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SABR 41: Scott Boras Keynote Speech

Here I am at the SABR national convention. I wasn’t able to get here early enough last night for the Medical Panel, but am up bright and early for the keynote opening speech by Scott Boras.

At 8:29:40 am, Andy McCue stepped to the microphone to call the first meeting of the morning to order. He delivered us a scouting report on Scott Boras, amusingly starting with his minor league stats (bats right, throws right, etc… a good on-base percentage but not much of a slugger, resulting in an average OPS). Mike Fischlin was his first client, an old friend from high school who needed representation, and then later a minor league teammate, Bill Caudill, for whom he won a large contract that shocked everyone. “He’s been shocking people in the baseball establishment ever since.”

Boras steps up to the mic and proposes a new stat: ORR, owner retention rate. (Making a very topical joke about the McCourt situation with the Dodgers.)

[What follows is more or less a transcript of about 70% of Mr. Boras’s remarks. I don’t type fast enough to get it all. Disclaimer: I’m posting this more or less raw with only very minimal editing at this point. Corrections on the spellings of people’s names would be appreciated. Places where I had to paraphrase I have placed in parentheses.]

We get calls all the time from football players, boxers, golfers, steel companies, you name it, people who want you to represent and negotiate something. I’ve turned them all down. I’ve had people offer to buy my company, and I could have made a lot of money that way. But baseball gave me everything I had. A baseball scholarship put me through school, and baseball is the reason I am where I am. You can run along the beach, and go to a game at Dodger stadium, and lay your head down on your pillow at night and know that baseball is everything.

I was asked to give you some information about my company today (and what we do differently for the game of baseball).

In the 80s the entire revenues of the game was around $500 million. There was this idea that representation on the players was going to be a drag on the game and keep it from growing. We’re now around $8 billion. The evolution of the game from ’80 to ’90 we grew to $1 billion, from ’90 to 2000 to $3 billion, and from 2000 to 2010 to $8 billion and still growing.

My focus on this was from being around players and having played, to provide to players the most insightful information we could give them and to create the best product possible.

I was raised on a farm. When you’re on a dairy farm you milk the cows in the morning and at night. Before I could go play ball, I had to milk the cows first. My father said you do whatever you had to do to get them done on time to get to the ballpark. In the dairy business the OPS if you will is fat content and volume. We had one cow that delivered the most volume and the highest fat content. These cows would show up every morning and every night in the same order; they are creatures of habit. My one superstar cow, though, she would always show up at 4:55, when I was trying to get to the ballpark by 5:30. I could not upset my superstar cow, though, because that wouldn’t work. So what I would do is take molasses and oats in my hand, the cows would follow me out of the barn and then back in the other side and my superstar cow would think it was her turn at 4:30 instead of five. I would get her done and then work on the others. So I learned at a very young age to get the most out of my talent.

I had three knee operations [during minor league career] and I went back to school, dentistry (? is that what he said? I know it was some kind of medical-related education…), then law school, and I thought my baseball career was over. The teams would say “you can still swing the bat” but I knew it was over. You’ve spent your entire life focused on this one goal (to play baseball). You have to redirect. I thought I’ll finish law school and I’ll end up a legal executive for a pharmaceutical company. It was interesting and challenging, learning the trade of law and interfacing with the medial community. It was a nice life for a young man raised on a farm who didn’t have very much.

But when I was getting started I would get recruited by these law firms. They’d see my resume, and 12 years of schooling and experience. And the law firms would sit down and talk to me. The very first panel was three women in a Washington DC firm representing the AMA, etc… and we talked for two hours, and what did we talk about? Baseball. Then I went to a firm in New York, we sat down, and what did we talk about? Baseball. I went to twelve interviews and talked about baseball with all of them, and I got job offers from every one.

Now in Chicago they play this kind of softball with a 16 inch ball. The thing looks like the moon. I worked for this firm in Chicago. I get summoned up to the 58th floor of the 60 floor building, to the senior partner’s office, and I sit down, and the man says, “You’ve been an associate here for one year. We’ve never won the slow pitch softball league. You’re on the team.” And I thought I used to a be a professional player and now I’m going to be playing slow pitch in Chicago?

