Many homeowners are now running into trouble with their mortgages because they didn't understand what they were getting themselves into when they signed up for artificially low payments with teaser rates. Then the payments exploded upward and now they're facing foreclosure. Similarly, free agent catcher Jason Varitek has cost himself millions of dollars because he didn't understand Major League Baseball's arbitration process.Varitek served as the Red Sox catcher from 1998 through 2008 but at age 36, his numbers have been in decline for the last two years. At the end of the season, the Red Sox offered him arbitration -- a process by which Varitek and the team would exchange proposed salaries and an independent arbitrator would pick which number was most appropriate. Because of MLB rules, the least Varitek could have made was $10 million for the season.
Varitek rejected the offer of arbitration and became a free agent and because he is a Type-A free agent, any team that signs him will have to surrender a first round draft pick to the Red Sox.
And therein lies the problem: At 36, Varitek is certainly not worth $10 million per season. Worse, most teams are unwilling to give up a first-round pick for someone like Varitek and the result is that no other team is expressing interest in him. Similarly, the Red Sox are now lukewarm to the idea of signing him because they might prefer the draft pick. Red Sox GM Theo Epstein has Varitek and his famous agent Scott Boras over a barrel and could sign him for a small fraction of the $10 million they would have been on the hook for had he accepted the arbitration offer. Varitek's decision to reject the offer of arbitration probably cost him upwards of $5 million -- maybe closer to $10 million.
Here's the question: Why didn't Varitek just accept arbitration and avoid this whole predicament? According to MLB.com: "Varitek was not aware that teams would have to surrender a No. 1 Draft pick to sign him, and he takes full responsibility for his decision."
The moral of the story: Understand contracts and offers before you accept or reject them! And fire your agent if he doesn't do a better job educating you. . . .
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Reader Comments (Page 1 of 1)
1-22-2009 @ 6:17PM
dan said...
stupid stupid stupid
1-23-2009 @ 9:21AM
lynleestep said...
This example of Scot Boras' incompetence needs to be trumpeted at every opportunity.
It's his responsibility as agent, not Teks.
Steve Blesofsky
Sun City Center, Fl