Going into the offseason, the prevailing thought was that the Tigers would be able to retain either Victor Martinez or Max Scherzer. With David Price on the payroll, several other needs to fill, and the luxury tax acting as a glass ceiling on the team's payroll, the numbers to keep both Martinez and Scherzer simply did not add up. Long story short: Martinez was re-signed, and the Tigers made other moves to fill their rotation.
Now, Scherzer is going to the Washington Nationals, who will be paying him a total sum of $210 million over 14 seasons. The contract is complicated, and the deferred money makes it seem as if Scherzer isn't getting paid as much as he actually is. However, he's still getting a grand total of $210 million to pitch for seven years, which comes out to $30 million per year. Martinez, on the other hand, will get $68 million over four years, an average of $17 million per year. The difference in total value and average value of their respective contracts is huge, and the Tigers appear to be wise for making the smaller investment.
Given the difference in contract figures, which player is more likely to provide market value over the length of their entire deal?
While I'm going to use an average value of $30 million to explain Scherzer's value, I'd be remiss if I did not give credit to those who have tried to explain how this $210 million contract isn't really $210 million. Last night, Danny showed us what Scherzer's contract would presumably look like if he were paid the full amount over seven seasons. Dave Cameron did a similar calculation at Fangraphs yesterday, but used a different interest rate and came up with a different answer.
To estimate how much value each player would have to provide over their entire contract, we will use a simple calculation: dollars per win above replacement (WAR). The Hardball Times has estimated that the current market rate for free agents rests around $7.5 million per win. If we divide the total value of Scherzer's and Martinez's deals by $7.5 million, we can see how much WAR they would need to provide to provide over the life of their respective contracts. We will call this calculation expected WAR, or eWAR.
At first glance, this seems like an easy win for Martinez. He needs to accumulate just over one-fourth of the WAR that Scherzer does to be a market value player. However, he also has a few built-in disadvantages. He has three fewer years than Scherzer to accrue WAR, and takes a big positional hit with the WAR stat as a designated hitter. Martinez was worth 4.4 WAR last year, but has averaged just 2.6 WAR in three years as the Tigers' primary designated hitter. Meanwhile, Scherzer has averaged 5.5 WAR over the past three seasons.
If we simply carry those averages forward for the next four to seven years, both players meet their respective market value goals. Martinez would provide just over 1 WAR of surplus value, while Scherzer would be 10 WAR over his initial estimate.
Unfortunately, the calculations aren't that easy. Aging happens. Martinez defied the typical age curve with an incredible season in 2014, and has showed no signs of slowing down yet. Scherzer is still just 30 years old and probably won't hit his decline phase for another few seasons. However, as a starting pitcher -- and one heavily reliant on velocity at that -- his decline will likely be more swift. For simplicity's sake, let's assume a 10 percent decline rate for both players, with Martinez's beginning in 2015 and Scherzer's deferred until 2018, his age 34 season.
By this method, Martinez would fall roughly 1 WAR short of his eWAR total, while Scherzer still surpasses the 28 eWAR he was projected at above.
In summary, this is a crude estimate of player value, and one that will fall flat on its face the moment either Martinez or Scherzer deviates from their respective WAR averages from the past three seasons. If anything, it underscores how difficult it is to compare players at different positions using WAR, especially when one is a designated hitter.
While Scherzer may be more likely to provide market value for his contract according to this estimate, he is still getting paid over three times as much total money as what Martinez will receive. In addition, the Tigers do not have to deal with Scherzer's presumed steeper decline or his deferred salary. The flexibility that letting Scherzer walk gives the Tigers provides value in its own right, and another MVP caliber season from Martinez will turn the tables on this estimate entirely.
What do you think? Did the Tigers make the right decision to re-sign Victor over Max?