Friday, February 6, 2015

Max Scherzer, James Shields and The Buyer's Market

Oh, uhh... hmm.

Its mid January, two weeks away from the Super Bowl and the MLB Hot Stove has ground to a halt. Normally this wouldn't be much of a problem, except this year 2 of the top 3 starting pitchers available remain without teams or contracts. This sort of "closing time" shenanigans are normally reserved for the Ervin Santana's of the world and not a former Cy Young winner or a 3.50 ERA, innings machine staff leader. So lets take a look at what has happened so far to Max Scherzer and James Shields, and see if we can figure out what to expect going forward.

How did we get here?

For Max Scherzer we need to start with the reported 6 year $150 mil or so contract offer that he turned down back in Spring Training of last year. As usual, the Detroit Tigers made a very competitive offer to one of their own. Had the Red Sox offered anything near that to Jon Lester in March of last year, they'd be no 'Cespedes for the Rest of Us' or 'Hello Mr. Rick Porcello'. All the same, its kind of hard to blame Scherzer for wanting to test free agency. Detroit was his 2nd organization so he was already used to the idea of forwarding his mail to a new city, and since Cy Young winners in their prime don't hit free agency every year Scherzer seemed a solid bet to surpass Detroit's offer. To his part, Scherzer posted a 127 ERA+ with a career high in strike-outs at 252 and innings with 220.1 in 2014. Something any team would want.

That's all well and good, but none of this has provided the seemingly near guarantee that Max's grandchildren will be able to send their kids to college by way of the Scherzer Trust. Part of the problem here is that when a player and his agent let a number like $200 mil start floating around, the market for that player's services becomes very limited. Take for example the current market setter Jon Lester. He wound up with that 6 year $150ish contract that Scherzer originally turned down and he really only had 4 potential and 2 practical suitors.

You would think that the teams in on Lester would also be in on Scherzer considering the numbers and the need, but it really hasn't turned out that way. The peripheral suitors of the Dodgers and the Giants have not been meaningfully linked to Scherzer and it makes a lot of sense. Signing a 30 year old pitcher for 6 years at $25 mil plus per year does not seem like a Andrew Friedman kind of thing to do and certainly doesn't fit into the way the Dodgers have gone about business this offseason. Similarly, that kind of signing doesn't remotely fit into the way the Giants go about building their teams, and its REAL HARD to argue with their results. The Cubs? Forget it. They already got their guy and a lot of factors went into all of that. And if the Red Sox weren't willing to go above 6yr/$140 for their 'own' guy then Scherzer at anything above that just isn't going to happen. John Henry loves his actuaries and since he signs the checks no pitcher over 30 is getting that kind of money.

Traditionally, the elephant in the room when it comes to big free agent signings has always been the New York Yankees. I'm sure that Scott Boras looked at the '14-'15 offseason and saw the Yankees as at least one of Scherzer's potential suitors. Unfortunately, for Boras, Scherzer and Scherzer's great-grandkids it hasn't panned out that way so far. Even with a rotation full of question marks, the Yankees seem to be pretty quiet on Mad Max. 

The Yankees reluctance to dive in head first on Scherzer make a lot of sense when you look at the whole picture of their current situation. Their payroll heading into this season is at nearly $212 mil which is right around twice that of the MLB average and well above the current luxury tax threshold. ( And while the Yankees financial commitments fall off pretty quickly in the next few years, most of Brian Cashman's moves this offseason have been geared towards making the Yankees a younger and more flexible team (Credit where credit is due; Cashman is a very good GM). It just doesn't make a ton of sense considering the rest of the Yankees' offseason that they would get involved in another long term, high priced commitment to a player on the wrong side of 30.

While James Shields did not have an opportunity to turn down a contract as lucrative as the one Scherzer spurned, he does face a very similar situation. Early in the offseason, the talk was that once Lester signed, Shields would find a home shortly there afterwards. That never panned out as Shields's team has floated a 5yr/$100mil expectation which wouldn't seem bad for a pitcher of his pedigree if he wasn't entering his age 33 season. Few of the Scherzer suitors have been seriously linked to Shields at those kind of numbers, although a mystery team (Houston Astros???) has reportedly put a 5/$110 offer on the table. For an in depth look at the James Shields market take a look at The Curious Case of James Shields post that I wrote back in December.

As if the obvious and reported on factors of the 2014-2015 offseason weren't enough to cloud the prospects of both Scherzer and Shields, there are other elements at play here that have created a very unfavorable buyer's market for these two free agents. One issue that both of these players are facing right now is the increasingly understood reality around baseball that paying a player, especially a pitcher big time money into their mid 30's rarely pans out in the best interest of the team. The Red Sox live and die by this strategy. Piggybacking off of that is general downward trend of offense that has been happening league wide. Sure, everyone wants a shutdown 'ace', but with the league average ERA having dipped below 4.00 for the first time since 1992 you don't have to shell out huge bucks for a pitcher who is just above average. ( If you have the time take a look at's pitching top 10s and see how many of those pitchers are either still on their rookie contracts, arbitration eligible or signed to very team friendly contracts. Also, for shits and giggles ask yourself how many of those pitchers are over 30 vs. under 30 and then drop me a comment telling me how badly you want your team to pay Scherzer or Shields $25 mil when they are 36.

