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Reportedly signed RHP Max Scherzer to seven-year deal worth $210 million, with significant money deferred. [1/19]

There’s an article from the Associated Press from 1992 about the Cubs signing Jose Guzman for four years and $14 million. "Guzman was 16-11 for the Texas Rangers last season,” the article goes. “Cubs general manager Larry Himes said he will be getting his money's worth if the 29-year-old right-hander does as well next year."

Guzman’s no comp for Scherzer—Doug Drabek, whose four year, $19 million deal with the Astros appeared in the same AP transactions roundup that morning, is—but that quote is a comp for almost every free agent signing. The Nationals will be getting their money’s worth if Max Scherzer does as well next year, and for the next seven years, as he did last year. He’s got the sixth-best FIP in baseball over the past three years, fourth-best in the past two years. He’s maybe the fourth or fifth guy I’d pick to make a start for me right now. He's so good. He just needs to not get worse.

This is the easiest part of the typical Transaction Analysis. First we find our pool of similar players: We’re going to set the parameters at 500 innings over ages 27-29 (Scherzer threw 622) and an ERA+ between 120 and 140 (Scherzer’s was 127) since 1980. There are 20 of these guys, 18 of whom got Cy Young votes during that three-year stretch, 17 of whom finished in the top five at least once, half of whom finished in the top three at least once, five of whom won the award, and one of whom is Aaron Harang, which makes you appreciate how good Aaron Harang was for a minute:

  • Harang, ages 27-29: 678 innings, 120 ERA+, FIP- 81
  • Scherzer, ages 27-29: 622 innings, 127 ERA+, FIP- 73

But let’s not get hung up on Harang, who was almost immediately afterward bad and stayed that way. The point of getting 20 comps is to see what 20 comps did:

That’s messy, like life, but we can draw some sadness out of it: By year one (year one!) only 55 percent of our group was above average, by B-Ref’s WAR model, though there are still a number of star-level performers. By year three, the group as a whole had dropped below average. By year four, more than half of the pitchers were either inactive or subreplacement. And, among the pitchers who have reached this point (i.e. excluding players in the group who are still young—Hamels, Fister, Sanchez), the group averaged less than 100 innings per year over years five, six and seven. Only Smoltz has a good excuse, though even his exceptional success as a reliever was instigated by surgery and an entirely lost season.

Overall, the group produced, on average, about 11 or 12 wins above replacement in the following seven years. This shouldn’t be surprising, because this is what we find out every time we do one of these actuarial tables for a free agent pitcher’s giant contract. Every time somebody crosses some big salary threshold, we do the comps, and the comps are depressing. Then, often, the results are depressing. So either the Nationals are the millionth team to get duped, or we’re asking the wrong question.

Putting aside, for a moment, the first option, the reason to sign Scherzer would be one of these two explanations:

  1. Despite the statistical similarities, Scherzer is not like that group of 20. He’s more like Glavine than he’s like Beckett, or he’s more like Leibrandt than he’s like Neagle. He will pitch better than his cohort.
  2. Despite the likelihood that he won’t, the Nationals consider themselves better with him (and without $200ish million) than without him (but with $200ish million).

To start with (2),signing Scherzer doesn’t happen in a vacuum. The move frees the Nationals up to trade a pitcher, apparently—even one as good as Jordan Zimmermann, and even one as good as Stephen Strasburg. Zimmermann is a free agent next year, and, as Sahadev wrote earlier this offseason, the market for “five-plus” players—those who are just a year away from hitting free agency—has been underwhelming, with the A’s and Reds getting relatively low-upside returns for Jeff Samardzija and Mat Latos. But Strasburg has two years of control left, and is Stephen Strasburg. Stephen Strasburg trade proposals quickly get into talk-radio call-in territory, because, like Giancarlo Stanton and Evan Longoria and Mike Trout, he’s in that disorienting zone between extreme excellence and reckless hyperbole that makes it difficult to find something realistic. The point being, though, that he’d bring a haul.

When Billy Beane traded away a bunch of his best players for lesser players, and we squinted and tentatively nodded, what we saw was this: Beane had a few assets (players), and he wanted to use them to make the future better and keep the present pretty good. That’s a tough balance to maintain, and Beane did it by getting younger and cheaper while adding mostly guys with now-value (at the expense, arguably, of upside). The Nationals, in a sense, are doing the same thing, except their asset isn’t Brandon Moss. It’s a big pile of money. They have the ability to spend a huge pile of money, and their goal is to make the future better and keep the present pretty good. Signing Scherzer, in a sense, and assuming another trade is coming, and that that trade might involve Stephen Strasburg, and that Stephen Strasburg might bring back a huge haul, is a move for the future—even though we know Scherzer’s future is quite possibly going to look like Jack McDowell’s or Josh Beckett’s. Even though we know that Scherzer himself quite likely won’t be worth his contract. We know that he will replace Stephen Strasburg (or Zimmermann) over the next year or two, and the Nationals will remain pretty good. And we know that the haul the Nationals get for Strasburg will be sexy as all get out, that it’ll be young and cheap and exploitable for years. We know it could potentially be the sort of move that extends a team’s window for years, and that easily offsets the expense of one premium salary producing merely average performance.

