the player contract context. There are quite a few culprits in this matter, be it the players themselves, the Major League Baseball Players Association in its bargaining process, or the agents providing services. The solutions are unclear at the moment, but one potential opportunity exists for an agency that embraces the transition to modern baseball.

This is not to say that a few organizations have not implemented analytical departments to serve agents’ negotiating capacity. But the efforts have not been in any sense overwhelming. In a detailed discussion of analytics on the player side, R.J. Anderson illuminated the gap between the haves, teams, and the have-nots–agencies:

One way agencies are handicapped is manpower. Teams have increasingly beefy staffs whose raison d’être is figuring out how baseball works. Agencies, by and large, do not. Blunck is the only baseball analyst at Octagon, yet he’s also tasked with overseeing the basketball department. To think, Octagon is one of the larger agencies–its corporate website boasts 50 locations and 800 employees across 22 countries, and its baseball department counts Randy Johnson, Wade Boggs and Joe Maddon as clients as well as current players like Felix Hernandez, Carlos Martinez and Jose Bautista. Smaller enterprises don’t have the privilege of employing someone (let alone someones) to mind and/or mine the data.”

This provides a strong example of the manner in which even influential agencies provide bare-bones analytical groups, but the reasoning for this decision may be a bit underwhelming:

As Anderson’s piece further provides:

The agents interviewed for this piece seemed content with that reality. They, after all, are primarily concerned with keeping their clients and recruiting new ones, tasks that seldom require knowing the differences between Wins Above Replacement measures. Besides, they say, an agent’s job is to read and react to the market–not to create one using analytical voodoo.

‘It seems highly unlikely that any agent, including Scott Boras, has discovered something statistically that most teams don’t have already,’ agent-turned-consultant Joe Kehoskie said. ‘Most outlier deals–of which there seem to be fewer and fewer–are due to team needs and limited supply and not because an agent pulled off a statistical miracle.'”

Kehoskie seems to suggest that free-market contracts are the central responsibility of agents, perhaps the only one, and that due to the amount of information organizations now act on, agents can longer significantly manipulate the price of the players. This raises a few interesting questions, among which–if the agents’ key counsel occurs during free agency and they no longer have the capacity to pull off a “statistical miracle”–why should players not just employ a contract lawyer for a short period and a publicist for the remainder of the time? Secondarily, can it be asserted that open-market negotiations are the only times during which an analytics department would be a cost-efficient investment for player and agent?

As to the first, it appears the noted binder builder Scott Boras has embraced hyperbole as a market manipulator rather than analytical argument. In the past month, Boras dubbed Eric Hosmer “Playoff-ville, Federal Express,” and said of Jake Arrieta, “He’s a big squirrel with lots of nuts in his trees.” But perhaps the most enjoyable offseason pitch from Boras was that regarding J.D. Martinez:

A Hardball Times Update
Goodbye for now.

High atop the MLB Empire rests the King Kong of Slug—a 50-point lead.” Boras said Martinez’s pace with DBacks would project to 70 HR and .741 SLG over 150-game season. Boras: “That’s how dominant J.D. Kong is.”

Boras in his public contract puffery has deployed the on-pace fallacy over the projection of a limited season, a posturing that is seemingly needless considering Martinez is one of the two best players on the open market in 2017. Indeed, Boras’ public boasting regarding slugging is rather humorous considering no team is going to be influenced by this sort of facile chest pounding. Of course, this is merely Boras’ public posturing, which has begun to align with a self-created caricature rather than appearing as any sort of cohesive strategy to create financial value for his clients.

Yet, in the context of R.J. Anderson’s article regarding the priority for adding new clients above developing an in-house analytics staff, Boras appears to be a tone-deaf example of the manner in which baseball is passing agencies by. Particularly galling is that agents, by agreeing to represent an athlete, enter into a relationship which has a fiduciary duty to the player. Further, from a practical sense, effective and informed counsel improves the financial expectations of the agent as well as the player.

Further, where the agents wish to suggest the most important contribution occurs in free-agent contract negotiation or arbitration, perhaps the most powerful aspect to being an agent in the context of baseball is the role of counsel in the pre-arbitration context.

