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Parties Reaching a Successful Agreement: Player Version

By Joshua Salzman

Part I: Initial Analysis and Derivation of the Arbitration Number Considering myself more of a casual baseball fan, I was at first intimidated by the density of the statistics; however when I finally sat down and pulled everything together, I realized the statistics told a story of the player. It could be argued that Colby Stevens is not your dream client at first glance, but after much deliberation and some unique statistical angles, I started to see his potential for a big contract. I recognized that I wasnt just selling his numbers, but his entire package. Obviously the easiest way to start, however, was to scrutinize his statistics juxtaposed by comparable players in the league. a. Stevens at first glance At first glance, Stevens numbers made him appear mediocre at best. In reference to the Relevant Market for Middle Infielders, his average ranking is 8.29/17 based on his 148 games played, and an even lower average of 9.29/17 based on 162 games played. Also, though it could be considered that Stevens is in his career prime in terms of age, he is only getting older, and the window for him being able to perform in more than 140 games is closing. Stevens has shown signs of inconsistency. His slugging percentage slipped from a .434 in 06, to a .355 in 07, and back up to a .452 in 08. To make matters worse, even though his RBI numbers appear solid, his general background states that he has not hit well with runners in scoring position the last two years, the two years he has played for the Platypuses. He also showed a sharp increase in his number of strikeouts, from 88 in

06, to 118 in 07, to 101 in 08. His strikeout numbers are considerably high for not being a power hitter. Many of Stevens statistics corroborate the fact that Stevens is not a scouts or tools player His batting average and fielding percentage are not bad by any means, but are not exactly selling points. True Stevens might have some mediocre statistics, but not being a scouts or tools player is not necessarily a career ender. The fact that the Platypuses are winning games with a defense that is above average in all measurable areas is a certain plus for Stevens. While such a statistic does not prove Stevens to be the cause, it certainly helps overlook some of his mediocrity, like his lack of speed or arm strength. The fact is, Stevens is an integral part to a winning team, and losing him might mean losing the winning team dynamic. I figured I could also explain Stevens below average 2007 season with the fact that it was his first year on a new team. It isnt rare that a player would have a rougher first season in a new environment. To top it off, Stevens had taken a below-market twoyear agreement. Being underpaid, it might have been tough to exert 100% of his effort. Despite 2007, Stevens has shown consistent improvement and some big numbers throughout his career. Given his age now, we could only expect him to keep improving upon these numbers. 34 doubles is a definite selling point, however what is most notable are his runs scored. Runs mean wins. There is no arguing with that, and Stevens had 62, 73, and 82 respectively from 2006-2008an obvious trend. He continues to play in more games each season, and has never been injured. Hopefully the pain in his shoulder will subside, but until then, I will keep that information confidential. Stevens definitely has the statistics and upsides to be contrasted with some of the better middle infielders in the


b. Player Comparisons Naturally the next step was comparing Stevens statistics to those of other similar players. I knew there would not be an exact perfect match for Stevens, so I pieced together comparable traits from a variety of players. Most importantly, I looked at the different players ages, contract histories, and relevant statistics. For example, I did not count Stevens fewer plate appearances too much against him, as he probably batted differently in the order. My favorite candidate for a match was Niedermeyer, as he had a great salary. Not only had he played the same number of years as Stevens, but also, like Stevens, had come to a point where a new contract had to be signed. Even though his career numbers seem to dwarf Stevens, his last two seasons are definitely comparable. Both had almost an equal amount of runs and games played. While Niedermeyers batting average is slightly better, both Stevens slugging percentage and on-base percentage have been superior throughout their careers. Looking at Niedermeyers plate appearance numbers, I would assume he was closer to the start of the batting order, so having an inferior OPS to Stevens is definitely something that should be noted. Unfortunately however, Stevens does not field as well as Niedermeyer, a statistic crucial to his position. He is also not as fast, posting fewer stolen bases. Stevens also strikes out significantly more. Even so, Niedermeyer gave me a ballpark estimate of how much my client deserved. As Niedermeyer was offered the option of $5.25 million for this season, and garnered a 4year, $16.2 million deal, I learned how an offer could turn into a deal. Though $5.25

