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May 16, 2008

Future Shock

Agents, the Draft, and the NCAA

by Kevin Goldstein

This time of year, I get a handful of emails with specific questions about some draft nuts and bolts, and this year--maybe because of the O.J. Mayo situation--that handful has turned into a full bushel. The email tends to go something like this:

Kevin,

I'm pretty confused here. I'm not any kind of insider, but even I know Pedro Alvarez has an agent, and that his agent is Scott Boras. And it's not like he's alone, all of these kids seem to have agents, so how is that OK with the NCAA?

It's a good question, and you're not alone. One front office official, when contacted for this article, stated, "I often wondered that myself, and I've raised the question, and frankly, I've never gotten a good answer." So what exactly is going on here? And more importantly, is it really that big of a deal?

The Rules

Every year, the NCAA's department of Agent, Gambling and Amateurism Activities sends a letter to all Division I baseball players with remaining eligibility. That memo has the title of "NCAA Information Regarding the 2008 Major League Baseball (MLB) First-Year Player Draft, Agents, and Tryouts." All players are required to sign the document. The document in part reads:

You will lose your eligibility IF:

1. You agree orally or in writing to be represented by an agent or any individual acting on behalf of the agent [e.g., runner].

2. You accept any benefits from an agent, a prospective agent or any individual acting on behalf of the agent [e.g., runner].

3. If an advisor markets your athletic ability or reputation to a professional team on your behalf.

4. If you participate in a tryout with an MLB team that lasts longer than 48 hours, which you have not personally financed.

5. If you try out with a professional team during the academic year and miss class.

But that's happening, right? Well, maybe... sort of... kind of.

Let's get the first thing straight, as we begin to tread into the seemingly endless gray area concerning this matter. There is not a single draft-eligible player in college baseball who has an agent. What they have are advisors. During the question and answer segment of the NCAA's document, it explains:

7. Am I permitted to have an advisor during this process?

YES, provided the advisor does not market you to MLB teams. However, an advisor will be considered an agent if they contact teams on your behalf to arrange private workouts or tryouts. Under NCAA regulations, you and your parents are permitted to receive advice from a lawyer or other individual concerning a proposed professional sports contract, provided the advisor does not represent you directly in negotiations for the contract. In this regard, it is permissible for an advisor to discuss with you the merits of a proposed contract and give you suggestions about the type of offer you should consider. In order to maintain your eligibility at an NCAA school, however, you may not use this advisor as a link between you and the professional sports team. Rather, you must view the advisor as an extension of your own interests and not as a source to contact a professional team. If you use the advisor as a direct contact with a professional team, the advisor shall be considered an agent and you will have jeopardized your eligibility at an NCAA school. For example, an advisor may not be present during the discussions of a contract offer with a professional team or have any direct contact (including, but not limited to, in person, by telephone, e-mail or mail) with the professional sports team on your behalf. Finally, it is important to note that in order to maintain your eligibility at an NCAA school, if you receive assistance from an advisor, you will be required to pay that advisor at his or her normal rate for such services.

Ask an agent, and that will be their interpretation of the services they are providing. "College players are absolutely entitled to have advisors and to get information, and that's where our roles end," said one prominent agent/advisor. "We can give the players and their families answers to questions, and help them sort facts from fiction, but we're not allowed to provide a player with anything of tangible value," he continued. "So no rides, no money, no lunches or anything like that. We take that very seriously, and I believe that most top agencies do as well."

Discussions with players, agents, and team officials indicate that rules one and two are being followed. Basically, nobody is stupid enough to sign an agreement with an agent, although in almost every case, a player's advisor ends up being his agent once he signs a contract. In addition, there was very little belief among industry insiders that players were receiving undue benefits, such as cash, meals or travel. When it comes to rule No. 3, which clearly involve negotiations, even though some talked around the issue, it's quite apparent that it's taking place.

"Sure, it's kind of ridiculous that all of these players blatantly have agents and there is no doubt about it, and there's no attempt to hide it," said one scouting director. A front-office official was even more explicit: "My sense [of] any meaningful rule is that the agent can't have discussions on the player's compensation, but that's happening," he said.

Additionally, one scouting official explained that it was certainly a two-way street when it came to player/team negotiations. "It is kind of ridiculous that they're called 'advisors.' Teams call agents all the time and agents are talking to teams. There is no question in my mind that the agents can have a major impact on where a guy gets drafted," he said. "I'm not sure when it crosses some sort of line between agent and advisor; I'm not sure what the difference is, really," he continued. "An advisor does everything an agent does, but for whatever reason we just call him an advisor."

One agent admitted that when it comes to the difference between agents and advisors, the rules as stated are not always being followed. "There are agents out there that are clearly negotiating on behalf of their clients, and from my understanding that's a violation of the rules," he said. "Baseball is different, although I'm not sure why."

Turning A Blind Eye?

So why is this happening? Is the NCAA simply ignoring the issue? Quite possibly, the answer to that question is yes. As the reason for this, those contacted had many theories.