(Boras saw the writing on the wall that baseball was going to keep coming back into his life . Moving on to talking about Bill Caudill, his second client.) He kept trying to throw a change-up or a slider, but the truth was his best pitch was a fastball at the letters or at the knees. Even though it’s the same pitch, the same velocity, the change in plane made it successful. Sounds simple, but very few pitchers can do that. (But Caudill was convinced he needed to throw these other, less effective pitches. Had to be convinced otherwise.)

What stuck in my mind was that his performance we relative to his psychology. Then Keith Hernandez would call on the phone and say “I can’t hit, I can’t hit…” — this was a guy with a lifetime .305 average. Never once did he say to me “I can’t field,” by the way. (laughter) Why could he be so confident about his defense, yet every day feel so uncomfortable about his approach to hitting? We would have this dialogue every day about his approach at the plate. It was my first introduction to the psychology of a superstar, why they’re good and why they do what they do.

My first intro to negotiating was with with now Hall of Famer GM Pat Gillick and Paul Beeston. Caudill had gotten traded to Toronto and they wanted him to be their closer. There had been a contract for Jeff Reardon, who signed for five years, $3 million, which I felt was undervalued. (laughter) Reardon had very similar stats and signed it during his arbitration eligible period. Caudill was also arbitration eligible (but Boras wasn’t going to accept that deal) so now we were preparing for an arbitration case.

I had gotten married six months before and my wife –she didn’t know this but– she had become my auxiliary memory. There were no computers then, so my house was just full of piles of information. The legal training was absolutely necessary to do a competent job on this. We were learning how to evaluate closers. (implying no one in the industry really knew how to actually evaluate talent) I had filed a salary number for Caudill that they perceived as rather high. And my (now friend) Gene Orza called me from the players union and said “You’re never going to win.” (because the number was so high) I chatted with him and made friends with the players union.

The night before the trial Beeston called me and offered $5 million for 5 years and said to me “There’s so much uncertainty in the marketplace. You’d do better to just take the deal.” He was essentially (trying to warn me) that the revenues were not going to be consistent for the next several years. Well, he was right, but things were going in a different direction that he thought. I was headed home that night and I thought, this is a lot like baseball. You just never know how these things are going to go.

So here’s this 6-foot-3 athlete in my car. On the way to the hearing, it’s snowing in Chicago, and I look at him and say “Are you relaxed?” And he was in a full sweat. I said “Thanks for the confidence.” (laughs)

There were 30 or 40 reporters there taking pictures because the case was so hyped and of course we won the largest contract in an eligibility case. So I learned a lot about managing the media that day.

So then I get called up to the senior partner’s office again, and they’ve got a copy of Sports Illustrated. They’re like, “Your photo is in Sports Illustrated. Maybe you ought to represent players through our firm.” But players would never go with a law firm. They’d walk in and walk right back out. I knew it wouldn’t work. A law firm wasn’t what players needed.

So I had to think long and hard about (whether I should strike out on my own and start a company). I was newly married, but I was passionate about what I was doing. I wasn’t representing brick buildings, I was representing people. So I said to my wife, “I’m going into something that’s probably going to lose money for the next decade, but here’s what we’re going to do.” I had access to a University of Chicago database and one secretary.

Rick Monday was drafted in 1965. Rick Monday was a heck of a ballplayer. He had gotten $100,000 to sign. When Reichert had gotten $200,000 with the Angels the year before [the year before the draft came in]. The owners had unilaterally made this change in the draft since there was no representation of young players in the draft. The first two players I chose to represent were Tim Belcher and (??? could not catch the name) and they were the first two who went in the draft. [If he meant 1983, Tim Belcher wen #1 but did not sign, and Kurt Stillwell went #2.]

Now, American families were being told by the scouts “you’re greedy” if you don’t take what the player took last year. If you don’t follow this course, then you must not like baseball, you must be all about the money.

And also they say “you’re unproven.” Well, that’s true, but that’s true of everyone. The initial signing is not the time. The families really had no data to rebut that. How do you illustrate the value of a draft pick to the family? What about how the revenue structure of the game has changed? The revenue has change to 10 to 15 times what they were. Honestly, the scouts had no idea what the value of draft picks were. You had very standardized practices for the scouts who overall are very honest-minded men.