Put another way: There are very few options to replace a pitcher as good as Zimmermann or Strasburg will be in the next couple years. The Nationals just found one in Max Scherzer. There are also very few opportunities to reap the sort of prospect haul that Strasburg would bring in—and, for a team that’s in the middle of a competitive window, fewer still. The Nationals have one, right now, and Scherzer lets them cash it in. Yes, this requires a huge commitment to a pitcher who isn’t all that likely to be great deep into the deal, but if a relatively big-market team isn’t willing to throw some money onto the fire when the options demand it then there’s really no point to being a relatively big-market team.

I think I like this move, despite what you’ll read in the final section:


As to whether Scherzer is different than the rest of the cohort—well, that one’s sort of inseparable from the “Nationals got duped” explanation. If we don’t want to give teams the benefit of the doubt, we’d explain the repeated signings of huge-contract pitchers as an example of Base Rate Fallacy, or Base Rate Neglect. As Jeffrey Quinton put it to me: “We say ‘this guy's different’ instead of saying ‘this guy is a pitcher.’” The fallacy comes in not because nobody is different but because the exceptions are much rarer than the non-exceptions; the best presumption is that you’re not looking at an exception. As doctors say: Think horses, not zebras. Or as that defense lawyer put it to Sarah Koenig: “The odds of you getting a charming sociopath? You're just not that lucky.”

Maybe Scherzer is different. The first thing you notice about him compared to the others is that Scherzer strikes out way more batters than, say, Charlie Leibrandt ever did, even when compared to the rising league average. So he’s clearly more dominant, right? So he should be a safer bet?

Actually, if you look at the strikeout rates relative to the league average of our Scherzer cohort, the relationship between Ks and success in those next seven years is negative. The high-strikeout pitchers threw fewer innings, and they produced fewer wins above replacement. Hypothesis bummer.

Of course, Scherzer is different from those other 20 pitchers—just as Glavine was, just as Hentgen was, just as every pitcher is going to have a set of skills that differentiates him from the inner circle Hall of Famers and the busts alike. Maybe the Nationals’ analytics guys spent more time on this than I did ( >20 minutes), and maybe they cracked it. I wouldn’t put it past them. But given how many front offices have offered contracts just like this one and almost immediately regretted it, I’ll assume not. I’ll assume this is just another example of a front office really, really, really liking what a player just did, and hoping that he’ll keep doing it. Horses, not zebras.

Incidentally, Jose Guzman was out of the league by the end of the second year of his contract. —Sam Miller

Fantasy Impact

Max Scherzer

Already an elite pitcher, Scherzer’s value moves up a little bit more due to the added benefits of the following:

1) Facing the opposing pitcher on a regular basis. Scherzer will get to face the opposing pitcher one or two times per game as opposed to a designated hitter. In 2014, pitchers struck out in 37 percent of their plate appearances compared to a 20 percent rate for non-pitchers. As you would expect, the impact of a league switch is typically even higher for an elite strikeout pitcher like Scherzer.

2) The move to a weak NL East should additionally help Scherzer’s value. The rebuilding Braves and Phillies have lost Justin Upton, Evan Gattis, Jimmy Rollins, and Marlon Byrd and replaced them with lesser options. The Mets are presumably contending, but their lineup still comes up a little short.

3) A slight wins benefit. The Tigers weren’t exactly the weaklings of the AL Central, but the Nationals are the class of the NL at the moment and don’t have the same degree of questions at the back end of their bullpen as Detroit did in 2014.

Scherzer was already a definitive top 10 starting pitcher in mixed; he should see a $2-$4 bid bump in auction leagues and should be a Top 5 pitcher in mixed drafts, at a minimum. It isn’t difficult to envision a 260-270 strikeout season from Scherzer with an ERA of about 2.75 in 2015.

Tanner Roark

A day, week, or month from now Roark could very well be part of the Washington rotation if the Nationals decide to trade another arm. However, if they do not go this route, then Roark is obviously the odd man out. He is decent insurance for a potential Gio Gonzalez elbow flare up, but in all formats it has to be assumed that Roark will serve as a long/middle reliever barring another transaction. —Mike Gianella

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I wonder how much of the contract structure played a part in this. The deferred money can result in something like a $30-60 M savings in terms of net present value. This is huge, and maybe the team thought they'd never be able to lock down a guy at those rates in any other circumstance, so they went for it. And while it has something to do with securing the future, it has more to do with a deal they find unbelievable, that happens to help them secure the future.
I'm sorry, this is crazy talk. All of it. To spend $200+ million on Scherzer so you can trade Strasburg or Zimmerman simply makes zero sense. To borrow a phrase currently popular on these pages, winners' curse otherwise known as more money than brains.

