Is A-Rod On to Something?
The news that A-Rod is talking to the Yankees without Scott Boras is flat out shocking, but when you think about it, not having an agent can actually be the best economical move.
I’ve long wondered why free agents overwhelmingly sign with the team that offers them the most money, even when it means leaving teammates and uprooting families. Most athletes are already extremely wealthy, and so it doesn’t make sense that money is almost always the #1 factor.
The explanation is that there is a difference between a players’ best interest and the agent’s best interest. For players, keeping their kids near their friends is important. Playing with teammates they like is important. Living in a city they like is important. All of these fringe benefits are crucial in determining their best contract offer.
Unfortunately, these fringe benefits mean nothing to agents (not counting their desire for their clients to have true happiness). For most agents, the best contract an athlete can sign is the most lucrative one. That’s all there is to it. The biggest contract gets an agent the biggest possible commission and it’s the best advertisement for acquiring future clients.
As a result, agents will often push for the contract that has the highest utility for them (lots of $$$), but not the highest utility for their player (no fringe benefits). This is what is happening with A-Rod and Boras. (Obviously there’s no way agents can’t always convince players to sign wherever the agent wants, but I’m sure there’s some “they’re lowballing you and don’t respect you”-type conversations they use to steer clients toward the highest bidder.)
A-Rod clearly wants to play in New York because he likes the city and the team. He values those things. Boras, on the other hand, doesn’t care about them. He just wants a Scrooge McDuck-like pile of money to swim in. The good news for A-Rod is that he’s figured this out before it got too late. He’s realized that Boras doesn’t want what’s best for him and he’s made the economically efficient move to go forward without an agent.
That sound you hear is the economist inside me respectfully applauding.
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