million is obviously higher than the averaged $4.05 million per year, having a guaranteed longer contract was probably preferable, despite missing out on years of possible free agency. I also looked at Corleone. He is probably more statistically similar to Stevens than Niedermeyer. Stevens and Corleone have had the same number of years of experience, and almost an identical number of games played, hits, doubles, fielding percentage (.975 and .976 respectively over a 2-year average), and stolen bases. Their only true differences are Corleone hits more RBIs where Stevens scores more runs. The only problem is, Corleone is still on the last year of his 2-year deal. Though he is making $3.4 million this year, that number was decided two years prior, and over these two years, he has improved several key parts of his game, including his fielding percentage. He is definitely worth more than $3.4 million in his next deal, especially with free agency eligibility just a season away when his contract ends. A third player who I compared with Stevens was none other than Tim Tebow. While he was not so perfect of a match as Corleone, he had just signed a one-year deal this year, avoiding arbitration. Tebow is superior in some key areas, with more runs, fewer strikeouts, and 29 stolen bases last year compared to Stevens measly two. However, Stevens had an equivalent number of RBIs, homeruns, batting average, and a consistently better fielding percentage. While Tebow might be considered a tools player considering his speed and ability to score, as an entire package, he does not overshadow Stevens. Ranking relatively 7.57/17 to Stevens 9.29/17 per 162 games, and 8.14/17 to Stevens 8.29/17 per game played, it is clear that Stevens deserves a comparable number to Tebows one year salary. Avoiding arbitration means Tebow settled at $5.6 million, a

$2.9 million dollar increase from the previous season. Tebows contract informed me that not only did Stevens deserve a significant increase through statistical comparisons, but also that it is conventional to increase a salary by such a significant percentage from the year before (Tebows increased about 78%). Finally I stumbled upon J. Dunphy. Even though he has been in the majors two fewer years, he is one year Stevens senior at 29. It also helped that he just signed a new 3-year, $9.9 million deal for the upcoming 2009 season. For the most part, their two figures are similar. For their two-year averages, Dunphy and Stevens had respectively 150 and 148 games played, batting averages of .273 and .262, OPS of .739 and .744, 103 and 110 strikeouts, and 74 and 78 runs. The only noticeable differences were Dunphys better speed (stealing 21 bases last season to Stevens 2), and Stevens slightly higher fielding percentage. Knowing Dunphy settled at $3.35 million helped me as a lower bound for my initial asking price. I knew Stevens was worth more than this, as he had more experience in the league, was on the verge of free agency, played for a World Series contending team, and was even younger than Dunphy. Now I could decide what I thought Stevens was worth. I estimated somewhere in between $3.3 and $3.7 million, a number slightly above that of Dunphy and Corleones salary. I believe I could get somewhere closer to $4 million, but due to Stevens adversity to the arbitration process, his desire to stay with the Platypuses, and the current state of the economy and ticket levels, I knew I had to waive some value.

c. Arrival at the salary figure

Arbitration is a complex, delicate process that involves precise estimation and foresight. One must be wary of the other sides offer as to garner leverage in the dealings afterwards. I knew I had to be careful not to request too high of a salary, because that would give the Platypuses leverage to just go to arbitration, leading to a salary far beneath what Stevens deserved. Too low of a number might suggest or signal to the team that I dont believe in my client, giving them leverage in the negotiation. Before I could decide my value, I knew I had to predict what the team would offer. To estimate what the teams number would be, I looked back at more possibly comparable players that Michael might use. I was startled at first when I saw Dufrense. He had an equal number of years in the MLB, yet his new 2009 contract actually decreased from the previous year. Dufrense had a superior fielding percentage, but for the most part was a lesser player than Stevens. Having 140 games played last season but a 2-year average of only 115 games played, I figured he was probably injured. Also, he was already 34-years-oldthis is probably his last contract. I could only hope the team would make the mistake of comparing Stevens to Dufrense. The player who I thought Michael would use was Bryant. Bryant is a better fielder, has a better batting average, and is much faster than Stevens. Other than that they are statistically very similar, yet Bryant is relevantly ranked 6.57/17 to Stevens 8.29/17 per game played, and 7.71/17 to Stevens 9.29/17 per 162 games. Despite his venerable statistics, he signed a one-year deal for this coming 2009 season for only $2.87 million, a value significantly below my estimated value of Stevens ($3.3-$3.7 million). Some facets do favor Stevens, however. Bryant is one year further away from free agency. Stevens