But what’s the value of asking a draft pick to give up going to college? What are your chances of playing 6 years in the major leagues? 6% in the first round, 2.5% in the lower rounds. Well, the premise of this for me came when Shawon Dunston signed for the same $100,000 as Rick Monday got in 1965, in 1982. I thought “we are hurting the game by doing this.” Because the NBA, the NHL, etc. they are recruiting guys at age 14 and they are paying what is fair–much higher than what baseball was offering. Also in the college system you can get a full ride in basketball and football, but you can’t get a full scholarship in baseball anymore. So the most talented athletes were being pulled into other sports. I would sit down with owners and say we need to offer highest bonuses so we can get the best athletes. And they didn’t like to hear that at all. But I said hey, if the risks are that high, why are we doing this? If the return on investment is not there? But this very ineffective model exists, since what data has told us is that we shouldn’t be drafting a large number of players. We should get only a small number of high school players, and a larger group of college players.

But this is how we can really help the players and the game. If we could increase the success rate of the draft it would benefit everybody.

I was raised in the Cardinals organization with guys like Ken Boyer and George Kissel. I played for a manager Jim Saul, I first met him back in the day and I was studying the neuropharmacology book on the bus. In those days they didn’t like you to go to college because they didn’t want you to have any options. I used to buy men’s magazines to hide the book so I could read it and study for this class they didn’t know you were taking.

I was in Arkasas in AA one day, and I had a pretty good night, three hits, and then the next morning the farm director knocked on the door. Now I thought it maybe meant it was a good thing. But it wasn’t. (It was actually Jim Saul) and he said “Come on, we’re going to mass.” “We’re going to mass?” “Yeah, we’re going to mass to pray for you because I saw how bad your defense was last night. And then we’re going to the field so you can take 300 ground balls.” So I had been a center fielder but after the knee surgeries and everything they moved me to the infield. In the Cardinals organization if you couldn’t run you got moved to the infield. So this guy taught me two things. He could see I wasn’t comfortable throwing. I had a good arm–I had thrown a ball 30 rows up in the stands at Arkansas and broke the popcorn machine. They’d never seen that before. (laughter) But he told me I had to get behind the ball when I threw. When you throw, he said, you don’t throw with your arm, you throw with your FINGERS. I had never heard that before. (and also detailed a few other adjustments this guy suggested at the plate that I couldn’t quite get down… raised his average significantly) This manager who I wasn’t so sure where he was intellectually at first (who he’d been hiding the textbook from), by the end of the season I realized he was a genius. These are the PhDs of baseball.

These are the men who wake up every day with baseball.

Every day you wake up with the game and you understand that every day you have a challenge to pursue.

This makes you realize players need to be protected. From who? From themselves. You are raised being the best. An even in college you’re probably the best at your whole school. But then you get to spring training and you’re one of thousands of guys trying to make 800 major league slots. What I realized was: thank god I can hit, but you start grading yourself and you start putting yourself into a form of who you are as a player. As a company we had to do the same thing, define the players. We had to develop a system to advance them physically and mentally. The game will wear you out, mentally and physically. So we had to develop a platform for that (for building them up mentally and physically). And we had to make sure the player’s goals were understood, by him and by us. I’m fortunate that when ballplayers retire they’re still relative young, in their thirties. (and we hire them) So we developed a scouting system who are trained to look for the many things I was taught about in the Cardinals and Cubs organizations. These traits, these tools.

We also had to develop a database, for the speed of information. I hire people who are much brighter than I am, they come from MIT and places I would ever be able to get into. We develop the most efficient and ready use of information we can. We assimilate information and can do it immediately. To serve our clients the best, we needed the best way of assimilating the data. Data is everywhere.

We started a sports fitness institute. We have a gentleman who worked for the White Sox for 15 years. He was a former decathlete. I was looking at the disabled lists year after year and the White Sox had the lowest DL days year after year. We now have a system where we monitor our clients all year round and we are in touch with all the trainers on the teams. We have a complete medical file on every client.