Consider for a moment a player like Jose Ramirez, producer of a 4.5-WAR season at age 23 positioned to hit free agency in his late 20s with a depth of skills suited to age effectively. Indeed, with 7.2 WAR accrued before his age-24 season, Ramirez has the sort of upside free agency would treat kindly if he reached it while still productive. Yet, before the 2017 season, in which Ramirez would finish in the top three of American League MVP voting with a six-plus-WAR season, Ramirez signed what was at the time a cheap extension. With only five years and $26 million guaranteed, as well as two super cheap team option seasons of $11 and $13 million dollars, Ramirez appears to be one of the 10 most valuable assets in baseball over the next few years.

Of course, there are mitigating factors. Ramirez was of limited prospect pedigree, with a small international signing bonus that increased the incentive to sign a long-term extension with guaranteed money. However, this is a period of time in which advanced statistics, nuanced counsel, and difficult conversations may have increased Ramirez’s long-term earning power exponentially.

Major League Baseball’s contract power structure of multiple pre-arbitration and three arbitration seasons creates the need for optimal decision making and risk balancing, an area in which sabermetrics have made significant gains in terms of quantifying future market value, skill diminution, and other factors of decline. Further, agents have the power to offer multiple options and solutions tailored to individual risk as well as player capacity.

Consider the ability to insure a player in order to mitigate risk of market diminution based on injury in the final years of arbitration. It is the pre-market entrance counsel that will prove to be the most powerful for players, and analytics can only serve to improve the quality of that counsel.

This conversation is related to the development of constantly improving player health modeling analysis, which is a goal at the center of teams’ pursuit of the next major market advantage. An example of this is Josh Kalk, who was on the cutting edge of analyzing PITCHf/x in the early expansion of the frontier. His capacity to improve predictive health modeling and a team’s ability to protect its pitcher offered so much upside that bringing him in house without noise became a priority:

Tell no one, they told the new guy. Send a cryptic good-bye to the blogosphere if you want. That’s it. Not only was Kalk barred from revealing the identity of his new employer, but the Rays took the added step of leaving his name off their front office directory.”

Not only does this sort of modeling aid teams in terms of competition but also against its employees. It provides negotiating informational advantages in determining whether to negotiate an extension or use a high-risk asset to completion before tossing it aside. What R.J. Anderson noted is that the divide between knowledge of the risk between player and team could only expand in the coming days.

Rather, the information gulf now resides between the teams and the players—or, precisely, the players’ agents. With the league investing in new data sources, like Statcast, the gap could continue to grow.”

In order to improve the position of players in free agency and while under team control, agents need to change the manner in which they operate, or players need to compel such a change in order to better protect their economic interests. The most important bargaining counsel a player will receive is not when considering between three offers on the free-agent market with similar annual average values but rather when they are making the league minimum and must choose whether to accept a team extension while dealing with a history of arm health issues.

In determining the correct course of action in the latter case, advanced statistics and modeling regarding positional aging curves and personal health risk empower the player to make more sound decisions. Therefore, agencies need to move towards providing this service to players in order to improve the nature of their counsel and perhaps create a competitive advantage over other agencies in the pursuit of bringing in new clients.

What does the composition of this new agency look like? That is more complex and rests at the feet of the agency to determine, but in my mind there are two potential approaches.

The first approach is likely applicable only to the larger entities but requires two actions. First, the agency must significantly expand its analytics department to at least a handful of staffers focusing on one sport. Considering the volume of coders and data analysts who want to break into this sphere at affordable rates, this is not a particularly cost-prohibitive approach.

Second, the players association must create information sharing with agencies. Statcast and MLBAM are owned by Major League Baseball, and more extensive information sharing must be negotiated into the next collective bargaining agreement. With these two actions, agencies could begin to provide more comprehensive and effective counsel.

The second approach is one which agencies have already embraced somewhat. That is the hiring of consultants for individual cases on which agencies need support. While this has value in singular negotiations and potentially career planning, it does not necessarily provide the proactive monitoring necessary to protect players over a broad span of time.

Perhaps there is no comprehensive remedy to the organizational advantage created by Major League Baseball’s data revolution, but agencies must take more aggressive steps to provide their clients with sufficient counsel.

References & Resources

Mike is a student at Case Western Reserve University School of Law. He has served as a Resident at FanGraphs, and writes at Waiting For Next Year. Follow him on Twitter @snarkyhatman.
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Las Vegas Wildcards
6 years ago

It’s unclear to me what the point of this article was. Individual players are only naturally concerned with their own careers, while the clubs have a roster of decisions to be made while managing a budget, and fielding a competitive team.

