Scherzer to Nationals: 7 years $210 million
- Thread starter RedOctober3829
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jon abbey said:
I almost wonder if they are doing this deal as a good faith show to later negoations with Harper and Strasburg.
Anyway, I am no fan of these longterm deals for teams I pull for, however it is what it is and for the moment that rotation is ridiculous. I am also really interested in hearing what they could get for either Zim or Fister, but it better be something really worthwhile, because the Nats have pushed all of their chips to the middle of the table.
Hell of a starting 6, really. Tanner Roark is going to the bullpen I guess? I suspect they're going to trade someone for some long term assets.
There's been a lot of speculation on Twitter that this means that Zimmermann or Stras are getting moved, but wouldn't the Nats be better served to keep everybody? They should clinch their division by the All-Star Break (slight exaggeration), and the top NL teams haven't done much to improve this winter. Seems like the right year to GFIN.
I think it'll be Zimm. Which sounds likes its crazy, but they can make the playoffs with a rotation of Scherzer, Stras, Fister, and Gio. They can move Zimm for parts that will strengthen them in a short series (relievers, lineup help, etc) and make them better for the playoffs. Zimmermann is great, and whomever lands him gets themselves gets an ace, but the've got four other ones, frankly.
You really have to wonder if they could potentially get a high upside bat from the Cubs for him. Speculation is he wants to go back to the Midwest, and ZImmerman makes the Cubs contenders in that division. Seems like a natural fit.
Edit: Interesting piece on the signing and Scherzer's value. http://www.fangraphs.com/blogs/nationals-build-potential-super-team-add-max-scherzer/
Edit: Interesting piece on the signing and Scherzer's value. http://www.fangraphs.com/blogs/nationals-build-potential-super-team-add-max-scherzer/
I really doubt they would trade zim to the cubs. The Cubs are on a strong talent upswing right now and might be one of the best teams in the NL in two or three years. They'll send him to the AL.
Rob Neyer argues that Scherzer isn't going to make the Nats substantially better: http://www.foxsports.com/mlb/just-a-bit-outside/story/washington-nationals-max-scherzer-not-better-011915.
One does have to wonder what Zimmerman is asking for if the Nats couldn't sign him to an extension.
One does have to wonder what Zimmerman is asking for if the Nats couldn't sign him to an extension.
I'm really surprised by this. Isn't all the smoke about moving Zimmerman or Fister in the first place because they were worried about being able to afford the rotation long term paying FA prices for Zimmerman, Fister and then Stras after next year? Didn't they just do exactly that for an older player? I don't get how this solves that problem. Am I misreading that situation?
I know it looked increasingly unlikely, but I'm just happy he didn't go to the Yankees in the end.
Ted Lerner is 89 years old. GFIN is a definite possibility, and a likely possibility if the Nats do not get what they regard as good value in a trade.
This contract is a long term commitment, obviously, but they have money coming off the books. Desmond. Zimmerman. Fister.
For Zimmerman or Fister, the Nats will be demanding prices people would not want to pay. And the RS have no leverage, because somebody else will pay those prices, or the Nats will simply keep them all.
dcmissle said:
I agree that those contracts are coming off the books, but doesn't this all but guarantee that one of Zimmerman and Fister are gone? Sure there is an argument to be made that they upgrade that spot, but by how much and at what cost? They also have no internal options to replace Desmond and Harper is about to get expensive. I guess the only thing that makes sense to me is your first point and they are all in on this season given their strong team, weak division, and their current crop of pending UFA's.
Eventually, yes. But there is no indication they cannot carry the financial load this year. Rather than trade either for peanuts, they will keep them both for 2015.
If the RS made this move, it would be celebrated as a brilliant accumulation of assets furnishing great flexibility. Because the Nats did it, it somehow puts them behind an 8-ball and destines them to help the RS by flipping Zimmerman for Marrero. Which isn't going to happen.
dcmissle said:
I'm actually not looking at this through a Red Sox lens at all. I don't believe the Sox will give up the assets the Nats would want for Zimmerman. My confusion is based more on the off-season long perception that the Nats are looking to move money because they can't afford to lock everyone up and keep their team together. This is either a shift from that narrative, as you've eluded to, which I think they should be applauded for, or that narrative was inaccurate. I was simply asking what other people thought of it.
Not aimed at you.
Probably no more complicated than the Nats looking down the road a year and deciding that they'd rather have Scherzer on this deal than Zimmerman and/or Fister at what they are likely to command, and maybe even further down at Strasburg, though I doubt the latter.
The silly discussion starts when you consider what flows from this. Some folks are reacting as if Zimmerman and Fister are burning holes in their pockets. That's plainly not the case -- Nats are not even paying them now -- and in any event the Nats can certainly carry them all for one season.
Rather than force anything, if you're the Nats you let the buyers come to you and play them off against each other. Gets even better when Shields comes off the table. And if you don't get what you want, you keep them all and let them walk, recognizing too that you made need them if you're killed by injuries to the rotation, or that you could deal one during the season.
dcmissle said:
This is what it feels like to me. But they are dealing from such a position of strength that even if they decide to move a pitcher, they're going to get a king's ransom back.
I am simply stunned at this. Obviously injuries could change everything, but the Nats have to be the overwhelming favorites in the NL at this point.
210 million, over 14 years. I mean present value is one thing, but we are discounting at all time lows in interest rates, so if that mental gymnastics exercise helps you sleep at night to justify that contract. Good luck with that.