also plays for a winning team. 1Based on research of the players, I figured Michael would estimate Stevens worth to be anywhere from $2.6 million to $3 million. In order to figure out the number I wanted to offer, I did a little math. I figured the average of both my predicted offer range from Michael ($2.8 million) and my predicted actual worth of Stevens ($3.5 million). In order to have the perfect offer, I knew I needed a number that would make the average of Michaels offer and my own offer be the higher than Stevens actual market value. The equation was as follows: 2.8+X >= 3.5 2 X=Best Value to offer the team

This math derived an X value of $4.2 million, however, just to be on the safe side I decided on $4.1 million, just in case my estimations were askew.

Part II: The Negotiation Through meticulous observation of the statistics and a little hint of luck, I was able to have guessed near what Michael was offering as his initial number: $2.65 million. The two offers averaged out to $3.375 million, a number in my range of predicted market value for Stevens, but definitely on the lower end, especially considering I was being so conservative with my estimates. I knew I could prove that Stevens was worth more than $3.375, so I had the threat of arbitration on my side. To make matters even better, Michael slipped a bit, informing me that the team wanted Stevens to star in their marketing campaign. I had been completely unaware of this additional worth, as in the packet it only said that Stevens was, not a team leader or a troublemaker. I now had the

Lastly, I believe Bryant to be severely underpaid. Something I will discuss further later in the paper.

leverage to acquire a great contract for my client. We then broke to think about what terms we both wanted in the contract.

a. Desired terms As Stevens agent, I had to look out for what was in his best interest. I used mostly his confidential wishes to flesh out the terms I would request or demand. Obviously this included the big signing bonus to guarantee his familys long-term security, a longer deal, a no trade clause, and performance bonuses. Even though Stevens voiced his adversity to the arbitration process, I would not under any circumstances accept a salary below $3 million. I refuse to watch my client take another below-market contract. At any number greater than $3 million, I would still use the threat of arbitration and free agency, though I would have no intention of going to arbitration. I would also refuse a one-year deal. For one, Stevens would like to play the rest of his career with the Platypuses. Also, even though he only needs one more year until he is eligible for free-agency, I worry that Stevens sore shoulder will get worse and he will be non-tendered after next season. No one would want an injured Colby Stevens, as he just doesnt have that spark to overshadow a shoulder injury. It is my goal to get him the greatest amount of guaranteed money possible, for the longest amount of time. I am willing, however, to give up money later in the deal (even though he might be worth more at that time) to get a longer contract. Because of Stevens unknown injury status as well as his desire to stay with the Platypuses, I would be willing to forgo his free agency years for a long-term contract.

I am almost sure Michael will negotiate on the length of contract, however he will probably want to offer a shorter contract, fearing Stevens unimpressive and inconsistent 2007 season as well as his age. He might be more willing to negotiate knowing Stevens is a candidate for free agency in a year, anticipating us running the price up as soon as his contract expires. I would also love some form of no-trade clause to go along with this longer contract, again because Stevens wants to stay in New Jersey. While I was willing to negotiate any type of no-trade clause, optimally I wanted a complete no-trade clause. Id imagine Michael would negotiate a no-trade agreement, as Stevens does not seem to hold any tremendous trade value. Stevens is a player who is part of a team, not a player who makes a team. Performance bonuses would be great, but Id rather have guaranteed cash. I will focus more on the signing bonus, but both parties will definitely negotiate all bonuses. Michael will almost certainly not negotiate Stevens participation in extreme activities. He will probably insist on some sort of Ben Rothlisberger clause, and I will probably let him have this. Even though my client might enjoy these activities, he must realize that he is a professional baseball player, and that there is too much money being risked by his team for him to participate in such dangerous behavior.

