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How Boras and Harper will Make Manny Machado Nearly $50 Million this January

In my last piece for The Loop Sports, “Sailboats, Submarines and Subterfuge,” I wrote about the “submarine race,” as Scott Boras put it, to sign Bryce Harper and Manny Machado. While both megastars remain on the market, it does appear as though the market has been slowly taking shape. Below, I lay out how Dan Lozano, Manny Machado’s agent, will use Scott Boras and Bryce Harper to make his client significantly wealthier — perhaps as much as $50 million wealthier — than if Machado was in this free agent period without Harper.

According to many national onlookers, the markets for Manny Machado and Bryce Harper have been pared down to perhaps the most serious two or three bidders for each player’s services. Machado’s market appears to consist primarily of two teams — the Chicago White Sox and the Philadelphia Phillies. Rumors of the omnipresent “mystery team” have of course entered the fray as of late, thought to be the St. Louis Cardinals by some, but ultimately — to stick with the Scott Boras theme — this race appears to have been reduced to two seaworthy vessels.

The Harper market, while inevitably more complicated to interpret — just as Scott Boras has engineered, of course — also remains fairly limited in scope. Boras has fought hard to inject the perception that traditional blue-blood franchises like the Los Angeles Dodgers, New York Yankees and Chicago Cubs remain interested in his star player, but the reality is that those teams are likely only interested in Harper on a shorter-term deal — perhaps three-to-five years in length — that simply doesn’t provide the level of financial commitment the agent and player demand, despite Harper’s reported desire to land with one of them

Another team known to be high on Harper’s list, — the Washington Nationals — has the obvious advantage of familiarity that no other team can duplicate.  However, the Nationals have carried on this offseason like a team planning for life after their former superstar player, signing Patrick Corbin to a six-year, $140 million pact, coming to terms with Anibal Sanchez for two years and $19 million, trading for Cleveland catcher Yan Gomes, and recently inking Brian Dozier for $9 million.

While none of these additions is particularly alarming for a team accustomed to spending lavishly under billionaire owner Ted Lerner, the real takeaway from these maneuvers is that a potential Bryce Harper reunion with Washington would bring with it significant financial penalties.

Beyond the dollars the Nationals would pay as part of the potentially record-breaking financial commitment to Harper is the 50% penalty the Nationals would be responsible for paying Major League Baseball as a result of being third time offenders of the League’s Competitive Balance Tax (more commonly referred to as the “luxury tax”).

As such, it would cost the Nationals significantly more in real dollars than it would, if say, the White Sox or the Phillies were to sign Harper, since those teams did not exceed the luxury tax in 2018. While I would never definitively rule Ted Lerner out of spending money — particularly when it comes to dealings with Scott Boras — whom Lerner is known to have dealt with directly in the past, it is my belief that the Nationals have moved on to LAB, or “Life After Bryce.”

In the meantime, I believe both parties are willing to carry on the illusion of mutual interest, as the Nationals provide Boras with leverage while Washington benefits from the public relations cover that a significant pursuit of the superstar provides.

As stated above, Harper’s market is purposefully more complicated, but ultimately, like the Manny Machado market, it once again comes down to the Chicago White Sox and the Philadelphia Phillies. For reasons that go beyond the scope of this piece, it appears as though the White Sox and Phillies are simply the only clubs willing to offer Harper the length of commitment and the massive sum of dollars that he and Scott Boras demand.

“What’s the problem,” you ask? Two teams, two players, one player goes to each team, we’re done, right? If only it were that simple. Below, I explain why it is not that simple, and how ultimately, Scott Boras will help Dan Lozano land a larger contract for Manny Machado than Machado would otherwise get without Harper on the market.

Scott Boras — the Inescapable Force

As I wrote in my previous piece for The Loop Sports, Scott Boras is determined to land a contract that breaks all records for Major League Baseball — both the total value record of $325 million established by Giancarlo Stanton in 2014 and the average annual value record of $34.42 million established by Zack Greinke in 2015 — and Bryce Harper is the just the candidate to receive such a contract.

Harper is a phenomenal young ballplayer just now reaching the peak of his athletic powers. He is also outspoken, yet trustworthy, handsome yet edgy, intelligent yet relatable. These athletic and personal attributes all coalesce into a dream ballplayer, one equally desirable by both the club’s general manager as well as its marketing department.

Scott Boras is indeed well aware of this, and should the clubs somehow forget, is the first to remind them. Boras is infamous for creating incredibly thorough marketing binders for his premier clients, consisting of hundreds of pages of data and projections, all for the express purpose of convincing clubs of the value his players will bring to their franchise.

Boras has certainly prepared and distributed such information regarding Harper, and provided some highlights during the General Manager meetings in Carlsbad, California in early November, when he mentioned his client’s impact on the National’s attendance, tv ratings, and the increase in value of the National’s franchise itself, from some $480 million to over $2 billion.

Ultimately, Boras’ pitch regarding Harper is quite simple: my client will transform every aspect of your franchise, so pay and pay dearly you will, but it will be worth every. last. penny.