1. It's not a major college sport. Let's face it, college baseball is a red-headed stepchild when compared to the multi-billion dollar industries that are football and basketball. In addition, those sports seem to have a prevalence of players receiving extra benefits, which does not seem to be happening on any sort of grand scale in baseball. "There are all kinds of things happening under the table in those other sports," said one agent. "Football and basketball are way shadier than baseball, and it makes me glad that I'm on this side of the fence."

2. Uncomplicated eligibility. Much of a football or basketball player's ability to leverage their talent into dollars revolves around their ability to declare themselves eligible for the draft. That's simply not the case in baseball, and that makes for a very unique situation. If you graduate from high school, finish your third year of college, come from a junior college, or turn 21 in your freshman or sophomore year at a four-year institution, then you are draft-eligible, whether you like it or not.

3. Resource management. "I think it's a big problem, and it's so prevalent in baseball," said one scouting director. "I don't know that the NCAA even has the manpower to address the problem in baseball. I'd be all in favor for trying to clean it up, but right now there is just so much gray area."

4. Nobody has a problem with it. "It's a total guess, but maybe the NCAA doesn't really do anything about it because MLB likes the current structure," said one agent. "If there was a problem, MLB would speak up... but they haven't."

So Is It A Problem?

Fundamentally, no. Even the teams themselves, while admitting that NCAA rules are clearly being broken, don't seem to have a real issue with the current system. "From our point of view it's a good thing, because now the kids we draft are educated on the process," said one scouting director. "We certainly know who we'll be negotiating with, for better or worse," added a front office official. "And to be fair to the agents, they're able to guide the player through the negotiation process so we don't have to worry about explaining every little detail--they are providing a level of expertise with the system and more often than not that speeds the process along."

In addition, the agents themselves make a strong case for the current situation, if not something even more liberal. "The current process that places the student-athlete in this situation where he has to negotiate a contract by himself is inherently unfair," explained one. "The clubs enjoy a huge advantage over the student-athlete because they know the slots, and the athletes do not, particularly since these slots are often subject to negotiation."

While the majority of agents and team officials do not take strong issue with the current situation, those feelings were hardly universal. "No, I don't think this way works, and I don't think this makes negotiations any easier," said another front office official. "Talk to some people who haven't been able to sign their picks because of this and see what they say." He then went on to explain that, on a team level, the agents aren't necessarily helping anything. "This is a negotiation over money," he explained. "The agent is providing value to his client, but he's not creating value, so it's a zero-sum game. If the agent gets a team to pay more than they would otherwise, it's certainly not to the team's benefit, and if he's not able to do that, he's not providing value to his client."

Another scouting director saw both sides of the coin. "They can be the voice of reason at times, and help facilitate things," he explained. "Sometimes dad thinks little Johnny is the best thing ever and wants a million dollars, [but] you took him in the eighth round, where his talent belongs--agents can help there. But like anything, there are good agents and bad agents, and the bad ones can make your life miserable." The scouting director went on to explain a particular situation, where a sure-fire first-round pick this June is currently being blocked by his agent from talking to certain teams. "All we're asking for is 15 minutes to shake his hand and let him know who we are and see if the kid is lucid and has his head screwed on straight," he said. "We're not asking him to run a 60-yard dash, we're not asking him to take batting practice for us, we're not asking him to throw in a bullpen for us--but now I can't access this player or talk to him, and that's a real problem," he concluded.

Is There A Solution? Do We Need One?

What's being said and what's really happening here reminds one of 1950s television shows, where the man and woman go to sleep in separate beds but as soon as the lights go out, we all know what's going on. The problem here is not with the player, not with the teams, and not with the agents; the problem lies solely in the lap of the NCAA, which has proven time and time again that it is utterly incapable of creating realistic rules when it comes to the business side of sports, and equally incapable of enforcing the ridiculous rules that it does take the time to cobble together.

Professional sports contracts are complicated things--a standard major league contract is around nine pages long and contains complicated legal language and clauses that go far beyond saying "John Doe will play for us and we will pay him $X dollars." In any line of business, one would be a fool not to have an experienced expert in the field to work on your behalf with a contract such as the ones we see in professional sports, yet for some reason, the NCAA frowns upon getting paid advice in this manner.

Look at it this way: the average fifth-round pick last year received between $120-150,000 dollars to sign. In the years 1990-1999, there were 285 fifth-round picks. Of that group, 196 (69 percent) never reached the majors at all, and only 28 (10 percent) had anything that could even be loosely defined as a career. So, for the overwhelming majority of these players, that signing bonus is the biggest single payday they'll ever receive as a professional. Yet the NCAA, in its quixotic quest to preserve the myth of the student-athlete, creates rules to limit just how well a player can leverage this once-in-a-lifetime opportunity.

What needs to happen here is a redefinition by the NCAA of what is an amateur and what is a professional, and that definition should be cut and dried. You are an amateur athlete until you get paid to be an athlete, and then you are a professional athlete. Agents do not get paid until their client gets paid, so there is absolutely no reason that amateur players should not openly have the right to retain the services of an agent. Of course, that would probably make far too much sense for the NCAA.

Kevin Goldstein is an author of Baseball Prospectus. 
Click here to see Kevin's other articles. You can contact Kevin by clicking here

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