Do Sports Agents Get Paid Up Front?

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With headlines detailing 9-figure mega deals for baseball players, some fans have to wonder what that means for their agents. Are they all on commission, or what? Do agents themselves get signing bonuses, or payment up front?

In practice, sports agents are not paid up front. In reality, they could, because baseball players are free to enter into almost any type of agreement they wish. However, to date sports agents generally get a percent of the player’s total contract value, and in baseball that percentage is not limited.

Both the National Football League and National Basketball Association limit how much agents can take from player contracts. In the NFL, agents can get no more than 3%, while in the NBA it’s capped at 4% of player contracts.

Similar percentage deals may be arranged for an athlete’s endorsement contracts, only those deals are usually for more, like 10 to 20% of an endorsement contract.

In Major League Baseball, barring any real rule changes by the league, sports agent contracts are hardly regulated. It’s basically buyer beware for players ~ especially young ones.

Why Do Baseball Players Need Agents?

For most of the history of Major League Baseball, player agents were not needed. Players were offered a contract each year by the club, and he could choose to sign and report to spring training. Or not.

Those contacts, due to something known as the reserve clause, were take-it-or-leave it propositions for MLB players. They were bound to the team that originally signed them, and if they chose not to sign a contract before a season, they would not be playing for any other team. They could just stay home and work a regular job.

That changed in the mid-1970s due to some player legal challenges and court rulings. Free agency began, so once a player’s contract expired, he was free to “test the market” ~ basically wait for teams to bid for his services.

Famous early free agents were Jim “Catfish” Hunter and Reggie Jackson, who fled the Oakland A’s and their penny-pinching owner; and pitcher Andy Messersmith of the Los Angeles Dodgers.

Free agency caused a significant increase in player salaries, as wealthy clubs like the New York Yankees outbid others for services of stars (like Hunter and Jackson). As the contracts grew in tremendous value, owners became more keen on the negotiation process, which is no short order resulted in the need for players to engage agents.

What Sports Player Agents Do

Basically sports agents argue for the value of the players they represent. As free agency blossomed, owners figured out ways to argue for smaller salaries for whatever reason, e.g. a down prior year (statistically), an injury, or not playing on winning teams. Very soon after Catfish Hunter kicked off modern free agency, players realized they could use help at the negotiating table.

With no precedent to build upon and certainly no league rules governing agent payments, many early player agents were attorneys trained in negotiations or bargaining, and smart enough to understand details of contracts that were starting to become much longer and more complicated than the 1-pagers in the 1960s and earlier.

Aside from salary and term of contracts (free agency brought more multi-year contracts), agents could argue for other benefits to be included in contracts, such as stipends for travel, or bonuses for achieving certain statistical standards, or winning awards.

Baseball Player Incentives

It’s pretty typical today for baseball player contracts to include monetary amounts should they win the Cy Young Award or Most Valuable Player award. Many contracts, especially for injury-prone players, might include game incentives, e.g. a bonus kicks in when the player appears in the 135th game of the season.

This has led to all kinds of shenanigans, or at least allegations of misdeeds, by clubs trying to avoid paying out bonuses. The games-played incentive is a great example: a player the owner did not like, who might be approaching the games-played threshold for a bonus, might order a manager to bench that player.

How Agents Might Argue Value

Both agents and baseball statistics have come a long way since the 1970s. Today there are any number of statistical categories an agent can use to argue that his client presents great value for a club looking to sign players.

In the old days it might have been just batting average, home runs, and runs batted in. Sometimes bad fielding percentages might be used by owners to discount a player’s skills or worth. They could be used by both sides in negotiations.

As they still can. However, modern negotiations can be chock full of newfangled statistics like on-base percentage plus slugging, or Wins Above Replacement (WAR), which is supposed to measure a player’s value compared against a “replacement-level” player at the same position (such as a minor leaguer or average major leaguer).

Other things can be debated by owners and agents including winning percentages, performances in the postseason, and even off-field demeanor or legal issues. Anything that can deter an owner from signing a player can be used ~ and they are.

In the end, owners must decide if signing a player would help the team succeed, and at what level, and what it might mean monetarily (e.g. increased ticket sales, bigger television broadcast contracts). That’s what they must place a value on ~ no easy task!

Location

It’s worth noting that the location of a club can contribute significantly to whether a player signs on, and if so the value of the contract. Athlete earnings are usually varied to take into consideration the cost of living of an area. Very high-paid free agents often end up with clubs in California, New York, and Florida, where it is not cheap to live.

On the other hand, sometimes the Toronto Blue Jays might be ignored by big-dollar free agents due to its taxation laws, or simply because a player does not want to go through customs over and over during a season.

Question: Who was the first player agent in the MLB?

Answer: Frank Scott, who became known for representing Yankees stars Mickey Mantle, Yogi Berra, and Roger Maris to land lucrative contracts off the field. His specialty was securing endorsement deals for the players, not seasonal playing contracts.

Q.: How much in commission might an agent get from a baseball player contract?

A.: MLB players are paid anywhere from $400,000 to $32 million. Therefore the commissions could range from $16,000 to $1,280,000. And that’s for a single player. Uber-agent Scott Boras has represented as many as 76 players at a time. Do the math: some agents can become multi-millionaires.