Wednesday, January 21, 2015

Max Scherzer and the Amazing, Deferred Contract

Yeah, I'd also be pretty happy with this contract
Seven years, $210M.

That is the official terms of the contract that former Tigers pitcher Max Scherzer signed with the Washington Nationals. A contract that not only gives the Nats the nastiest rotation in the majors, but allows Scott Boras to say that Scherzer makes almost as much as Clayton Kershaw.

Except both those things aren't exactly true.

The second point first. While Scherzer will get paid $210M, half of that is deferred money for another seven years. So what he really gets is $15M over the next fourteen years, with his massive $50M bonus paid up front.

Now, this sounds like semantics until you take into consideration two things; inflation and the increasing money that comes from television contracts. Money today is (unless the global economy utterly collapses) worth more than money 10 years from now. And the Nationals will most likely have more money to spend in the future than they have today. So while the yearly hit over the seven year deal is somewhere in the 20s (the bonus structure isn't available yet) the financial hit isn't as extreme as you would think.

However, it is more than the Nationals were paying at this time last year. Even using a rough estimate of $22-23M (15+ 1/7 of the bonus), that is a large chunk of change that the Nats cannot use now.

Which brings us to the first point.

The Nationals now have the best rotation in the majors. Scherzer, Stephen Strasburg, Doug Fister, Jordan Zimmermann, Gio Gonzalez and Tanner Roark. But that is six pitchers for five slots. Yes, you could bump Roark into the bullpen but then you risk screwing up a pitcher you have locked up for the next few years.

The two pitchers most likely to go are Zimmermann and Strasburg. Zimmermann is out of contract at the end of 2015, Strasburg at the end of 2016. And the Nats, for all the money they are spending now, cannot spend that type of money two more times. Spending over $60M a year on three pitchers is competitive suicide. So someone has to go. Likely Zimmermann. And the bidding on that kid will make this deal look like peanuts.

The problem is that Zimmermann and Strasburg are the youngest two pitchers in the rotation. Oh, and throw in that Strasburg is also represented by Scott Boras. So in signing Scherzer the Nats are going to lose one (or both) of their youngest starters. You can argue the pluses and minuses of that for a long time to come. What you can't argue is that the Nationals pitching staff is, for this year at least, lights-out amazing.

It is also interesting that the Yankees and the Red Sox never really entered the bidding on Scherzer. And I would guess part of the reason is because he turns 31 in July.

Pitchers are tricky investments. And once they hit their 30s, you never really know what exactly will happen with them. The Sox are pretty upfront about not committing large dollars to pitchers in their 30s. It looks like the Yanks are feeling the same, at least for now.

Of course, both teams still benefit in one way. Short of the World Series or the odd inter-league game, they never have to see Scherzer again.

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