Risk/Reward and Varitek

I really dont get the brouhaha over Scott Boras and Jason Varitek 's potentially costly decision to turn down arbitration in favor of free agency.  Turning down arbitration for free agency is taking a chance.  That chance usually works out, but of course, it has risks.

Every so often, you have a case like Jody Reed.  Reed was a middle infielder with a career line of 270/349/350 and an ops+ of 90 - this guy was the definition of replacement level.  Prior to 1993, Reed was offered a three year $7.8m contract from the Dodgers.  On the advice of his brother-in-law / agent, Reed turned the deal down to test the free agent waters.  He ended up signing for the league minimum with the Brewers.

But for every Jody Reed, there are a hundred success stories.

Scott Boras is not Jody-Reed's-Brother-in-Law.  In a business that quantifies success by performance data, Boras has dominated his class.  His performance - not only for players like A-Rod and Teixeira, but also for guys like Alex Cora and Willie Bloomquist - speaks for itself.  But, nobody can bat 1.000 in baseball.

There is a risk/reward trade off for every decision.  Varitek thought he could squeeze a second year out of the Red Sox.  He will probably end up taking a couple million dollars less than he would have gotten.  Ok - good gamble, bad result.  Like with the stock market, poker, or any other venture that involves taking a chance, you have to judge the decision and not the result.  It is premature to judge - we dont know what contract he will end up with - but the decsion to turn down arbitration can not be judged simply by the result.  You take a chance, you risk losing out.  That is the business.

Comments

[Jason G]

I still don't understand what they were thinking. He would have gotten about 11 million in arbitration. He hit 220/313/359 and is going be 37 years old. I know he's considered a "winner" for whatever that's worth but I don't get how they could expect getting even 5 million coming off a season like he had and and at his age. I predict he's going to have to settle for a one year deal at about 3 million which is a lot of money lost.

[daltonic]

how could Boras actually think that Tek would get more in the open market than he would in arbitration.

could it be a case of being too busy with his higher profile clients to pay attention to jason?

[Herb Esasky]

As Bobby Deniro would say ot Scotty B "You Blew it, You had it and you blew it" Good for the Dodgers that Jody Reed didn't rip them off too

[Stephe]

I'm curious to how team with different % of Boras clients do in stats such as wins per dollar and championships per dollar. It seems like teams with lots of Boras clients don't win as much as they considering how what they are paying for a Boras client. That may just be perception but I'm curious if anyone has time to crunch those types of mubers and figure out which agents have the best
win/$ ratio.

[gemf89]

Hey The Problem with your excuse for Boras is that you always weigh the risk and the reward and take the best decision you can. In this case there was really no earning upside for him.

So they risked 10 mill to get 12 mill over 2 years at most. I like Boras, but if he really tought he could get Posada money for Tek than he needs to be sent to a mental institution.

[Jumbo]

Varitek saying he did not know declining arbitration would kill his market value because of the compensatory draft pick belongs in the Hall of Lame excuses.

There is pressure on the Red Sox to be tough. After losing out on Texeira, can the Red Sox mollycoddle Varitek? The Sox need to show their fans they are not Boras patsies by giving him millions less than he could have made in the arbitration that goofus Boras turned down. If Varitek does not like it, he can sit out a year or retire.

[Gary in Indiana]

Well, the numbers are in on the offer, according to one source. The Sox offered Tek $5M for 2009 and a dual option for 2010 with the team option at $5M and the player option at $3M.

As I read those numbers, the best Varitek can hope for is to play 2009 for less than half of he was paid in 2008 and hope he does poorly enough that the Sox don't exercise their 2010 option yet well enough that he can turn down his $3M option and make more on the open market as a free agent. That sounds like quite a balancing act.

The reality is that if he does well, the Sox might bring him back for another $5M payday in 2010. That would have him playing two years for less than he would have earned in one if he'd have accepted arbitration.

I suppose the best he could hope for might be really terrible in 2009 and then to exercise his 2010 option for $3M and have the Sox just pay it to be rid of him, thus enabling him to earn roughly $3M-$4M less for one season's work than if he'd taken arbitration.

When you say that the decision to turn down arbitration can't be judged by the result, I'm confused. I always thought that in the final analysis it was the results of decisions that determined that quality of those decisions. If not that, what, then, would you use to measure such things?

[Jumbo]

The World's Greatest Living Negotiator falls flat on his face.

But no one should feel sympathy for Varitek. A very rich man, he has already been paid vastly more than his worth to society.