Business Contract Dispute Paper

Business Contract Dispute Paper

Contract disputes can be complicated, just plain ugly, or simple. A researcher would not have to look far to find some of the worst of the worst in contract disputes of the modern era. Currently a bitter strike is in progress in Hollywood over royalties paid to writers of hit television shows; the complicated. February 8th of this year AK Steel of Middletown, Ohio and the International Association of Machinists reached an agreement settling a year long strike by workers; the plain ugly. (MarketWatch.com, 2007) Now for the simple, those are the rarity in today’s world of big business, but they happen, and this guy really needed the good press.

Alex Rodriguez plays third base for the New York Yankees. He is a three time Most Valuable Player Award winner (Baseball-Almanac.com, 2007). He’s also the most popular player in Major League Baseball and seems destined to break the all time home run record recently broken by Barry Bonds of the San Francisco Giants. Did I say break? I meant obliterate, the most hallowed of all professional sports records, which took 30 years to be broken and will be broken again in a mere 7 years.

On October 28th, 2007 during game four of the World Series, Alex Rodriguez enacted a clause in his contract. This was the most lucrative contract in the history of Major League Baseball and it allowed him to opt to seek even larger paydays. Rodriguez had just finished the 6th year of a record $252 million dollar 10 year contract and on the advice of his agent, Scott Boras of the Scott Boras Corporation, he sought a new 10 year contract worth approximately $350 million dollars a year. Many experts felt that no team could but the New York Yankees could afford this contract.

In February 2004, Alex Rodriguez was traded to the New York Yankees by the Texas Rangers. Contract in hand, he went to New York but the agreed terms of the trade called for the Texas Rangers to pay 12 million dollars a year for the remainder of Rodriguez’s contract. The Rangers were so desperate to unload the $25.2 million dollar a year salary that they let him go and continued to pay him $12 million dollars a year…to be gone. This is where his decision to opt out of the remaining three years of his contract ruffled the feathers of his employer, the Yankees… more on that later.

During the course of the past baseball season, both the Yankees and Rodriguez made public statements that they wanted to remain together and work out a new contract. The Yankees have a tremendous amount of revenue and a history of spending whatever amount of money is required to retain the highest profile players, therefore a new contract seemed to be inevitable.

Enter the evil roadside strangler of horror movie fame, Scott Boras. Mr. Boras is a high powered, infinitely successful sports agent. However, his tactics in strong-arming sports teams in to signing players for huge sums of undeserved or unaffordable money is legendary. Many professional teams have simply stopped pursuing his clients. Mr. Boras has a keen ability to convince his clients that they are worth much more money than they are offered and that they can do better elsewhere. Many times they do and many times they do at the expense of their personal fulfillment. Mr. Boras makes all decisions based on money, lots of money, for his clients and himself.

Mr. Boras had convinced Alex Rodriguez that he could land a $350 million dollar 10 year contract with the Yankees. All he had to do was exercise a clause in his contract allowing him to opt out of the remaining three years of his deal and scare them into a new contract. Despite his ties to New York City and his public statements, Rodriguez opted out. This action angered Brian Cashman, General Manager of the Yankees, because he was willing to pay Rodriguez’ price, but now if he were to re-sign Rodriguez (which he still could) the team would have to do without the 12 million dollar a year subsidy that would have been paid by the Texas Rangers because the original contract would be void. Any new deal would have to be without the subsidy. (Payscale.com, 2007)

In light of these facts the Yankees promised to not negotiate with Mr. Boras or re-sign Rodriguez. Rodriguez was apparently not aware of this but details are not completely clear. Public