At first glance, the Washington Nationals' agreement with Max Scherzer on a seven-year, $210 million contract appears to be an exceptionally expensive commitment. After all, the only other pitcher to earn that type of cash on a long-term deal is Clayton Kershaw, and although Scherzer has been one of baseball's best pitchers the last couple years, handing any hurler that amount of money at the age of 30 is a risky proposition.
Max Scherzer’s deal with the Nationals is complicated, but benefits both sides
Max Scherzer’s contract with the Nationals could set a trend that other teams and free agents follow.
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Yet, as Ken Rosenthal of Fox Sports reported, Scherzer’s contract isn’t quite as straightforward as the years and dollar amount suggest. According to Rosenthal, half of the money in Scherzer’s deal will be deferred, with the right-hander set to make $15 million annually over the next 14 years.
From Washington’s perspective, this enables GM Mike Rizzo to save a few bucks at the major league level in the short term, giving the Nationals more flexibility if they seek to trade one of their current starters. Per Rosenthal, Scherzer’s luxury-tax hit will be in the $26-27 million range rather than $30 million for each of the seven years on his deal.
This, of course, gives Washington slightly more security than simply handing Scherzer all of the $210 million from now through 2021. If Scherzer’s performance declines considerably by the end of the contract (a decent possibility considering the volatility of pitchers in their 30s), he’ll be less of an albatross on Washington’s payroll. Factoring in inflation also means the $105 million of deferred money the Nationals will owe Scherzer will be less valuable by the time they have to pay it out.
Scherzer, meanwhile, can enjoy the security of receiving all this income over a 14-year period, while pointing to the $210 million he will receive as fair market value for a starting pitcher of his ability.
Indeed, adding Scherzer gives Washington the best rotation in baseball on paper and makes them even heavier favorites to win the NL East again in 2015. The righty will be yet another power arm for the Nationals and allows Rizzo the luxury of dealing away either Doug Fister or Jordan Zimmermann, both of whom are eligible for free agency next season. Some have speculated that even Stephen Strasburg could now be available.
The larger point is that the uniqueness of Scherzer’s contract gives the Nats a win-now player while retaining financial flexibility and further strengthening their position in trade talks. They can go into spring with five All-Star caliber hurlers in their rotation, deal Fister or Zimmermann, or trade Strasburg if a massive offer from another club materializes.
Whether teams start handing out more contracts like Scherzer’s remains to be seen. Given all the revenue MLB owners currently enjoy, deferring money makes sense if it helps clubs entice big-name free agents with large dollar figures, while also trimming money off their current luxury-tax bills.
For the Nationals, Scherzer further boosts the team’s outlook in 2015. Moreover, the way his contract is structured ensures Washington’s wallets won’t be weighed down by the money they owe him in any individual season.
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