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Friday, February 23, 2007
Chad Cordero: Wins Arbitration But Losses Autonomy?

Attorney Bryan Stroh (a former law school classmate whose practice includes sports law and who was also a pretty darn good baseball player at Princeton), passes along this link from on Washington Nationals' closer Chad Cordero being pressured by his agent and the MLBPA into turning down a two-year guaranteed deal (said to be worth between $7 million and $8 million) from the Nationals. According to Cordero, both the MLBPA and his agent, Larry Reynolds, thought he would win his arbitration case, and that he would be making a big mistake by signing the two-year offer. They appear correct, as Cordero won his case, securing a $4.15 million contract for 2007; if the 24-year-old Cordero--one of the best young closers in baseball--has another terrific season, he would be poised to make even more in 2008.

But even though he won his arbitration case, Cordero doesn't feel good about being pressured into not signing the two-year contract offer:
"I don't know why I didn't sign [the two-year deal]," Cordero said. "I wanted to. The Players Association thought I had a good case and they wanted see how it turned out. Even if I lost my arbitration case, I wasn't going to lose. It's still a lot of money. It's still more money than I ever would have thought [I'd make]."
Assuming this media report of Cordero's feelings is accurate, what does it say about the role of the agent and the players' association? I understand that the players' association has a collective interest in trying to maximize salary averages for each position, and that Cordero's contract affects future contracts of other closers, but who is looking out for Cordero? He is, after-all, a member of the MLBPA; should he be dissuaded from his instinct, or was the MLBPA correct in taking a more guiding approach?

And what about his agent? On one hand, he probably gave his client advice that will enable him to make more money--perhaps a lot more money--but on the other hand, his client doesn't seem to feel too good about what happened. Rick has written extensively on this topic (e.g., his post Players Union Needs to Fix the Agent Business and law review article Solving Problems in the Player Representation Business: Unions Should be the Exclusive Representatives of the Players), and I would be interested in hearing his thoughts.

This topic also brings to mind that many players perceive significant value in non-monetary terms, such as getting to play in a particular part of the country or with a certain group of teammates. Sometimes players are moved by those non-monetary terms in ways that they don't fully appreciate (a subject which I examine in my article: It's Not About the Money: The Role of Preferences, Cognitive Biases, and Heuristics Among Professional Athletes, 71 Brooklyn Law Review 1459 (2006)), but sometimes they genuinely prefer to not go through a contentious salary arbitration process. Along those lines, even though we live in an American culture of "every last dollar" mattering, clearly not every American embraces that creed. And maybe Chad Cordero is one such dissenter.



Great post, and you raise some interesting questions. First of all, the baseball arbitration system is a total crapshoot because the arbitrator is only permitted to choose either the team's or the player's figure (there is no in-between award). The system is set up that way to encourage settlement and thus few cases go to arbitration because it's so risky. So Cordero's arbitration award could have easily gone the other way.

But I think sometimes we tend to forget that the player is the principal in the player-agent relationship, not the agent. In other words, if the player wants to sign a multi-year deal with his team, the agent has a fiduciary duty to negotiate the best possible deal within the range of direction that his principal has provided to him. I don't believe it's the agent's role to "talk his client out of it" just because the agent thinks it's not in his client's best interest.

As you know, I'm always advocating in the best interest of the player. The union's position is understandable because it is looking after the collective interests of all the players, but the reason the union delegates authority to agents is because the union does not want to be charged with looking after the interest of each individual player (which sometimes conflicts with the collective interest). Cordero's agent also has an incentive for Cordero to make more money because the agent's commission is based upon what Cordero makes. But the question is, what is in the best interest of Cordero, not the union or his agent.

Now suppose that Cordero gets injured next year. What's he going to be worth the following year? He would have been guaranteed 7M or 8M, but instead he would only have 4.15. Would he have a claim of malpractice or breach of fiduciary duty against his agent for providing him bad advice? Maybe not, because Cordero ultimately made the decision to go to arbitration instead of signing the two year deal.