Odds that this contract isn't a disaster are reliant on health, performance and continued wage inflation. That's all. I'd give that what 10-15% odds?
Odds that this contract isn't a disaster are reliant on health, performance and continued wage inflation. That's all. I'd give that what 10-15% odds?
I'd like someone to do the math, at reasonable discount rates in today's interest rate environment. $15 MM in 2028, even at low rates, is not close to $15MM today. This assumes, of course, that the Nats will not be paying interest on the deferred money, which may be wrong.
More interested in this from Boras' perspective than the Nats. Lots of folks were saying he'd get $200MM for 7, or close to it. It appears Boras didn't come very close to that.
More interested in this from Boras' perspective than the Nats. Lots of folks were saying he'd get $200MM for 7, or close to it. It appears Boras didn't come very close to that.
So it's not 14 years, as he's not getting money he would today in 14 years, he's getting money we would get in 7 years in 14 years etc.
So very roughly the deferred money should be discounted by 7 years.
From spot to 7 years, the discount factor is 0.8865 so 15mm is 13.298 mm
So he's very approximately losing 1.7mm x 7 so 11.9mm in deferrals.
Discount to today is not a fair comparison. This also is 7y to today, not 14years to 7 years, which is a different and more annoying calculation
Edit made an error this should be correct off a spot libor curve now
So very roughly the deferred money should be discounted by 7 years.
From spot to 7 years, the discount factor is 0.8865 so 15mm is 13.298 mm
So he's very approximately losing 1.7mm x 7 so 11.9mm in deferrals.
Discount to today is not a fair comparison. This also is 7y to today, not 14years to 7 years, which is a different and more annoying calculation
Edit made an error this should be correct off a spot libor curve now
So how does this work with the luxury tax? Are they taxed at 30 million AAV for 7 years, 15 million for 14 years or is it done some other way? In really curious to find out if the Nats found a loophole and will only get hit for 15 million a year for tax purposes.
My recollection is that the salary is allocated per year and then deferred, the deferral is irrelevant for tax purposes.
IE if you are paying 25 million or 15mm this year and 10 million in 2025 the whole salary counts for this year.
I say this but I tried to find a link to confirm and couldn't. It makes sense and I'm pretty sure that's the case, but not 100%
IE if you are paying 25 million or 15mm this year and 10 million in 2025 the whole salary counts for this year.
I say this but I tried to find a link to confirm and couldn't. It makes sense and I'm pretty sure that's the case, but not 100%
So the deferments are essentially a luxury tax cheat? Why don't teams, particularly ones that have to concern themselves with the tax like the Yankees, Red Sox, Dodgers, etc, do this more often? Is it simply that saving $3-4M against today's cap isn't worth carrying $3-4M of essentially dead money against the cap in 2025?
People thought he was daring, if not nuts, for turning down Detroit's extension offer of 6/144 or $24M per.
Worked out fine.
Worked out fine.
Man Lester's deal looks pretty good now. There's no way I'd give Scherzer $34m more than Lester. And this deal just made Amaro smile because Hamels looks like an even bigger bargain now. I'd bet that Washington will regret this deal at some point.
Red(s)HawksFan said:
Deferred compensation is covered in excruciating detail in the CBA. (CBA is here: http://bizofbaseball.com/docs/2012-16CBA.pdf).
Article XXIII, Section (E)(6)(b) states:
It's not really a loophole, I would think it's not used more because it's not the greatest benefit to the player. The team could reap a reward if it can invest the funds; if you recall, the Mets thought a lot of their deferred compensation was basically "free" since their "investing prowess" funded the deferrals without them actually having to budget the money in later years.
LondonSox said:
Isn't one easy way to do the calculation just to look at either scenario as an annuity?
Case 1 is a 7-year annuity, paying $30m a year.
Case 2 is a 14-year annuity, paying $15m a year.
If you compare the present value of each of these two cases, you get a sense of the real effect of the extra 7 years.
Present value depends on the interest rate you use. The lower the rate, obviously, the less significant the spread and vice versa if you increase the interest rate. Using a 2.5 percent interest rate, the present value of the 7-year annuity is 190.5 million. The present value of 14-year annuity is 175.5m. So, that gives you a good sense of the cost of money he's losing. To get a sense of how interest rate dependent it is, if you use a 1 percent interest rate, the 7-year annuity's present value is 201m and the 14-year annuity's present value is 195m. If you use a 5 percent interest rate, the 7-year annuity's present value is 173m and the 14-year annuity's present value is 148m.
JimD said:
I think that's exactly what it is. Deferrals aren't totally uncommon. ARod and Manny both had deferrals. It's not a loophole around the cap and there's nothing shady about it. Players want to be able to say they got the highest contract and teams want to reduce the true economic cost. All long term deals have a deferral to some extent. Extending it beyond the term of the contract simply increases the deferral and further reduces the true cost.
Average Reds said:
The Nats next step is also interesting to me.
I understand that it's probable that they could keep everyone and see how far they get this year, but they are going to have some holes to fill next year and whatever draft picks they get won't do that.
They could try to trade Zimmermann (or Fister) right now, but White Sox general manager Rick Hahn seems to intimate that the going price for one-year rentals is pretty low right now.
Finally, it's true they would get more at the mid-season, but assuming they are in WS contention, it's going to be hard to pull off a trade for a top-level pitcher unless they are directly improving a current weakness, not trying to address future needs.
Interesting calculus. I would think it's too complicated to get anything done.