The Boras Corporation — the powerful agency led by Scott Boras — has lost a grievance action that it brought against recent Yankees signee Carlos Beltran, report Bob Nightengale and Jorge L. Ortiz of USA Today. Boras had sought $1.3MM in damages from Beltran for leaving his agency in October of 2011, prior to inking a two-year, $26MM contract with the Cardinals.
The ruling by arbitrator Shyam Das held that Boras could not enforce the following provision in his contract with Beltran:
"You understand and agree that we invest substantial resources, time and effort in preparation for free-agent contract negotiations and salary arbitration hearings. Therefore, you agree that if you terminate our agency authorization during or after a championship season, and before the following championship season you sign a free-agent or arbitration-eligible contract (whether single- or multi-year), you agree to pay us 5% of the entire contract regardless of who negotiates it on your behalf."
This provision had been part of Boras's contracts for fifteen years, with many other player reps utilizing some form of it as well. The agreement of which this clause was a part must be re-executed annually, leading Boras to argue that Beltran had prematurely terminated the agreement. But Das effectively read it out of the contract, deciding that it was not "permissible under governing MLBPA regulations" and holding that Beltran's termination of the agreement foreclosed any obligations to pay Boras a cut of any future earnings.
Of course, the broader importance of the ruling is what it means for player-agent relationships going forward. Without the implicit threat of the provision's enforcement, there is somewhat less disincentive to look for a new agent in the middle of a representation term. Boras warned of dire consequences:
"It basically makes the agent an at-will employee. Is this what you want? You should be responsible for the work you do. We need accountability on both sides. … The understanding of this rule is that it now promotes the vast majority of agents to take any deal they can get. The agents' conduct will be affected. This rule gives owners a lot more power. This is not in the best interest of major-league baseball players."
Meanwhile, for Beltran, the case was also about principle. He said:
"I felt like I had to win because he was basically suing me because I left him and he was trying to collect money without having done anything for me. It's not the money. It's the intention. Scott Boras had to do something that wasn't right. If I haven't done anything for you, haven't negotiated your contract, how could I sue you and try to collect money because you left me and because you hired another agent? That didn't make any sense to me.''
In addition to the broader impact, the ruling seems to have implications for already-framed disputes. Boras has an action pending against Edwin Jackson, who left Boras Corp. before landing his $52MM deal with the Cubs. And Robinson Cano famously bolted for upstart agency Roc Nation in advance of signing a monster $240MM contract, though no action has been initiated in that situation. "I never worried about it,'' said Jackson. "Come on, you can't have it both ways. You can't take away guys from another agency, but when your guys leave, sue them."