Being a baseball fan, a former resident of Japan, and a student of ADR, I followed the negotiations between Japanese pitcher Daisuke Matsuzaka (and his agent, Scott Boras) and the Boston Red Sox with interest.
To review: The team with which Mr. Matsuzaka is under contract in Japan, the Seibu Lions, "posted" him. This allowed major league baseball teams in the US to submit bids (a "posting fee") to Seibu for the right to negotiate with Mr. Matsuzaka. The highest bidder received exclusive negotiating rights -- if the team and Mr. Matsuzaka reached an agreement, Mr. Matsuzaka would pitch for the team and Seibu would get to keep the posting fee. If no agreement was reached, Mr. Matsuzaka would continue to pitch for Seibu, and the US team's posting fee would be returned to them.
As you can probably tell from the above, the posting process is a screwy one. Seibu wanted Mr. Matsuzaka to leave, and wanted the posting fee, but had no involvement in Mr. Matsuzaka's negotiation with the Red Sox.
Boston wound up with the highest posting fee: a little more than $51 million. Then the real negotiation began. What did everyone want?
Mr. Matsuzaka apparently wanted -- badly -- to pitch in the US.
Mr. Boras wanted what his client wanted. To maximize Mr. Matsuzaka's salary (and, as a result, his commission)? Of course. To get Mr. Matsuzaka into the US to play ball? Of course. Mr. Boras may have also wanted to try and overturn the posting system, although this is questionable; if it is the case, there's a potential conflict of interest involved.
Boston wanted to sign Mr. Matsuzaka while minimizing his salary.
Boston had the upper hand in these negotiations, for two reasons:
(1) It was widely known that Mr. Matsuzaka wanted to pitch in the US. It may be that Mr. Matsuzaka had no "BATNA" (Best Alternative to a Negotiated Agreement), other than returning to Japan. And I've read some commentary suggesting that, in Japan, this would be considered a shameful thing.
(2) Boston had a secondary goal: keeping Mr. Matsuzaka away from its main rival, the New York Yankees. Boston's high posting fee pretty much guaranteed that would happen, since Boston would either sign him or Mr. Matsuzaka would return to Japan. The only way the Yankees might have a crack at Mr. Matsuzaka would be if the Red Sox didn't reach an agreement and were found by the commissioner of MLB to have been bargaining in bad faith. In that case, the team with the second-highest posting fee might be allowed to negotiate with Mr. Matsuzaka. (It's unclear who this second team might be, although it was rumored to be the Mets.)
After lots of drama (which is to be expected, given that the Red Sox and Mr. Boras were involved), an agreement was reached. One of the interesting parts of the negotiation involved the question of whether Seibu could "kick back" a portion of the posting fee to Mr. Matsuzaka and/or the Red Sox. The answer is "no."
Finally, one ridiculous thing I read in the wake of the agreement was that Mr. Boras had somehow "lost" the negotiation. Days before the agreement was reached, rumors circulated that Boston had offered a 6 year, $48 million contract while Mr. Boras countered at 6 years, $66 million. Some folks have taken the final number (6 years, $52 million) as proof that Mr. Boras failed. But given his client's wishes, I disagree. Mr. Boras represents his client, and if his client wants to reach an agreement, Mr. Boras must help him to do so. And that's just what he did.
