Max Scherzer and Jon Lester Have Been Free-Agent Bargains

Two years ago, Max Scherzer and Jon Lester signed deals worth a total of $365 million between them, agreements which would keep both players employed into their age-36 seasons. The accepted wisdom, dating back at least as far as Mike Hampton and Barry Zito, is that signing free-agent starting pitchers to massive contracts into their 30s is a poor idea. If early returns are any indication, last season’s deal for Zack Greinke is unlikely to serve as evidence to the contrary. David Price’s injury scare, meanwhile, provides another reminder of the risks inherent to long-term agreements with pitchers.

Not all such commitments are doomed, however. We’re just entering the third year of the contracts signed by Scherzer and Lester, for example, and so far those deals look quite good.

Two offseasons ago, Lester and Scherzer represented the only two players to receive a contract of $100 million or more. Eight other players signed for at least $50 million, though. All 10 such contracts are listed below. For each player, I’ve also provided an estimate of the value he would have been expected to provide starting with the time he signed. To calculate this estimated value, I began with each player’s WAR forecast from the 2015 FanGraphs Depth chart projections, started with $7.5 million per win, added 5% inflation per year, and applied a standard aging curve. The rightmost column indicates whether the player in question was expected to outperform or underperform the cost of his contract.

2015 Free-Agent Signings
Contract (Years, $M) Contract Value at Time Surplus/Deficit
Max Scherzer 7/210 $198.8 M -$11.2 M
Jon Lester 6/155 $146.1 M -$8.9 M
Pablo Sandoval 5/95 $127.4 M $32.4 M
Hanley Ramirez 4/88 $81.4 M -$6.6 M
Russell Martin 5/82 $109.9 M $27.9 M
James Shields 4/75 $94.4 M $19.4 M
Victor Martinez 4/68 $42.7 M -$25.3 M
Nelson Cruz 4/57 $23.8 M -$33.2 M
Ervin Santana 4/55 $16.7 M -$38.3 M
Chase Headley 4/52 $104.1 M $52.1 M

The surplus and deficit figures for individual players vary by quite a bit. Overall, however, the actual contract and value numbers are within 1% of each other.

It might be hard to believe that, at the time, projection systems were calling for Chase Headley to record $100 million in value. Remember, though, that he had averaged more than five wins over the three previous seasons and had just completed a four-WAR year. From this point, it looked like Scherzer, Lester, and Hanley Ramirez signed contracts pretty close to their expected value. The number for Scherzer is probably even closer than what we see above after accounting for his deferrals, as he makes just $15 million per season over the playing life of the contract.

In addition to Headley, Pablo Sandoval, entering his age-28 season, looked to be a decent bet, as did Russell Martin. James Shields hasn’t done much lately, but in 2015, he was coming off his fourth straight 225-inning season and the 3.2 WAR he’d just recorded for the Royals (en route to the World Series) represented one of the lowest totals of his career.

On the other side of the ledger, aging sluggers Nelson Cruz and Victor Martinez didn’t look like they would age well. In three of the previous four years, Cruz had been worth roughly one win. As for Martinez, he was 36 years old. Despite having just recorded a 168 wRC+, age-related decline was imminent. Ervin Santana had decent seasons with the Royals in 2013 and the Braves in 2014, but in 2012 he put up a 5.16 ERA and a 5.63 FIP (142 FIP-) and was well below replacement level.

Here’s how those players performed during the two seasons following their deals, 2015-16. Red Sox fans might want to look away.

2015-2016 Performance vs. Value
2015-6 WAR 2015-6 Value 2015-6 Surplus/Deficit ($M)
Max Scherzer 12.0 $92.8 M $62.8 M
Nelson Cruz 9.0 $69.6 M $39.6 M
Jon Lester 9.3 $71.9 M $21.9 M
Russell Martin 5.4 $41.5 M $19.5 M
Ervin Santana 4.6 $36.1 M $9.1 M
Chase Headley 4.2 $32.8 M $6.8 M
James Shields 1.6 $12.3 M -$13.7 M
Hanley Ramirez 0.8 $7.3 M -$36.7 M
Victor Martinez -1.1 -$7.8 M -$39.8 M
Pablo Sandoval -2.2 -$16.6 M -$53.6 M
Shields’ performance is through his trade to the White Sox.

