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Lessons from the signing deadline

8/14/2011
Mark Goldman/Icon SMI

Major League Baseball’s signing deadline for the 2011 draft is midnight ET on Monday. The stress is now being felt by the teams, players and agents. Everyone is trying to make the best deal, with the agents trying to break new ground and the clubs hoping to lower or at least maintain market value from the prior draft. Both want to make a deal, and both know the other side has equal leverage.

The players and owners make the final decisions while usually the scouting director, general manager and agents are in the middle doing the actual negotiations. During my years as GM of the Washington Nationals, I was involved in the negotiations of first-round picks and/or Scott Boras clients. The process for each player’s signing is never the same and the results are always unpredictable.

When we signed Ryan Zimmerman, we did so on draft day with fair numbers that worked for both parties. Getting him out and playing early helped the Nationals solve their third base situation by September, and allowed the arbitration clock to begin for Zimmerman. The Aaron Crow negotiations were completely different in that they dragged out to the final minute, when both sides decided to walk away. Danny Espinosa's process was the most detailed and lengthy, but finally came in at a fair and equitable number, just days before the deadline. Here are quick behind-the-scenes summaries of those three negotiations.

Ryan Zimmerman negotiations

Ryan Zimmerman was represented by Brodie Van Wagenen, sports agent and co-head of the baseball division of CAA. Van Wagenen is one of the most respected baseball agents in the industry. We selected Zimmerman with the fourth overall pick of the June 2005 free agent amateur draft. They knew when we drafted him that we were going to stay within the recommending slotting system. However, Brodie also realized that if his client signed quickly, we could promote him to the majors by season’s end, thus starting the arbitration and free agency clock immediately.

We signed him the day of the draft with a signing bonus of $2.975 million. Had the negotiations drawn out until the Aug. 15 deadline, he might have been able to negotiate a few more hundred thousand dollars (Mike Pelfrey, drafted by the Mets, received $3.55 million with the ninth selection). However, because Zimmerman signed early and made it to the majors that season, he got significant leverage with proximity to arbitration and free agency, which has led to more than $45 million in guaranteed money through the 2013 season. The shrewd business decision by Zimmerman, as advised by CAA, to sign immediately, and not wait to maximize his potential bonus at the Aug. 15 deadline, paid off.

Aaron Crow negotiations

Randy and Alan Hendricks of Hendricks Sports Management began representing players in the mid-1970s. They’ve represented high-profile players like Roger Clemens, Doug Drabek and most recently Aroldis Chapman and Jameson Taillon of the Pittsburgh Pirates. They represented approximately 10-15 percent of all major league baseball players during my 15 years as a general manager. They have many record-setting contracts to their credit, and have been an integral part of successful labor negotiations over the years.

We selected Crow with our first-round pick (ninth overall) of the June 2008 free-agent draft. The negotiations began with an initial offer to Alan Hendricks on draft day for $2.1 million. They refused to meet with us in person and wouldn’t allow us to bring Aaron or his family to Washington for a face-to-face meeting and/or negotiating session throughout the process. With no counter and no response, we later increased our offer to $2.25 million, hoping to spur discussions. Nothing. We tried to persuade them to not wait until the Aug. 15 deadline, comparing Crow’s situation to the Zimmerman signing and pointing out that we could put Crow in our rotation as early as September and start his arbitration and free agency clock. There wasn’t a nibble.

Then, on Aug. 12, Randy gave us a figure of $9 million, a number that didn’t change until 11:44 p.m. on Aug. 15, when they moved all the way down to $4.4 million in one quick, drastic strategic maneuver with just 16 minutes left in the negotiating window. A few hours prior, the Orioles had agreed to terms with the fourth overall selection, Brian Matusz, for $3.47 million, and we responded by increasing our offer at approximately 10:30 p.m. to $3.3 million.

Our final offer for Crow was for $3.5 million and Randy’s final offer was $4.0 million. Our final bid was higher than any pitcher drafted that year received, including Matusz. In addition, the player drafted directly ahead of Crow was Gordon Beckham of the Chicago White Sox. He was the college player of the year -- and he signed for $2.6 million. The player drafted directly behind us was Jason Castro of the Houston Astros, and he signed for $2.07 million.

The Nationals and Hendricks Sports Management both decided to walk away from the deal and both had leverage to do so. Crow would go back into the draft and was the Royals’ first-round selection (12th overall) in the June 2009 draft, and signed for a signing bonus of $3 million guaranteed. The Nationals used their compensation pick for not signing Crow to draft Drew Storen, signing him to a bonus of $1.6 million. Storen has developed into one of the best young closers in baseball while Crow is prospering in Kansas City’s bullpen and is expected to move to their starting rotation in 2012.

The non-deal has worked out well enough for both parties. However, this is an example of why baseball needs a hard slotting system, so that Crow would have signed and by now could have been close to being arbitration eligible and further along in his development. Owners, GMs and agents spend their lives at a negotiating table and when they’re attempting to bang out a deal, it’s easy for a deal to fall apart if one side clearly wants to break new ground and go against fair and equitable deals.

Danny Espinosa negotiations

The negotiations began the day we drafted him and included approximately 24 direct negotiating sessions with agent Scott Boras. Boras always returned phone messages within 24 hours, regardless of how busy he was. There isn't an agent in baseball that was more prepared for contract negotiations. His research team is deep and his databases have the highest volume of information, statistics, history and details of any agency that I ever negotiated with.

Boras' negotiating style doesn’t usually lead to deals early in the process, unless, of course, it really changes the marketplace for the industry. The Espinosa negotiations were no different. Boras had studied every contract for every shortstop ever drafted. He went to great length to find the top contracts even if they were drafted two rounds earlier, like Stephen Drew and Troy Tulowitzki. He spent considerable time explaining why all pertinent comparables were old contracts.

Much of his argument had holes and he knew it. It’s just part of the process: He wanted to debate and he wanted us to be engaged. He wanted to make sure we were as prepared as he was to give his client a fair and thorough negotiating process. He listened and responded. When I argued relevant slot signings, he recognized it and then demonstrated why Espinosa had much more talent, value and leverage. He explained how he was really a first-round talent that dropped because of his representation and perceived asking price. He utilized his only real leverage, that if we didn’t sign him, Danny was willing to go back in the draft next year.

Boras wanted sincere dialogue and communication. The process was lengthy and tiresome, but always professional. He’s a grinder. He’s not afraid to negotiate daily. He will always find new arguments, information or angles. He’s a warrior. He’s not afraid to bluff. He’s not afraid to walk away. He likes to be in control of the timing and he will walk away from a deal at slot or below. We were prepared for both the timing and over-slot final signing amount when we drafted Espinosa. We liked the player and thought we were fortunate to get him where he was drafted.

We also knew that Boras had a significant amount of unsigned players that he would have to worry about on the Aug. 15 signing deadline. So when we had a chance to close the deal a few days before, we did, and signed him for a bonus of $525,000 as the 87th player selected overall. This was slightly above slot, but signed, sealed and delivered. A long summer of grinding was worth it, as Espinosa is now in the race for National League Rookie of the Year.

Signing deadline day will be a stressful one for many clubs trying to sign their draft picks. Some will sign with a grind, some will sign on schedule and a few will just simply walk away and wait for next year’s compensation pick. Let’s hope for fair and equitable deals for all parties so that we can turn our attention back to the playing field, where it belongs.