Wall Street Journal baseball – The Scores Report

The Wall Street Journal recently had a chance to sit down with a high-profile sports agent not named Scott Boras. Arn Tellem currently represents Francisco Rodriguez, Rafael Furcal, Mike Mussina, and Jason Giambi, all who are entering contract negotiations during this offseason. In this interview, Tellem discusses how the current economy will affect the big contracts his clients are pursuing.

WSJ: Let’s consider the Passover question — what makes this year different from all other years?
Mr. Tellem: It’s probably unprecedented in recent times that there is the cloud of what is happening in the global economy. In 1987 there was a huge drop in the stock market, which also occurred on the eve of free agency, though as I remember that was right in the middle of the period of collusion among the owners.
WSJ: Have owners been spreading the word that with the economy in trouble agents better understand this isn’t the year for the big-money, multi-year deal?
Mr. Tellem: Free-agent signings will not be impacted by what has happened. Baseball has had a run of record attendance and revenue. Major League Baseball and the teams have done an incredible job of marketing the sport here and abroad. You look at Philadelphia and you see the impact that winning can have on an organization and a city.
Owners are passionate about trying to win and fielding the most competitive team. Those that miss the playoffs and the World Series want to get there. I believe the owners all recognize that being successful means to prudently risk and manage a company’s assets for a successful future. When you quit taking calculated risks, failure is inevitable. There are a number of players who can make a difference, and I expect the market to be robust.
WSJ: Do you adjust your advice to consider the times and the economy, perhaps telling a client to take an offer more quickly than in another offseason?
Mr. Tellem: Unlike any other business, sports is a true meritocracy. Players get paid on prior performance and on what people expect them to do in the future. No business is more predictable. The irony is if the same scrutiny that applies to pro sports were applied to executives of public companies, we’d be better off as a nation. The statistics are part of the public domain, we all know the ups and downs, and players are accountable to the sports media each day about their performance. If we had an equivalent level of scrutiny and accountability in the business world, I guarantee we would not have the same levels of compensation given to executives of public companies that are now being bailed out by the government.
WSJ: Does a team like Tampa Bay making the World Series with a $44 million payroll hurt your efforts to get your clients the money you feel they deserve?
Mr. Tellem: In baseball success is achieved in a variety of ways. Tampa went through tough years. They marshaled high picks and drafted wisely and now they are seeing the fruits of their labor. Every team has a different strategy. There is no one way, and that’s a reason why baseball has had so many different winners recently.

I really appreciate Tellem’s point about success in baseball being achieved in different ways. While a team like the Yankees constantly adopts a “win-now” mentality by signing marquee players to big contracts, the Tampa Bay Rays made strategic moves over the years that ultimately paid off in the end. It’s as if the Rays were willing to take years of losing because they knew they would ultimately achieve their ideal roster. This type of waiting game really makes you wonder what teams like Pirates and Reds are doing.

Tellem’s also correct in that Furcal, K-Rod, and Giambi will still command high-paying contracts despite the economy. Major League Baseball had a very successful year. All-Star Weekend sales and viewership can support this claim. “Baseball has had so many different winners recently” and this is wonderful. The sport is becoming more competitive as teams like the Rays, Phillies, Brewers, and Dodgers are now formidable organizations. Thus, as more teams become competitive and have the ability to make the playoffs, the fans will come out to support their team, as witnessed in Tampa Bay.

Many organizations still have deep pockets and we’ll see them on display over the next few months. Guys like Manny Ramirez, CC Sabathia, and Francisco Rodriguez will still get the same type of big money that was being dolled out from 2000-05. From the Yankees to the Nationals, teams want to win, and they’d be dropping millions even if the next Black Friday were right around the corner.

The Wall Street Journal has confirmed what we all pretty much suspected: any sports cards bought over the past 30 years are virtually worthless.

In 2000, Mr. Christensen died suddenly at age 28. Today, the cards sit in a storage unit and his mother must decide their fate. She has no idea how many cards are in the collection or whose faces appear on them. Maybe they’re worth a lot of money. Maybe not.
“I don’t know what they’re worth, so I don’t want to start giving them away,” says his mother, Carol White. “I don’t want them to sit in storage,” which she notes is not climate controlled. “I don’t have any grandchildren. He didn’t have a family, so I might as well sell them.”
It’s not uncommon for sports collectibles to fall into the hands of a non-collector through death, divorce or debt. Then what?
“What people need to understand is that the price guides list the retail price, and the amount a dealer would pay would be much smaller,” Mr. O’Connell says. For vintage cards — those from before 1980 — a dealer might pay between 50% to 60% of the retail value. Newer cards may only command 5% of the retail price. That’s not necessarily because the dealers are dishonest, Mr. O’Connell notes, it’s just how they make a profit.
With only vague descriptions and few details, Mr. O’Connell could not even guess whether Mr. Christensen’s collection carries much value. But 1972, his birth year, suggests that many of the cards are relatively new. “So the values for cards that you saw in the ’50s, ’60s and ’70s you won’t get here,” Mr. O’Connell says.

Case in point, when I was twelve years old, I pulled a Cal Ripken Jr. insert card worth $1,000 at the time. When I checked the Beckett price guide two years ago—$150! I’ve foolishly kept the card in a safety deposit box over ten years on the advice from the shop owner that the list price would only continue to rise. Well, that’s an 85% loss in value and this decrease is represented in most of my collection, which spans the years 1990-2002.

I specifically remember realizing when sports cards were on their way out. The industry had been suffering for years and companies like Topps, Pinnacle, and Upper Deck were beefing up their packs to try and increase demand. These tactics included more insert cards, pieces of athletes’ uniforms, autographs—I even own a series that includes nothing but coins. Then came Pokemon and Magic, whose cards also doubled as components of a complicated game. This new and very young demographic of nerds and elementary school kids clobbered the sports card industry. While fathers continued to collect, their children were drawn to the allure of fantasy cards.

I always kid with my dad about how his card collection will bail me out of hard times in the future. In a way, it’s no joke. His collection runs from 1950-1980 and includes such prizes as a complete 1956 Milwaukee Braves Topps set. I have an absurd amount of cards which at one point probably valued about $10,000. Now, the collection probably isn’t worth the cases it’s stored in.

Obviously, collections are only worth the value collectors are willing to place on them. As the number of card aficionados has dwindled over the years, the industry is barley hanging on. However, those cards produced before 1980 are still highly sought out by the old school of collectors. Thus, guys like my dad are sitting on a cardboard gold mine.

Tag: Wall Street Journal baseball

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