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Max Scherzer
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January 20, 2015 Transaction AnalysisThe Nationals Stare Into The Future
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:
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:
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
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. 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
Sam Miller is an author of Baseball Prospectus. Follow @SamMillerBB
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Fantasy Tiered Rankings: Second Base
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.