We create a whole culture (and change the way guys think, within the Boras client base). A guy can have a great year, but we find out that his motor quickness is actually down by 2%. Now the defining moment isn’t how great a year did you have, but where you meet your own standards that we have kept measured. We’ve had the good fortune with catchers, we’ve got Pudge and Varitek going on toward 40 when most catchers are done at 32. We’ve got new standardization measurements.

The betterment of the game is if guys have longer careers. You have fan identification and greater and more experienced players in the game. “The Mental Game of Baseball” book is incredible, our association with (author) Harvey Dorfman goes back a long way. (Dorfman, sadly, passed away earlier this year.) Read it. Whether you are a player, executive, coach, whatever, there are metrics in there for how to measure yourself and evaluate yourself. People think agents are negotiators, but it’s only about 30% of what we do. The other 70% is stuff like the guy who throws 97 miles an hour, but I’m talking to him the next day after he gave up a grand slam, and he says “Yeah, I did what I always do and it didn’t work out.” “Oh, what’s that?” “I just rear back and throw harder.” Now, this guy throws 97 miles an hour, maybe I shouldn’t be questioning, but… so I ask him “Let me get this straight. Your strategy in a key moment in the game was basically just ‘throw harder.’ When do you practice this ‘throw harder’ approach?”

He says: “Huh?” He’d never thought about that before. So he started thinking about it. I asked, “Like, when you throw a bullpen session, is your last pitch the harder one? You just went into a situation where the game is on the line and you threw a pitch you never practiced?” “You make it sound like I’m stupid,” he says. But the fact is he realized that HE thought he was stupid. Next time he calls me, he says he got into that situation and he threw the breaking ball that he’s been practicing for 17 years and got a called strike three. But it was all due to psychology.

A player comes to me complaining about his batting average. So I tell him, he’s hitting .400 against 60% (of the pitchers). He says, “I am? Really?” Yeah. And if you’re hitting .400 in 60% of your at bats, but you’re only hitting .260 (overall), what’s happening in the other 40% of the at bats? He says “I don’t know.” You don’t know? The players says to me, “What, am I stupid or something?” So I showed him those other 40% of the at bats were when he’s behind in the count. With two strikes, he was hitting seventy five. “Seventy five?” he asks, “What do you mean?” I mean .075. (knowing laughter) He was taking the called third strike too often. I told him put down a drag bunt and even hit .180 and your whole average will raise above .300. And now when I see him he’s always asking me “What am I hitting with two strikes now?” And he’s focused. And successful.

An informed athlete is a better player. People ask me why are your clients receiving these big contracts? And I answer: well, they’re really good players. But really they’re informed players.

This is the world of sabermetrics. But remember who you’re doing it to. There are some of the brightest lawyers in America (running arbitration hearings), and yet you go into these arbitration hearings and most of what they do it just compare this guy and this guy. Whereas what I do is go in and try to establish a new value. We’re going to lose 70% to 80% of the time, because the arbitrators are not comfortable with going to a new level. But can you imagine getting a call from your son who is a ballplayer saying “I just turned down $75 million!” I have parents showing up at my door with guns saying “what are you doing?” But you have to look at the numbers. You have to ask the questions. Is he a speed player? How old is he? Body type? Conditioning, discipline, what’s he like off the field?

Can a player really play when he turns down million of dollars?

The first time I was faced with this, Greg Maddux came to me. He was with the Cubs, and he loved the Cubs. They had drafted him right out of high school. The idea of it is when you’re advising these young men, what are your goals? (Maddux said:) After five years, I want to win. Now you’re looking into the Tribune Company, the revenue streams, the industry revenue streams, and now we’ve broadened the database. We have an owner database. What are the owners’ goals? They control what players can achieve. So all of a sudden this young man comes to you, you come back and say, you got a high school education, they offered this, but I think you’re worth 30% more on the free agent market. The first person you negotiate with is your own client. “Are you saying to me under this structure the Cubs can’t win?” “Yes.” This was back in the 90s. “Where can you put me?” “Atlanta Braves.” The Braves said they didn’t need pitching. I presented the data to Bobby Cox. Cox talked to Schuerholz, we talked to the Rangers who needed a left-hander, they moved a lefty to Atlanta so that they could take Maddux.