A couple of years from now, we'll all be looking at this contract the same way we looked back on the Pujols and Hamilton deals, wondering what was everyone thinking? How did it go so wrong?

Just because I feel like piling on, do you remember the inverted W that made Scherzer a sure injury risk and had him ticketed for a career in the bullpen? You know, once he'd had the inevitable UCL replacement.
I don't think it's completely crazy. What if you could buy Addison Russell? What would you pay?

Well, some team is probably going to pay 80-100mil for Yoan Moncanda (40-50mil plus a 100% tax) who's pretty similar.

I'm not saying the Cubs would trade Russell anyway, but if you're willing to pay 100mil for him, then you can see this deal as spending 100mil to get Russell and 100mil to get Scherzer.

Or course you're really trading 2 years of Strasburg and 200mil for Russell and Scherzer, but Strasburg didn't have a rotation spot anyway.
On the other hand, two fifths of the rotation is gone after 2015. Scherzer is a pretty good replacement there.
Hypothesis: The unique local TV arrangement leading to direct competition between the Nationals and the Orioles, and the Nationals ability to reset the terms of the deal every fifth year, means that marginal wins in 2015/16 are more valuable to the Nationals than to other teams.
Revising and extending a bit: more wins now means the Nationals more-or-less lock in a larger share of MASN revenues indefinitely.
Of course, the Nats and MASN are in a bigtime dispute and hopefully will get divorced.
Possibly. And then a superstar Nats team gets the lion's share of the joint media market when the separate TV contracts are signed.
Mad Max was a great pitcher for a lot of years, and I will miss him this year and next, but beyond that, I'm glad his contract is jamming up the Nats and not the Tigers.

On the other hand, the number of scary contracts already guaranteeing lean years ahead, if keeping Max would have increased the chance of being able to metaphorically wrap ourselves up in a pennant to help warm the cold winters to come... It's not like pitchers will get any cheaper next year when we talk about Price.

So what's worse, paying big chunks of money for 7 years or medium size chunks of money for 14 years, the last 7 when the player is long gone?
Either is great if it leads to even a single WS title, as I say below.
Well, you already have a mess on your hands with the contracts the Tigers are on the books for now.
Given Tanner Ro-ark's success as a starter, and the Nats trade of Tyler Clippard. Roark looks like the 8th inning guy to me. Pare his repertoire down to 2 pitches and let him air it out for 1 inning.
I'm not sure it would work, but I do like the way you are thinking it through.
Let the out years take care of themselves. Please,please let this acquisition lead to a single World Series championship, or at least a pennant. If it is the former, than it does not matter what happens after that. Ask the Cubs, or 89-year-old Senators fan Ted Lerner. If it is the latter, at least there is a meaningful banner to hang. Time was I would have been ecstatic to simply see the NL East Champs banners- I want more now.

You will find if you ask a bunch of Nats fans what they think, they would respond by saying, "In Rizzo We Trust." I expect Phillies fans may have said the same about Ruben Amaro at some point, but I have more fear of another team stealing Rizzo than I do of Rizzo making Amaro's mistakes. If he trades Zimmermann or Strasburg for a worthy return we will know he is not Amaro, even if it makes Nats fans unhappy in the short term.

One title: that's all it takes.
this is what I say about NYY financial commitments when people complain about some of the money on their books. 2009 was very special for me and others and worth the price of teixiera sabathia rodriguez etc
Per Forbes, Ted Lerner is the 3rd-wealthiest MLB owner, worth ~$4.3B. He's 89, helming a franchise that's never won a playoff series. DC last won a World Series in 1924, before he was born. Lerner was born, raised, and educated in DC, and built the vast majority of his wealth there. He also owns a piece of the Wizards and the Capitals. He's about as "DC" as you can get.

He may simply be looking for the best path to a World Series win in his lifetime. He may also be playing the long game-- the Nationals will eventually pass on to his family, and the franchise's ongoing value would get a big boost from a World Series or three.

As a quick example, Forbes appraised the Nationals at $480M in 2012, $631M in 2013, and $700M in 2014.
Explanation #2A for a team to sign this contract: the marginal value of a win is a meaningless construct when the industry is making money faster than the supply of ballplayers to spend it on can be developed. Rizzo can't call down to Hagerstown to ramp up production.
How is Tanner Roark just dismissed in all this?
Not sure what you mean. There was an entire paragraph about him losing his starting job, unless another trade happens. Do you mean Taylor Jordan? With this signing, here are your current five Nationals starters:
Scherzer, Gio G, Jordan Zimmerman, Fister, and Strasburg. Roark can work in long relief until an injury/trade opens up a slot.
Or would you request that the Nationals move to a five-man rotation?
I would rather have signed Zimmermann than Scherzer but it could be that Rizzo knew that Zimmermann is not leaning towards staying or that it was too risky they'd be outbid next year.