b. Proving Stevens was worth more than $3.375 million Proving Stevens was worth more than $3.375 million was naturally the first step

in the negotiation process. Once I garnered leverage through being able to threaten arbitration, I would be able to accrue all of my terms and conditions. From equivalent player statistics to the teams intended marketing plan, I had everything going for me. I strategically let Michael go first to explain why he thought Stevens was only worth $2.65 million. He started by explaining his comparison of Stevens to several players, including Bryant, Locke, and surprisingly my own Corleone. We both agreed that Locke had not been in the league long enough (and yet is still even older than Stevens) to be considered. I then explained my idea that Corleone was only going to be worth more after his deal ended this season. The $3.4 million Corleone was to make in 2009 was derived from an old deal, and therefore was an antiquated measure of his worth. Finally we arrived at the dreaded Bryant. Obviously Bryant is a better all-around player, and even though he is one year younger, he is still close to free agency. While I conceded that Bryant was a better all-around player than Stevens, I made the argument that Bryant was dreadfully underpaid. I compared Bryant to Espinosa, a young player who only played 102 games last season but was signed for a 1-year, $2.35 million deal. I then compared Bryant to Niedermeyer, explaining that Bryants statistics were comparable to a player who was offered an outstanding $5.25 million. While we agreed that Niedermeyer was a bit of an outlier, Michael was forced to admit that Bryant too had an unrepresentative salary. Michael then voiced his concerns about Stevens inconsistency over the last three years. I tried to explain that it was due to his need to adjust after being traded. Being somewhat of a subjective response, I did not feel that Michael bought this rationalization.

Thus I went on to explain how he was also upset that he was being so underpaid. When Michael asked how I knew he was underpaid, I responded by telling him the confidential fact that Stevens did not like the arbitration process so he took a below-market deal. While I tried to explicate that Stevens hatred for the arbitration system was because of his love of the game and intrinsic value of playing, I probably lost some clout when threatening to go to arbitration. Luckily, I did not also tell him about Stevens fear of being non-tendered and becoming a free agent. Michael later brought up valid claims about Stevens unusually high strikeout count and his inability to hit with runners in scoring position. While it was tough for me to argue this not-so-moot point, I made a claim that maybe if Stevens got the big contract, he would feel as though he should make those plays, and therefore would do better in the future. Michael retorted that such a claim was all well and good, but that a player should prove himself by already making plays to earn that contract. His offer, however, was raised to $3.1 million. I declined. Now it was my turn. While I knew I had to elucidate all of my clients positive traits, I needed at the same time to make Michael believe I was helping him, as well as Stevens. I dictated to Michael my arsenal of good qualities in Stevens, strategically playing each positive facet to gain one of my desired terms. I highlighted his great health record, obviously not mentioning the shoulder pain he had been recently feeling. I also brought up that his age was actually his prime, and with his health record, there would be few signs of wear years down the road. In response to this claim, Michael a day later made me literally put my money where my mouth was, insisting that in years 3-5 of Stevens contract, that his salary be made up of a smaller base, and the rest locked in

performance bonuses. Stevens would need to have a set amount of games played and plate appearances to earn his entire salary. I was more than willing to give up part of his base salary to these bonuses for such a long contract. I then discussed with Michael the implications of Stevens being an integral part to a winning team. Even though the Platypuses had made the playoffs three years ago without Stevens, it wasnt until Stevens was traded to the team that they succeeded on a larger scale. I justified Stevens being worth more than his statistics might show through clarifying that a contract is a return on investment, and therefore other variables must be considered. Stevens might be a key to winning, which obviously translates to more money. Stevens could also bring in money by starring in this marketing campaign. It is very exciting that attendance has shot up from 1.1 million in 2003 to 2.5 million in 2008, however there is still apparently much more room for improvement as the new attendance numbers are still not even in the top third of the MLB. Also, even though the economy is static, a good marketing scheme couldnt hurt such a new team. Branding the Platypuses could open up an entirely new fan base in the years to come. I then briefed Michael about how I compared Stevens to Corleone, Tebow, Niedermeyer, and Dunphy. Essentially I explained the reasoning I used when trying to establish my original arbitration number. While I used Tebow and Niedermeyer to try to convince Michael that Stevens was worth more than my requested $4.1, he pointed out that their two salaries were a bit inflated and the statistics were too different to be convincing. Now all I wanted to do was prove that Stevens was worth more than $3.375 million, and Corleone and Dunphy were my key to success

