Baseball, Hedge Funds, and Bad People
As a Boston Red Sox fan (a long-suffering, loyal fan I might add), I’ve watched nervously Gary Sheffield’s at-bats against my favorite team. Ever since moving over from the National League, he’s been a threatening presence at the plate against my boys from Boston, especially when he played for the hated New York Yankees. Only after John Henry, a wealthy hedge fund manager, bought the Red Sox and instilled a philosophy of scientific management based on sabermetrics did the Fenway Faithful enjoy the team’s recent dominance over the Yankees.
Today, I got to laugh a little when I heard that Sheffield, one of baseball’s best sluggers of this generation, called out his former agent, Scott Boras, for being a “bad person.” As baseball’s most powerful agent, Boras has a little more clout than the typical sports agent. He can sometimes set a floor on the market for a client’s services by maximizing competitive bidding. And for some reason, baseball teams seem to get in a tizzy whenever he comes calling. With deft marketing and promotion, he’s scored some of baseball’s richest contracts for his clients, some of whom are mediocre talents at best (Barry Zito). Of course, he has also represented the game’s elite like Alex Rodriguez, Carlos Beltran, and ex-big leaguer Bernie Williams.
Sheffield certainly qualifies as an elite player and he isn’t the first to have negative feelings about Boras. A-Rod renegotiated a new deal with the Yankees by himself and has not talked with him since. Kenny Rogers, a pretty good pitcher fired him recently. But Sheffield’s recent tirade is the most direct and public attack he’s received from a player. Of course, this all boils down to money, money, money.
Sheffield fired Boras in 2003 to represent himself in negotiations with teams. Shortly thereafter, he signed a multi-year contract with the Yankees. Boras subsequently filed claims for 5% of the $39 million deal.
Wow! That’s rich. Those are better terms than even hedge fund managers get. The typical hedge fund charges a 1-20 compensation structure. The 1% management fee pays the bills for running the fund day-to-day (rent, salaries, computers). The 20% is the share of the profits generated by the hedge fund manager. It’s an incentive to perform and produce value. Boras gets 5% right off the bat and he doesn’t even have to produce after his client signs. His client could just become a huge bust (Travis Lee) and he would still get his sweet 5% commission. So Hillary Clinton says that hedge fund managers are overpaid, she ought to take a look at sports agents like Scott Boras. Even Boras’ company website is eerily similar to a hedge fund’s - secretive, short on description, password protected, with only an email address for outsiders to interact with. Only the rich need apply.
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Some of these owners are so stupid (Tom Hicks). Of course agents use Steinbrenner’s ego against him all the time. Clearly Boras is the mark by which all agents must measure themselves. However, after the fallout with golden boy client arod and the yanks’ refusal to talk to boras, and then kenny rogers’ decision to fire boras, it looks like everyone has grown tired of boras’ antics. looks like manny is going to hire boras though.
oh, and the first paragraph (i am a long-suffering, loyal arod hater) reminded me how differently sheff was pitched to than arod. the opposing manager and pitchers looked terrified (literally) of sheff and they pitched around him opting to right after arod, especially in the playoffs. they’d walk giambi too, sometimes intentionally, to get to arod. he’d comply with a pop up or a strikeout.
@ Derek - you’re absolutely right - I would rather face A-Rod than Sheff in a tight situation.