In just two years, Scherzer’s performance has been nearly equivalent to $100 million worth of production on the free-agent market. Nelson Cruz has vastly outplayed his projections over the last couple seasons, too, making his contract with the Mariners a very good one thus far. Nor are the Chicago Cubs likely complaining about the performance they’ve received from Jon Lester, who has also added 49.2 postseason innings, during which he’s produced a 3.48 FIP and 2.72 ERA in seven starts and one very important relief appearance. Russell Martin’s contract is slightly backloaded, but he’s been a good deal thus far, while Santana and Headley have played to expectations. The other four players have actually combined for a -2.3 WAR over the last two seasons when you include Shields’ time with the the White Sox.

The Padres probably actually did well to get rid of Shields when they did, but in addition to paying most of his 2016 salary, they’re paying another $22 million over the next two years, as well. Victor Martinez had a disastrous 2015, hitting like Jason Heyward did last season while providing no defensive value. He rebounded some last year with a 120 wRC+, but terrible baserunning and no defense limited his contribution to about a win. The Red Sox opted to spread $183 million between Hanley Ramirez and Pablo Sandoval while letting Jon Lester go. The result was four wins below replacement level in 2015 followed a replacement-level season from Sandoval in 2016 and a decent 2.6 WAR season from Ramirez.

Going forward, the projected value looks a lot like the value thus far.

2015 Free-Agent Signings, Change in Value
2017 Projection Remaining $ Owed (Year, $M) Remaining Value 2017- Surplus/Deficit
Max Scherzer 6.0 5/180 $232.6 M $52.6 M
Jon Lester 4.5 4/105 $136.3 M $31.3 M
Nelson Cruz 2.5 2/28 $39.1 M $11.1 M
Ervin Santana 2.4 2/28 $37.4 M $9.4 M
Russell Martin 2.9 3/60 $63.9 M $3.9 M
Chase Headley 2.0 2/26 $26.8 M $0.8 M
H. Ramirez 1.9 2/44 $28.6 M -$15.4 M
James Shields 0.9 2/22 0 -$22.0 M
V. Martinez 0.3 2/36 $3.0 M -$33.0 M
Pablo Sandoval 0.7 3/58 $8.2 M -$49.8 M
Shields’ contract is essentially done for the Padres’ purposes.

Max Scherzer’s 6-WAR projection heading into the 2017 season is larger than the one he received before making his first pitch with Washington two years ago. The defending Cy Young Award winner has already given the Nationals good value, and he might be just a couple seasons away from providing the full value of his contract despite the five years he’s got remaining on it. Lester isn’t sitting quite as well, and there are some concerns about his spring velocity, per Jeff Zimmerman, but to expect a 33-year old, in the third year of a six-year deal, to record 4.5 WAR is a big victory for the Cubs.

At the other end, we have some players who were already negatives from year one of their contract — when teams generally get the best performance — and things don’t look much better going forward. When we combine the present surplus/deficit with future surplus/deficit, we can see how the value of the contracts changed over time.

2015 Free Agents Change in Value
2015-6 Surplus/Deficit ($M) 2017- Surplus/Deficit Projected Total Surplus/Deficit Surplus/Deficit Projected 2015 Change from 2015
Max Scherzer $62.8 M $52.6 M $115.4 M -$11.2 M $126.6 M
Jon Lester $21.9 M $31.3 M $53.2 M -$8.9 M $62.1 M
Nelson Cruz $39.6 M $11.1 M $50.7 M -$33.2 M $83.9 M
Ervin Santana $9.1 M $9.4 M $18.5 M -$38.3 M $56.8 M
Russell Martin $19.5 M $3.9 M $23.4 M $27.9 M -$4.5 M
Chase Headley $6.8 M $0.8 M $7.6 M $52.1 M -$44.5 M
Hanley Ramirez -$36.7 M -$15.4 M -$52.1 M -$6.6 M -$45.5 M
Victor Martinez -$39.8 M -$33.0 M -$72.8 M -$25.3 M -$47.5 M
James Shields -$13.7 M -$22.0 M -$35.7 M $19.4 M -$55.1 M
Pablo Sandoval -$53.6 M -$49.8 M -$103.4 M $32.4 M -$135.8 M