It could not have been more perfect that Dunphy had settled at $3.35 million. I explained how Stevens was worth more than this, as he had more experience in the league, was on the verge of free agency, played for a World Series contending team, and was even younger than Dunphy. Michael's and my earlier agreement that Corleone was worth more than $3.4 million corroborated my point even further. Agreeing that both of these players were worth more than $3.375 million, though not explicitly stated in the negotiation, virtually proved that my original number ($4.1 million) was closer to Stevens fair market value. Now I had leverage.

c. Acquiring the terms With my newfound leverage, I could now start attempting to instill my desired terms. Most importantly, I started with contract length. Not only was a longer contract most important to my client, but I also had the strongest argument supporting this greater length. Michael started by offering a two-year deal. Had Stevens not been possibly injured, and had he not cared which team he was going to play for, I might have accepted such a deal. With a two-year deal, Stevens would possibly be able to enjoy the leverage of his pending free agency. Knowing my clients wishes, however, I countered this offer with a six-year deal. I built an argument that a longer deal would be best for both parties to mask Stevens adversity to the arbitration process and free agency. Instead of explaining how Stevens did not want to go to arbitration and was afraid of being non-tendered, I described how Stevens was willing to give up his free agency years so he could play on the team that he had grown to love. Such a statement signaled that Stevens had intrinsic value for playing the game. I went on to explain how he had

accepted the below-market two-year deal just to avoid arbitration. Again this signaled his intrinsic value. Worried Michael would see Stevens consistent trepidation of arbitration as a negotiating weakness, I wasted no time continuing on with my argument for a longer deal. I persisted by explaining that while Stevens would prefer to stay in New Jersey (which was true), he had no fear of becoming a free agent if he felt disrespected by another price gauging contract. I warned Michael that he would not want to lose a player that had already meshed so well with the team. I then showed Michael my new offer of a 5-year deal with a base salary of $3.65 million. I asked him where he could find another player of Stevens experience, caliber, and character for that price. I also highlighted that a long-term deal would probably save money, as Stevens could no longer use free agency as leverage. I then pointed out that the team was significantly under the luxury tax mark, spending only $62 million on salaries. Michael was still hesitant to make such a long commitment to what he thought to be an inconsistent player. I brought up how the team wanted to use Stevens as a cornerstone to their marketing campaign. Being a business student, I informed Michael that branding a product takes time, and that if they were dedicated to using Stevens in their campaign, they could not just lose him after only two years. That would reflect poorly on the team as a business. Finally Michael agreed to the five years, but not without stipulations. Michael required a buy-out agreement in case the team really wanted to get rid of Stevens after three years. I was more than happy to agree to this term, as the buy-out sums were still worth a good percentage of what Stevens would have made anyway. Michael also

demanded that Stevens base salary be reduced and locked in performance bonuses. Stevens would have to play in enough games and have enough plate appearances to garner his entire salary. This was an insurance policy in case Stevens got injured or played a couple of bad seasons. In order to reduce the amount of money that Michael recommended had to be earned back with performance bonuses, I suggested a preventative measure for injuries. We quickly agreed on mandatory Pilates, after researching that such exercise can help athletes avoid injuries. Michael then brought up his idea for a Ben Rothlisberger Clause, which I readily agreed to, knowing that giving him another easy break might persuade him to reciprocate later when it came to the other bonuses. After I had given into the buy-out, the performance bonuses, the Ben Rothlisberger Clause, Pilates, and forfeited what Michael thought were precious years of free agency, I had to ask for something in return. I suggested a complete no-trade agreement out of respect to Stevens wanting to play the rest of his career with the Platypuses. I advised that such a move could only help the marketing plan succeed more, giving it more clout by displaying Stevens with a franchise label. Feeling that he had already garnered enough protection with his five insurance checks on Stevens 5-year deal, Michael agreed to the complete no-trade clause quite readily. Finally, I attempted to increase Stevens signing bonus as he so desired. I knew I couldnt just ask for another $400,000 out of nowhere, so I suggested taking money from Stevens year 4 and 5 base salaries. When Michael asked why, I told him the truth about Stevens wifes failing business and how he just needed the money now instead of later. Michael obliged, making Stevens signing bonus $900,000 instead of $500,000.