I could talk for days about this stuff, but those are my initial thoughts.

Blogger Rick Karcher -- 2/23/2007 5:38 PM  

Great post and comment from Rick.

I believe the agent and the Player's Association did their job in this instance. They talked Cordero out of signing a bad deal. At the same time this deal prevented the market from being "capped" for other similar/comparable players.

Even assuming that Cordero is hurt his next year, he still makes as much if not more than he would have with his 2-year deal. It is highly unlikely that the Nationals would non-tender him, even if he suffered a shoulder or elbow injury requiring surgery. Worst case scenario, the team would only be permitted to cut his salary 20%. Still quite a pay day.

Anonymous Anonymous -- 2/23/2007 7:12 PM  


In my original comment, I meant to say, suppose that Cordero gets injured THIS year (not next year), which only gets him the 4.15. He would most likely be non-tendered if he had a serious enough injury this year.

Blogger Rick Karcher -- 2/23/2007 8:44 PM  

While I'm not entirely sure how this might have been weighed by the MLBPA or Cordero's agent, how might have trade rumors affected his arbitration process?

I've heard numerous rumors about the Red Sox targeting Cordero, and many Sox fans think it nearly a done deal. While I don't know about that, the fact is that the Nationals aren't playoff bound anytime soon, and Cordero is a valuable asset in trade talks.

Blogger Satchmo -- 2/24/2007 8:15 PM  

The concern here seems quite overblown. A grown man does not lose his autonomy (a amazingly vague word) because someone gives him advice. This is simple a risk-reward scenario: Take a chance now for more money later. People do this all the time and I'm sure Cordero understood what he was doing. Yet this posts seems to imply that nobody should even give Cordero advice for fear that it would override his "autonomy/" That's an untenable position.

Anonymous Anonymous -- 2/25/2007 10:35 AM  

Thank you all for these excellent comments.


You bring up some outstanding points, especially concerning the unpredictability of the baseball arbitration process, the fact that the player is the principal in the player-agent relationship, and the fact that the whole reason the union delegates its authority to an individual player agent is because it is thought that the agent would look out for what is best for the player and not necessarily what is best for the market (as the union does).

Anonymous 1:

I agree, Cordero makes a ton of money no matter what happens, and like Rick, you bring up a good point that the union has to look out for collective interests, even if those interests do not coincide with those of the player (and that is precisely where the agent should come in).


You're right, the Red Sox trade rumors seem like the subtext to this story. With Jonathan Papelbon moving to the rotation, and with no clear heir apparent to his closer position on the Sox 40-man roster, Cordero has been mentioned as a guy whom Theo Epstein covets. I guess the question is how would those rumors affect the advice given by the union and Cordero's agent? I'm not sure, but it's an interesting question.

Anonymous 2,

I find it striking that you describe autonomy as "an amazingly vague word," and yet you offer what I would call an "amazingly vague phrase" when writing, "This is simple a risk-reward scenario: Take a chance now for more money later." Is it really that simple? How, exactly, are you quantifying risk and reward? Sure, any choice sounds simple when you ascribe a conclusion to it, but it becomes a lot harder when you actually have to plug in numbers to justify that conclusion.

Also, please note that the point of the post was that Cordero didn't want to take the chance for more money later, and yet he was apparently pressured into doing so. So even if you are right that it was a risk-reward scenario," that scenario didn't materialize as the player desired. Doesn't sound so "simple" does it?

Along those lines, you seem to be neglecting the fact that Cordero's decision-making process wasn't in a vacuum. He was being pressured by his agent and the union--two very persuasive authority figures for most MLB players, I would imagine--into selecting one choice over the other. Do you really think being pressured by those authority figures had no bearing on Cordero and should just be excluded from the analysis? Are you not troubled by that result? I think comments by Rick, Anonymous 1, and Satchmo above illuminate how meaningful the situation was to Cordero, and how it may have moved his choice-making in ways that he neither desired nor fully-appreciated. And that is probably why he is unhappy despite winning his arbitration case--he didn't get to make the choice he wanted, because he was pressured into not making it.