Overall, the values have remained unchanged, but great performances from the big-name pitchers have upped their value, as have Nelson Cruz and Ervin Santana, who have put together some surprisingly solid performances. Headley’s value has dropped, but only to what the Yankees are actually paying him. Poor play by Ramirez, Martinez, and Shields has hurt them while Sandoval has been a huge waste thus far. Performance and injuries could still change things over time, but right now it would appear the Nationals and Cubs have gotten very good deals despite going against conventional wisdom.

Craig Edwards can be found on twitter @craigjedwards.

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5 years ago

Are Scherzer and Lester actually bargains? In an ideal world, shouldn’t every player signed to a long-term contract provide significant surplus value in the first few years? Basically the first several seasons end up paying for the last several seasons once the player begins their age-related decline.

Dont Snort The Foul Lines
5 years ago
Reply to  willl

Exactly what I was thinking, with these aging players team are paying for the player they are now knowing that decline will set in and they will likely be paying them more than their worth at the tail end of their contracts. Obviously this happens because these 29-30 year old players aren’t going to sign a 3-4 year deal that makes them a free agent right when they’re expected to start their “decline” and miss out on a whole lot of money. These superstar players that are 29-30 years old have the power to get that 6-7 year $100m deal because of how good they are today.

5 years ago

I think there are two different things running through here. First, there’s a marginally more likely chance that because they made it through year one without any catastrophic they’ll provide some value at the end of the contract. Second, because they piled up great WAR in the first couple years of the contract it starts to help outweigh the decline phase. But hindsight is 20/20, so unless you’re going to use it to change the projections for elite FA SPs it’s mostly just a fun exercise.

Dont Snort The Foul Lines
5 years ago
Reply to  sadtrombone

I think the piling up a great WAR in the first half of the contract outweighs the decline and justifes paying a 30 year player $100m over 6-7years because that decline is something that is expected as they age and teams knows this and expect production to be higher at the front end of the contract. When a player of that age signs a $100m contract and puts up numbers of that value or higher early on in their contract and starts the dwindle as they age is exactly what teams are paying for. They don’t expect them to be their ace for the entire length of the their contract and you see these teams with younger starters with a loads of potential that they expect to come into that “ace” role like the Tigers with the aging Verlander and a young Michael Fulmer,the Cubs with Kyle Hendriks, the Philles with Buchholz and Nola where they expect these older guys to assume the role of a player thats going to give them quality starts rather than be their go to guy at the tail end of their contract.

5 years ago
Reply to  willl

So far, yes. The charts above illustrate that Scherzer and Lester have been even better than what was originally projected for those “first few years,” so they’re ahead of the curve. They may get injured or decline sharply, who knows, but as of right now those contracts look better than they did at the time they were signed.

5 years ago
Reply to  willl

Generally yes. But I believe in the second to last table he is projecting the players remaining contract obligations and then their remaining value. I’m not entire certain where he derived these numbers from, but if Scherzer and Lester actually provide that much surplus value for the remainder of their respective deals, that would indeed qualify as a bargain.

5 years ago
Reply to  v2micca

Exactly this. That table projects Scherzer, for instance, to be worth $10 mill less than his remaining contract the rest of the way through.

5 years ago
Reply to  Richie

No it doesn’t it projects he will be worth $56 million more than his remaining contract from now on. The 10 million less was the projection for scherzer when his contrac started. His great last two years improved his outlook by 126.6 million for the lifetime of the contract.