The other issue is the fact different teams place different values on how a specific player fits into their short and long term picture. It’s not all about the money, and if a player like Jose Ramirez likes Chicago, and the organization, he has every right to sign for a figure suitable for him. Data alone will never be able to set the market, because of the reasons I stated above. General models for areas such as player decline are just that, some players age faster than others.

Marc Schneider
6 years ago

I’m all for players getting what they deserve-or, in some cases, more than they deserve-but I don’t really care about how the sausage is made. If the teams have an advantage, that’s something the players should worry about but I’m not sure why I should care. This is not 1963, where players are being paid $7000; they are making a lot of money and I have plenty of other things to worry about. This seems like something the author should have addressed to agents and the Players’ Association.

6 years ago

Is that really an issue? I don’t think contracts are based on actual value but based on market value. Now what happened is that value is now more transparent so that teams don’t overpay players as much. I don’t see that as an edge though , as value is pretty much transparent for anyone as are projections and aging curves.

Teams still have edges but those are tiny edges that are more and more short lived due to a more level playing field in analytics.

On the other hand while sluggers get paid less other guys like heyward get paid more so there is also a re distribution of money.

But in the end teams are not bidding against themselves but against the opponents. So the players agent doesn’t really have to argue value, he just has to find the team wha values him the most.

The players salary is always a little higher than the second highest bidder. Trout would play for 1m if nobody offered more or 100m if somebody gave that.

What has changed is that the teams can judge value better, but that is not really an edge because anyone has access to that.

I don’t really believe that this is what causes the salary dumping. Top salaries are still very good and some player types get actually paid better.

I believe what has changed mostly is that mediocre veterans have a harder time getting paid, teams try to replace many of those jobs with minimum players (why pay 5m for a 1 win player when you can get a 0.8 win player gor a tenth of that.

Dave T
6 years ago
Reply to  Dominikk85

I agree.

Said a bit differently, it seems like front offices have become more similar in how they value players. Dave Cameron has noted this trend: there aren’t front offices run by Dave Stewart or Ruben Amaro anymore. Since a free agent by definition cares more about the highest bid than what the median offer would be from all teams in MLB, a front office monoculture oriented toward similar analysis is by definition going to be tough on the players who would receive an outlier bid from a Dave Stewart type of GM.

Dave T
6 years ago

“Consider the ability to insure a player in order to mitigate risk of market diminution based on injury in the final years of arbitration.”

Does that type of insurance really exist, though? My understanding is that the actual insurance available covers the event of a player who is medically unable to play (e.g. Prince Fielder). I suppose that “value diminution” insurance could exist in theory – most anything should be insurable at some high enough premium – but I’m dubious that the premium cost would be palatable to players because it would insure such a broad spectrum of events and probably have big problems of adverse selection and asymmetric information. Wouldn’t it be most attractive, in a sort of extreme case, to a player who decides that he wants to cut back on his off-season training regimen?

Dave T
6 years ago

“In determining the correct course of action in the latter case, advanced statistics and modeling regarding positional aging curves and personal health risk empower the player to make more sound decisions.”

Maybe, but there’s still the problem that the sample size is 1 for a given player, while the team has a portfolio of players and contracts. Even if turning down the extension offer is “correct” for a player on an expected value basis, he still has the downside in this example that he blows out his arm, never recovers, and ends up in a situation with something like only minimum salaries and maybe one arbitration year.

I’m not sure that an agent getting great at quantifying whether that’s a 30% risk or 40% risk really changes a player’s decision all that much, because a player logically should be risk-averse. A player almost certainly sees a lot more personal utility from dollars $3 million to $33 million of career earnings than from dollars $33 million to $63 million.

Kyle Boddymember
6 years ago

I enjoyed the article, and as I stated on Twitter:

“I think there is a different viewpoint to take with the same thrust: Agencies can fund analytical departments to help their players get better when they are employed by teams who do not value quantitative analysis.”

6 years ago

Also not sure jose Ramirez was really affected by that. he basically bet against himself with signing that Extension. he had a good 2016 but that was fueled by a high BABIP and he was bound to some Regression had he not changed his Profile.

sure it came differently because he developed that power but at that time he was just some 24 yo guy who was several years away from free agency.he also was never a top100 prospect.

those extensions happen due to the Long Team control. Players are losing future Money but they might prefer 30M guaranteed over maybe getting 150 in 4 years.

for a top prospect that got a 5M signing Bonus and endorsement deals that is less of an issue but for a domenican kid who signed for 100K and has no other income sources those 30M are quite tempting.