Four Cy Young awards later and one World Championship… when you get a phone call in the middle of the night it’s usually a player on the way home from the ballpark. It’s what I said about how I’m not representing brick buildings. Brick buildings don’t call you and say thanks.

We educate the players on how much their franchises are worth. “Conventional wisdom does not apply.” The Braves were considered a mid-market club. But we were able to show him that they had the top television revenues, for example. They really weren’t “mid-market” in terms of revenue streams.

When we went into represent Kevin Brown, his numbers weren’t very good. He was 9-12 with (a not very good ERA, and I missed some other details about Brown here). But I focused on the quality start. At the time no one was looking at the quality start as a stat. It wasn’t in the dictionaries the other side were looking up. But Brown had given his team the chance to win 25 times that year. We won the case.

(Then Steve Avery.) He was 7-13 with a 4.67 ERA. Not very good. So I used the “Bobby Cox idiot defense.” Which was: Bobby Cox is not an idiot. Let’s not look at this big ugly wart, let’s look at the TRUTH. (laughter) Cox kept running this guy out there, 34 starts, and in the playoffs took out this other starter and put in Avery (long list of examples). Cox must know something he’s NOT TELLING YOU. (laughter) Won the case.

I tried it again with Lou Piniella. We had a guy who the organization was saying “we won’t play a utility player that much.” But they didn’t appreciate how difficult it was to be a utility player who could play so many positions, and play them well, and play infrequently, not knowing whether he’ll play, and where, et cetera. We won that case. We used a piece of data from 1933 to describe the player’s true value. And Lou Piniella was not an idiot. He knew the value of a player who could play four positions well.

After arbitration you come to free agency. Free agency is the ultimate chess board in player negotiations.

The best contract in history was Greg Maddux, he was the highest paid player, but he put his team into the playoffs 11 years in a row. Maddux got the first 5-year contract. My good friend, baseball Hall-of-Fame writer Tracy Ringolsby, came and told me “This means baseball’s fallen off the ledge.” Like it was the end of the world. Now every time I see him in that cowboy hat I say “Hey Tracy, 300 wins later, baseball still hasn’t fallen off the ledge.”

We’re constantly trying to use every nuance and distill it into a process to include it in the balance to fairly evaluate players. I wish there were 10,000 people in this room so you would all publish articles, because what you all do helps what I do.

(At this point it was 9:50, well past the allotted time, so we didn’t have time for a lot of questions, but we didn’t really mind. As Andy McCue said in remarks afterward, it was one of the better speeches we’ve had at a SABR convention, triggering more applause.)

Two questions were allowed, the first one being about what Mr. Boras thought about incremental income tax. Boras basically said he teaches clients they have only a small window to make their money, “It comes early and it doesn’t come for very long.” The remarks moved on to something about financial responsibility and thankfulness for what we have in America… I didn’t get it down. It basically sounded to me like Boras is fine with everyone doing their patriotic duty to pay their taxes.

The second question was how can parity between the large market and small market teams be achieved?

Boras: Well, if there would be free agency after three years that would solve everything. Just kidding. (Laughter.) The answer to parity for me is in baseball we have an opportunity to create an evaluative structure where the intellect of the game is constantly re-evaluated. (By “intellect” I believe he means the intellectual property of the game, including not just the data but the way it is interpreted and understood by the industry.) The 40 man roster has to have an approach to it where for a time it becomes a 35 man roster, when the clubs who haven’t done well for a while remain at 40. The idea that you can’t trade draft picks in baseball has to end. The draft this year was extraordinary. The 2014 draft is going to be really good. Next year’s draft will not be as good. So if you’re able to harvest that intellectual property you can have an advantage in knowing that. The less rules the better decision-making because the executives are accountable. Fans can evaluate them. Slotting. If we have slotting in the draft, I represented the same pick by the same team and got a different amount each time–the value of the 5th pick may be extraordinary this year and in other drafts might be (not that great). A general manager and his staff are evaluated because they have the freedom to do what they do. We should have a reserve system. You can have 30 players, and then if a club drafts someone away from you, $2 million has to (transfer.) The charge of each organization is the evaluation of the talent.

And then it was time for the SABR business meeting, which I did not transcribe. Join SABR and attend the convention to be a part of that!

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