Michael and I based our numbers for performance awards off of other similar contracts, deciding on $50,000 for an All Star, $40,000 for the Golden Glove, $100,000 for an MVP ($75,000 for 2nd; $50,000 for third), and $50,000 for the WS MVP. I was not too concerned with this portion of the contract, as I did not think that Stevens was a great candidate for any prestigious awards.

Part III: Reflection On the whole, I am ecstatic with the deal I got for Stevens. I acquired just about everything he asked for and more. I attribute my success to my preparation. Though Michael was great at negotiating, I came prepared by not only knowing what was good about my client, but what Michael could say was bad about him too. For every argument Michael had, I was ready with a counter. Regardless whether the counter argument was firmly grounded did not matter too much so long as I always had something to say to neutralize his poison. Also essential to my negotiating was making the other side feel as though it were getting something, when in fact it was my advantage. For example, I advocated that Stevens was willing to give up his free agency to take a longer deal because of his love for the team, when I was just afraid that his shoulder pain would lead to him being nontendered! The key, however, to getting everything my client wanted, was being lenient with what the team wanted. I asked for a long-term deal, and in return, I gave Michael the checks and balances he asked for. In the end, an agreement is all about trust, and if

Michael sensed I was not accommodating his wishes, we would certainly have reached a stalemate.

a. Mistakes and future considerations First of all, I would have liked to know my player better. Not only should I know my clients statistics and contract desires, but also his place on the team, how he interacts with fans, his media coverage etc Hearing that the Platypuses wanted to make him a central figure in their marketing campaign came as a complete shock to me considering what few words were said in the packet. While I would have had no way of acquiring such knowledge in this particular assignment, it would have definitely been helpful for determining Stevens value earlier, so I could use this deeper knowledge for even more leverage. Secondly, while appealing to ones emotions might sometimes help a negotiation, I could have really shot myself in the foot when I told Michael that Stevens had taken a below-market deal to avoid the arbitration process. While this probably did signal that Stevens was intrinsically motivated to play ball, it might have lost me leverage if Michael thought my threat of arbitration or free agency was empty. Instead, I could have just used other signals to prove Stevens intrinsic motivation, like him giving up his free agency years to play for the Platypuses, or I could have just harped on his incredible work ethic that the team wanted to display in their marketing scheme. Telling Michael about Stevens wife and her financial problems was another mistake. Again, though emotion can help, I should have realized that establishing Stevens' contract is about business. Though bringing his wife into the picture got me the

signing bonus I was looking for, it was probably an unprofessional move. I also need to be careful with contradictions. I drove home the fact that Stevens was so loyal and intrinsically motivated to play, but then asked for money favors (like the extra signing bonus) that may have caused some dissonance. I thought I did well by repeating the theme of respect to mask my true intention of garnering more money, but another team might have seen right through that. Finally, I should have taken more time putting together Stevens performance bonuses for the awards. Though I do not think that putting more bonuses for the different awards would result in any more money for Stevens, I should have, out of respect to my client and his best interest, taken my time to do whatever I could to make his contract as perfect as possible. A lack of bonuses for awards might signal to a client that his agent doesnt think he is any good, or that the agent is being lazy. Mistakes aside, I know I harvested a wonderful contract for my client that he will be excited about. I know now that he and his family will be financially secure with at least $15.585 million guaranteed, with an opportunity for $18.1 million. I know my client will continue to strive for excellence above all, and will be a perfect face for the Platypuses marketing campaign.