While most of us were struggling to watch the 2nd half of the New England Indianapolis game last night, the Washington Nationals were completing a 7-year $210 million dollar pact with former Detroit RHP Max Scherzer.  The structure of the deal is rather unusual, as Scherzer will reportedly earn $15 million annually for the next 14 years.

Scherzer was seen by experts as the top free agent in this year’s crop,  and because Mike Rizzo drafted Scherzer in 2006 while working for the Arizona Diamondbacks, many speculated about a natural reunion between the two this winter.

The 30-year-old Scherzer was 18-5 last season for Detroit with a 3.15 ERA, 1.175 WHIP, and 252 strikeouts against 64 walks in 220.1 innings pitched.  The previous year, 2013, was his breakout season, as he posted a 21-3 record, a 2.90 ERA and 240 strikeouts while capturing the AL CY Young award.  During the course of his 7-year major league career, Scherzer has a 3.58 ERA, 3.39 FIP, 1.219 WHIP, and a 9.6 K /9 ratio against a 2.8 BB/9 rate.  The durable 6-3 220lbs pitcher is a workhorse, making 30+ starts in six consecutive seasons and throwing 185+ innings five straight years.

Scherzer features a powerful 4-pitch repertoire consisting of a blazing 93-95mph fastball with horizontal movement, a mid-80s changeup with extreme sink, a hard mid-80s swing-and-miss slider, and an upper-70s curveball with terrific vertical drop. (Thanks BrooksBaseball.net)  In short, Max Scherzer is the definition of an “Ace”.

This free agent contract is the largest in franchise history, and Scherzer, one of the top 5-7 starting pitchers in baseball, should lead the Nationals’ starting rotation for the rest of the decade.

Interestingly though, this signing seemingly creates more questions than it solves, as Washington now has six impressive starting pitchers and a team payroll above $150 million for next season.

First things first, having a surplus of quality pitching is never a problem and this supposed dilemma often resolves itself organically.  But certainly Rizzo’s phone is ringing off the hook with calls from opposing general managers seeking to acquire Doug Fister, Gio Gonzalez, Stephen Strasburg, or Jordan Zimmermann.  The logical move for Washington would be to listen to the various offers and use this pitching surplus to retool the farm system and shave some salary obligations.

However, the Nationals have nearly $50 million coming off the payroll next offseason due to the pending free agent status of Ian Desmond, Fister, Denard Span, and Zimmermann.  In addition, the unique structure of this contract allows the Nationals greater flexibility in future negotiations with those players, along with future free agents Strasburg and Bryce Harper. Ownership can take solace in these future savings, in addition to the potential for increased funds from their MASN deal in the upcoming months.  Furthermore, ticket sales and local television ratings could skyrocket this spring as the team is poised to be the favorite to win the 2015 World Series.  These possible increases in revenue should help cushion the shock of this monumental contractual obligation.

I would be remiss if I did not mention the extremely mediocre historical results of signing pitchers to 7-year contracts.  Only 4 pitchers have signed contracts of this length, two of whom have been recent with Felix Hernandez and Clayton Kershaw – the other two were C.C. Sabathia, who has struggled with injuries and subpar performance the past two seasons and Barry Zito, who was an unrequited bust for San Francisco.  Certainly this falls into the category of “small sample size” but previous results have not been kind to lengthy contracts with starting pitchers.

Additionally, because Scherzer was a Type A free agent and was offered salary arbitration by Detroit, the Nationals will forfeit their 1st round pick, 27th overall, in next June’s amateur draft.  As we witnessed first-hand in 2013 when the team did not have a 1st-round pick due to signing Rafael Soriano, lacking that pick and only having a late 2nd-round pick on Day 1 of the draft significantly impacts the elite-level talent you can acquire that summer.  The Nationals farm system is currently in fine shape, but this “absent” prospect and the projection of late 1st-round picks in the next few years could have negative consequences down the road.

These concerns aside, the Nationals must be commended for such an aggressive move, as Scherzer’s acquisition gives Washington 3 of the best 15 pitchers in baseball and one of the best starting rotations in recent memory.  Combined with average or better position players at all 8 starting positions, Washington has the strongest projected roster in the National League and should begin 2015 as the Vegas favorite to capture the World Series.

Scherzer should give Washington 4-5 more seasons of terrific production on the field, with the last two seasons feeling like a sunk cost of acquiring a premium free agent.  This realistic probability, along with the possible negative impact to the farm system, and extreme dollars involved, makes this signing feel extremely risky to the long-term health of the organization.  Yet much of this peril is mitigated by the fact that so much of the financial obligation is deferred into the future, allowing the team flexibility in navigating this financial debt.

As mentioned above, this move will likely have roster consequences in the forthcoming weeks, but in a vacuum, the Nationals just signed an elite free agent to an expensive but not outlandish contract – at least in baseball terms.  A risky contract like this goes against my nature, but even acknowledging for the potential future negative ramifications for the franchise, I “Scher-ly” like this signing for Washington.

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3 Responses to “Washington Signs Max Scherzer to Sure Up the NL East”

    • Ross Bukouricz

      The only way this would be illegal is if it were banned in the CBA and neither the players nor the owers should want this. Deferrals allow players to have financial security in a profession where bankruptcy is quite common and they give owners financial flexibility. In fact, deferrals like this are routinely used in the business world as a retirement planning technique for executive level staff when they make too much money to contribute to an IRA and already max other retirement options.

      As for the Mets, yes they did. They converted the last year and $5.9 million of Bobby Bollina’s contract into a 25 year annuity paying roughly $1.2 M a year starting in 2011 after the 1999 season. They are paying about an 8% interest rate using the TMV. Jeff Wilpon did this mostly because of his “investment” with Bernie Madoff, thinking he would make 2-3x the approx. $30 M payout. The Nats however won’t be paying any interest on this contract, so it is roughly a equal to a 7 year $170M contract.

      Reply

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