Blogger Michael McCann -- 2/25/2007 10:59 PM  

Prof. McCann:

I may underestimate the complexity of the decision, but that only supports my point. The more complex a decision, the more appropriate it is that Cordero is getting advice from people that know what they're talking about.

Further, you underestimate the fact that Cordero is a grown man, not a child. What, exactly, would have been the consequences for Cordero if he had simply told his agent he was signing the contract that he originally wanted to sign? Would be have been ostracized by his fellow players? I assume the answer is no. In fact, I assume there would be no real consequences at all. Unless there are serious consequences for bucking the union on this issue, then I do not see any real "pressure" on Cordero to do anything.

I view this situation as similar to an average investor who is talked into a riskier stock by a broker. After the fact, the investor wishes he had invested in bonds. But that doesn't mean there was any real "pressure" to invest in the higher risk stock.

Anonymous Anonymous -- 2/26/2007 9:51 AM  

Anon -

Except, of course, that there is no "union of average investors" let alone a "union of investors" that looks out for "market setting" stock buys.

And as for your Cordero is a "grown man" points, I think you vastly vastly underestimate the impact of the MLBPA, let alone of agents, on a player. In the abstract, the "grown man" argument seems valid, but the realities of the baseball world are much different - a fact born out both by Karcher's excellent work on the subject, AND by the fact that I don't think any of us here can name the last time that an individual player went against the union's wishes about any topic at all. It just doesn't happen.

Anonymous Anonymous -- 2/26/2007 10:13 AM  

I think this situation does illustrate why having the MLBPA as the exclusive representative for all players would present an untenable conflict. The MLBPA's role is to look out for the interests of the collective whole. It is the individual agent's responsibility to look out for the individual player's interest.

Anonymous john -- 2/26/2007 1:12 PM  


I think we agree on almost everything. I assume by loss of "autonomy" Prof. McCann is referring to the loss of right to make your own choice about important decisions in your life. A core violation of decisional autonomy would be barring a choice that free adults should be able to make, e.g., Lawrence v. Texas. I will grant that actitivy other than outright pressure can be problematic if it affects decisional autonomy. But those activities must at a minimum be coercive in some meaningful sense to implicate autonomy concerns. Cf. Lee v. Weisman.

Therefore, whether the Cordero situation amounts to a loss of autonomy depends entirely on the coercive force of the MLBPA, i.e., the consequences for saying no the the MLBPA. I cannot answer that question. But I assume that the pressures are not that great. In fact, I think there should be a strong presumption that that is the case, at least where adults are involved. Accordingly, I would want strong evidence that there are real consequences to bucking the union on this issue.

Reasonable minds could certainly disagree about whether sufficient evidence has been produced, but I haven't seen any clear statement about what the exact consequences to Cordero would have been. Until we see that evidence, I don't see how anyone can say that serious autonomy concerns have been implicated. (The post-signing dissonance by Cordero is not compelling evidence to me. People re-think their decisions all the time.)

Anonymous Anonymous -- 2/26/2007 2:47 PM  


I understand the conflict issue presented by the proposal in my article. I discuss all the conflict issues in my article and provide some proposals for how to address them. But note that the union does represent the interests of individual players in other contexts (e.g. player grievances), so it's not that far-fetched. Also, there are many conflicts that currently exist in the 3rd party agent system.

In any event, in my article, I discuss many reasons why the unions should consider giving players the OPTION to be represented by a salaried union-employed agent, and those agents hired by the union would be isolated from collective bargaining negotiations. I think all of the pros and cons need to be evaluated and I don't think you should dismiss the idea just because there is one potential problem (the conflict) that needs to be addressed or overcome.

Blogger Rick Karcher -- 2/26/2007 8:11 PM  

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