Why this revolutionary change in the Agent Industry?
Because it makes total sense!
See for yourself…
1) The Math says it all
In constant dollar terms, the 5% agent fee of 1990, when adjusted for the HYPER INFLATION of player salaries, is the same as a 1.42% agent fee for the average MLB player today. In fact, MLB players are paying three times the amount for the very same service than the players were paying years ago. (see below)
| Year | MLB Avg Salary | 5% Fee | Cost of Living Index | Salary Adjusted Fee % | Normalized Agent Fee | Excess Fees to Agent |
|---|---|---|---|---|---|---|
| 1990 | $598,000 | $30,000 | 1.00 | 5.0% | $30,000 | – |
| 2000 | $1.9 M | $95,000 | 1.31 | 2.1% | $39,000 | $56,000 |
| 2010 | $3.0 M | $151,000 | 1.67 | 1.65% | $50,000 | $101,000 |
| 2014 | $3.8 M | $191,000 | 1.81 | 1.42% | $54,000 | $137,000 |
So, now that we have established that fees are “out of line”, why do agents still charge 4% to 5%?
Well, besides the fact that no agent WANTS to lower his personal income, there are several structural reasons – and it has to do with the flawed business model of the traditional sports agency.
2) The Bloated Cost Structure
Most traditional agencies employ legions of employees that essentially “buddy-up” with the clients and deliver non-essential services. These “relationship agents” can command anywhere from 30%-50% of the player fees alone. This is by far the biggest component of the agency’s cost structure. It’s no wonder the agent fee has not changed over the years!
3) Expansive Service Offerings
The array of services offered to clients has swelled over the years and carrying these services cost real money. The official Agent application actually lists twenty different agent services, of which over half have nothing to do with baseball. So while your agent competes by offering this array of services, YOU are the one that is actually paying for them – whether you use them or not!
See for yourself…
The services you are paying for:
Player contract negotiationAdvising potential drafteesAppearances and endorsementsBaseball equipmentCareer counselingTravel & Housing arrangementsBaseball coaching or instructionTraining services or facilitiesBill paying servicesLegal representation or adviceAsset ManagementInvestment adviceTax planning or adviceTax return preparationFinancial planning or adviceEstate planningBooking flights and other forms of transportationArranging for transportation of vehicles and other personal propertyPersonal shopping servicesArranging for tickets to events |
The services you actually use:
Player contract negotiationAdvising potential drafteesAppearances and endorsementsBaseball equipmentCareer counselingTravel & Housing arrangements |
4) “Meal Ticket”
The “established” Major Leaguer is essentially the “meal ticket” for the entire agent industry. Years ago, led by a prominent LA based agency, it became the standard practice for agents to only charge fees to players who were arbitration eligible and beyond. As such, it is currently the established MLB player that must SUBSIDIZE the agent services (as well as the cell phones, personal loans, spikes, running shoes, workout gear, etc.) for most every player with less than 3 years of Major League Service , as well as all of the minor leaguers!
Does that sound like a fair system? So, industry regs and practices aside, can a player earning the MLB minimum of $507,500 afford to pay 1.5%, or $7,612 for his OWN services? We think so.
Yes, it is way overdue
but 1.5% is HERE and it’s REAL.