Despite the current economics of Major League Baseball free agency, wherein data is king and nickels are being thrown around like manhole covers, I believe Harper will be the exception to the current penny-pinching trend. After all, he is a generational type combination of performance and production both on the field and off. He is only twenty-six years of age. And he does have the capability to entirely transform a franchise by himself.

All of this being the case, the premium Boras is demanding is not necessarily one many clubs should pay. The blue-blood franchises mentioned previously — the Yankees, Dodgers and Cubs — already have the ingredients for significant revenues at the gate and on television. Their franchise values already are among the highest in professional sports. They have strong rosters with young star players and have no difficulty attracting other talented players.

In short, these clubs simply don’t need to buy what Scott Boras is selling, because they already have it. Therefore, there is no reason for the Yankees, Dodgers or Cubs to pay the type of premium Boras will demand, and as a result, they haven’t buttressed the market for Harper like Boras would like many to perceive.

What has resulted is a slowly-developing market wherein the clubs that stand to benefit most from a Harper signing – the White Sox and Phillies – are both in the midst of significant rebuilding efforts. While surely in need of the type of legitimacy a star like Harper brings with him, both clubs have been content to slow-play this poker game, knowing full well that Boras must either negotiate with them or accept a shorter deal with another club; one that will not result in the type of total dollars his client hired him to reel in.

The Effect of Scott Boras and Bryce Harper on the Manny Machado Market

Further complicating this equation is the fact that Manny Machado remains on the market as a very reasonable and exciting alternative to obtaining Harper’s services. If not for the presence of Harper in this free agent market, and in nearly any other year, Dan Lozano’s client would be the crown jewel of Major League Baseball’s offseason.

While it might initially seem as though the presence of Harper in the same market is harmful to Machado’s value, I’d argue the effect is actually the opposite, particularly because the same two teams happen to be vying for each player’s services.

The most current reports and informed speculation seem to indicate bids for Machado rest in the $240 million range. It is believed the Yankees discussed a $200 million offer internally, and that was widely believed to be well-below the frameworks officials from the White Sox and Phillies have discussed with Lozano.

And while conventional thinking might expect Lozano to collect final offers from each team and make a decision based on those offers as well as Machado’s personal preferences, I think Lozano is far too good of an agent to carry out negotiations in such a simplified manner.

Instead, Lozano will use Scott Boras and Bryce Harper to his advantage, positioning his client’s services as a slightly lower-cost, perhaps structurally simpler alternative to the ultra-premium cost and structural complexity Boras demands. However, in order to do so, Lozano needs both the White Sox and Phillies to fully believe that Scott Boras and Bryce Harper are hell-bent on breaking both Stanton and Greinke’s records for total value and average annual value, respectively.

Because both the White Sox and Phillies seem content to land one of the two superstars, but not necessarily one of them in particular, Lozano can offer Machado as a simpler alternative to being forced to capitulate to Boras’ demands as a result of Machado no longer existing as an alternative to Harper on the market.

Imagine being the club that has been on both players for months, being forced to make a decision between acquiring neither player or engaging in a mono a mono stare down with Scott Boras. Signing Machado first, and removing oneself from such an unenviable position is a strong alternative Lozano should offer to both the White Sox and the Phillies.

By leveraging the specter of one-on-one combat within close quarters against Scott Boras, Lozano will significantly improve on the speculated high bids of approximately $240 million that have thus far been offered to his client. Lozano will focus on the similarities in production between Harper and Machado’s on-field performance, perhaps even conceding that his client may not offer the same certain je ne sais quoi level of magnetism Harper will bring on a daily basis, to argue his client should surpass the average annual value record of $34.42 million set by Greinke.

He’ll push for 10 years, an opt-out, and a no-trade clause. But to keep the minds of the front offices of the White Sox and Phillies from being lured back to the Boras “bargaining” table, he’ll likely back down from Stanton’s total value record of $325 million. I think he’ll ask for 8 years, $300 million, likely with an opt-out after 3 years.

Predictions

While the rapid evolution (or de-evolution, depending on whom you’re speaking with) of the free agent market over the past three offseasons, it is likely Machado will sign a contract for far less than what was initially anticipated.

Be that as it may, his production, age, and significant star power is capable of serving as a bit of an outlier in even the harshest of markets. Ultimately, Lozano will land Machado an 8-year deal in the range of $280-300 million, likely with some novel terms regarding his ability to opt-out within the first 3 or 4 years, and payment escalators should he be traded.

The White Sox appear to have gained momentum in the bidding between them and the Phillies, perhaps because they simply do not see staring down Boras as a viable option, and I think they and the Machado camp will agree to terms similar to those described above shortly.

Harper, on the other hand, will indeed get much of the contract Boras is demanding for him. While it, too, will be lower than was once anticipated, I believe it will shatter Stanton’s record for total value, and it will best Greinke’s record for average annual value.

I believe the White Sox landing Machado will indeed remove them from Harper’s market, and while we will hear that they are still monitoring discussions, I believe the Phillies will eventually capitulate to Boras. They simply will have no other choice. This will result in a premium above Machado’s contract — exactly what the White Sox sought to avoid — most likely something in the range of 10-years, $376 million, with an opt-out provision and financial payments should Harper be traded to a small group of teams not on a specified no-trade list.

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SeatGeek

 

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