But, but, but wait it gets worse! While these 2 high pedigree pitchers north of 30 are searching for the right matches, take a look at the free agent pitcher class coming in the 2015-16 offseason. First up is Johnny Cueto who is coming of a season where he threw 243.2 innings to a 160 ERA+ and 242 Ks. BTW, he will be 30 in the 2016 season. Next is Jordan Zimmerman who owns a career 120+ ERA (slightly better career wise than Scherzer) and will also be 30 in 2016. Similarly Doug Fister hits free agency next year with a career 120+ ERA, but will be 32 in 2016, which is eerily similar to Shields if you pretend for a second that Shields hasn't been good for 200+ innings for 8 straight years. How about David Price? 31 years old in 2016 and the owner of a career 121 ERA+ and a Cy Young, but in 2014 between 2 team he threw nearly 250 innings with 271 K's. Oh, and we can't forget about Jeff Samardzija. While his career numbers aren't all that spectacular he has thrown for over 200 innings and 200 K's the last 2 years and will be 31 in the 2016 season. In addition to these topish level 30ish pitchers the following very solid to up and coming options will also be hitting the market: Rick Porcello (27), Mike Leake (28), Mat Latos (28), Hisashi Iwakuma (35), Yovani Golardo (30), Ian Kennedy (31) and Wei-Yen Chen (30). Not to mention a few former Cy Young winners in Tim Lincecum (32) and R.A. Dickey (41) and quite possibly Zack Greinke(32). Considering the shear glut of option on the horizon, its not hard to see why teams might be reluctant to shell out $200 mil to a guy like Max Scherzer when pitchers of very similar projections are about to flood the market and drive down prices.

What can we expect now?

The reality of this new buyer's market has to be setting in with both the Scherzer and Shields camps. What will be interesting to see is how each of these players respond to this new reality. By now you've probably heard the "Pillow Contract" talk that has surfaced around both these players, but don't buy into that idea. Shields is too old (only in baseball player terms) to be taking on a 1 year deal in hopes of re-establishing his value, while Scherzer won't be doing himself any favors by joining the free agent crowd next offseason.

So, its really going to come down to exactly what each one of these players want to get out of the remaining years of the baseball careers. You will never read a negative word here about a player who chose to take all the money he could when it was available. Baseball players have very short careers relative to the rest of us and when your skills are worth tens of millions of dollars you have every right to cash in on it while you can. But if that was really the case, then you would have to think that James Shields would have already jumped all over that 5yr/$110 that we all heard to much about. 

Lets be real, both these players have been winners for much of their careers and they know the value of that.  Both Scherzer and Shields are in line to make more money than they could ever spend regardless of where they wind up so why wouldn't they want to join a team that gave them the best chance to win. The contenders that we already mentioned (Yankees, Red Sox, Dodgers, Giants, and Cubs) aren't likely to offer the kind of money both of these players are looking for. So we are left with a few other teams that could stretch to spend the money needed, but its unclear exactly how far these teams might go, Included in this group are the Blue Jays, Tigers (Scherzer's got a bit of history there), Angels (stretched pretty far already) and the Cardinals (we've all heard it, but I don't buy it). 

While both of these players might be able to get close to the money they are looking for from teams like the Astros or Diamondbacks, they may be looking for more than just a paycheck. For Shields to go to a team with a consistent shot at winning he may need to look for a contact more in the 3yr/$60mil area. For Scherzer to play for a contender he could certainly land a Cliff Lee like 5yr/$125-6/$150 or slightly more to basically choose where he wants to play for the next 5-6 years. Even though both their agents want to deliver headline grabbing type of numbers, don't underestimate the value of working someplace that you enjoy. When you are already talking about making more money than you can spend in one lifetime, I would think that the value of enjoying your career would mean even more. Then again I make less money in a year than these guys make in a game so its hard to fully understand what shapes their decision making.
For the sake of pure speculation, I'll throw down a few guesses here. I still think that Max Scherzer will sign with the Houston Astros to the tune of about 6yrs/$165mil with options. Boras won't allow him to sign for anything less that Lester and the Astros have money to spend and are closer than people think. Shield I think will take something close to that 3yr/$60mil to play for a contender. If that's his number then the Cubs, Red Sox, Giants, Yankees, Tigers, Blue Jays and even Dodgers are definitely in the picture and will provide him with the opportunity to win every year. Otherwise he can take all the money he can and go to Arizona and hate the game for the last few years of his career.

Neither of these gentlemen have easy decisions in front of them. The money they want is out there, but they certainly have to weigh the value of winning in the equation. Some guys are perfectly fine to punch the clock, collect their check and go home, but most baseball players aren't wire that way. After all, Andrew Miller went on record as saying he felt like it was his duty to get the biggest payday he could. Well, as you may have hear he turned down bigger money from the Astros to go to the Yankees. Miller knew he would make his money one way or another, but he chose the chance to win above all else. If Scherzer and Shields feel the same way then we may have a few more surprises left in the Hot Stove season.

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