Mariners No Stranger To The Deferred Contract
By Dan Hughes
Max Scherzer just agreed to a 7-year contract with the Washington Nationals. Though it will take 14 years for him to receive the $210 million the Nationals agreed to pay.
His contract is set up with a deferral that will pay Scherzer $15M a year for the next 14 years. While this sounds crazy – and in my opinion, remarkably stupid – it doesn’t come without precedent.
The most famous example of a deferred contract in baseball is probably that of Bobby Bonilla. the New York Mets continue to pay Bonilla – who hasn’t played in the Majors since 2001 – $1.2M a year until 2036.
Scherzer’s deferral isn’t as long, but the per year payout is a record. Who knows where the Nats’ payroll will be in 2022, but to have roughly 10% (2015 payroll is around $150M) of your annual payroll being paid to a guy who is either retired or playing for another team is just plain dumb.
The Seattle Mariners have used this before as well.
When the M’s extended Ichiro Suzuki in 2007, they did so with a deferral of $25M of his contract at 5.5% annual interest – to be paid out in an unknown annual increment once Ichiro retires – until the year 2032, or when the money runs out.
Assuming Ichiro signs a new two-year deal and retires after the 2016 season, the Mariners will then start paying him roughly $2.5M a year until 2032 – unless the annual amount was already specified.
Former Mariner Ken Griffey Jr had money deferred when he signed with the Cincinnati Reds in 2000. In fact, almost half of the money was deferred.
The Reds are paying Griffey $6.5 million a year through 2024, when Griffey is 53 years old.
I understand the perceived necessity for small-market clubs to defer money in order to get top talent. But the Nationals are not a small-market club – or at least they don’t spend like it.
All it does is allow a club like the Nats to stockpile top talent in order to make a run for October. Whether this move for Scherzer will result in a title for the Nats is obviously yet to be determined.
But I am NOT a fan of paying a pitcher – or any player for that matter – millions of dollars per year, for years after they have retired, or worse, while playing for another club.
Just because a team CAN do something, doesn’t mean they SHOULD do that thing. It just doesn’t seem like a very sound business model.
And if that’s the kind of deal it took to land Scherzer, then I’m glad the Mariners were not in the mix.