On dealing Scherzer and the cost of a win

Dave Dombrowski is a high-end general manager who works for an owner with high-end business sense. Using this premise, it is easy to see why the Tigers are rumored to be considering trading a breakout star in the midst of a post season run. After all, when managing assets it makes most sense to sell off your pieces at their highest point--unless the value produced by that presumably declining asset is more valuable than the assets that would be obtained in return. In the case of Max Scherzer, it may be reasonable to assume that the Tigers would be more wise to deal him and accrue assets rather than spend the necessary money to keep him around.

Where Scherzer stands now

As has been mentioned, the 28-year-old Scherzer broke out in the 2013 season--delivering what could very easily be a Cy Young performance. Depending on what camp you belong to, you may actually not believe that this was a breakout performance. In fact, some individuals may actually prefer Scherzer's 2012 rates to his 2013 rates--after adjusting for things like HR/FB ratio and BABIP. Here's a chart:

The point here is that Scherzer has reached a level where he can produce--hopefully--an expected number of wins--somewhere in the neighborhood of five per season. Coincidentally, this places him in the same ballpark as David Price--and more conveniently, I wrote about him recently. Now, there are a couple of big differences between these starters that need to be pointed out: firstly, Price is a year younger than Scherzer--13 months, actually--and Price is more well-established. By that, I mean that Price has three consecutive years with an xFIP between 3.12 and 3.32, whereas the range on Scherzer's numbers is between the current 3.16 and his previous baseline that rested between 3.68 and 3.72.

Needless to say, Scherzer's put himself right on par with pitchers considered in the game's elite--though his actual value rests in a sort of second tier along with pitchers like Madison Bumgarner and trailing individuals like Clayton Kershaw, Yu Darvish, or Adam Wainwright.

Trade Value

Again, the baseline for an expected deal is going to be compared to Price--especially since Price is likely a part of the exact same trade market. That being said, Scherzer and Price have different cases because of the following variables:

1) David Price is 13 months younger than Max Scherzer.

2) David Price has two years of guaranteed control left whereas Scherzer only has one.

3) Price--though younger--has a more consistent track record than Scherzer--though both are performing at a similar rate in recent years.

4) Price is coming from a team that feels pressure to make trades because they can ill afford to pay future contracts to said player. In the meantime, Scherzer is coming from a team with seemingly limitless resources that would appear to be looking into trading him to capitalize on the height of his value. Essentially Price would be traded out of necessity whereas Scherzer would be traded because management wants to capitalize on opportunity.

It's tough to assess exactly where this puts Scherzer on the open market--and it hasn't yet been considered that handedness may make teams even more fond of Price over Scherzer. The best guess is that Scherzer's actual trade value is a step below Price, but the upstart Cy Young-caliber results Scherzer saw in 2013 would probably put the two pitchers on the same plane. Both will be viewed as aces when it might be true that neither actually falls under that category.

Of course--with Scherzer--a team's willingness to trade for him is also going to depend on what he costs to extend. For this, let's enter the debate over the cost of a win.

Which cost estimates should we actually use?

If you're a regular reader on the site, you've probably/better have read Lewie Pollis' article on calculating the cost of a win--which is linked in the snippet below. The center of this debate rests upon two different philosophies: do we calculate the cost of a win at what teams think they are paying for a win, or do we value it on what teams have actually paid for wins in the past? When entering negotiations for a player, you need to build a contract based on what you believe a player is going to be worth each individual year--as well as what the player will provide over the life of the contract. Because of that, I believe the baseline for cost of a win needs to be a combination of the two.

The reason for using both methodologies is this: Lewie makes a great point in that the best guess for what a win will be worth tomorrow is likely what a win will be worth today. However, it needs to be pointed out--as it has been by many--that the conditions surrounding the value of a win could change drastically tomorrow from what they are today. In fact, the conditions surrounding the value of a win are changing drastically--as can be seen in this article from Forbes. Team values are swiftly on the rise as the average team is now valued at nearly $750 million--up 23% from last year.

Another thing that may sway what teams believe free agent wins are worth: the Collective Bargaining Agreement. Why would the value of a win be changed by this document? Firstly, compensation rules have been changed--as in, there's less compensation offered for losing key free agents. This means less risk for prospective buyers--they can focus more on signing a free agent than losing multiple draft picks as a result. Heck, the bottom ten finishers from the previous year don't even have to sacrifice a first round pick anymore--which makes their risk involved much lower.

Knowing this, it's possible that the value of a win is even higher than the number suggested by Lewie in his work. After all, some players are attached to compensation whereas others are not. Max Scherzer--as an example--is certainly on pace to receive a qualifying offer at the very least, which will attach a first round pick to his name. That makes buying Scherzer on the open market like buying a car with a part missing rather than the entire car itself--that additional piece carries some unknown value that will reduce the expected price of the player--regardless of how many wins that player produces.

I'll let the debate about this wage on, but for now I'll simply say that I'm going to place the expected cost of a win at a place just north of Lewie's $7 million--with the disclaimer that each team will do this differently and that things like compensatory picks and no-trade clauses impact how much teams are willing to pay.

We were talking about Scherzer...

Yes we were, and my apologies for the tangent. According to Lewie's research, the cost of a win has bounced between about 6.2 and 7.1 million, and my assumption is that this number is going to grow as two things happen:

1) The CBA catches up with free market spending.

2) Back loaded contracts signed as a result of large TV deals--Pujols, Fielder, Hamilton, etc--begin to reach their later years.

Inflation will also cause prices to grow, but for the sake of simplicity let's say that teams--over the next decade--are going to pay an average of $7.5 million per win. This may not be the price every season, but let's say that this is the expected average price over the next decade--with new compensation rules and all intact.

With Scherzer, his career progression will likely follow a similar trend to Price's as well. Price was projected for 30 wins over nine years. By shifting the age curve one year, Scherzer should produce around 26.5 wins over that same span of time. Using the model above, that would put Scherzer's performance over said time frame at $198.75 million. That's what the wins are worth, but that's not what he's getting paid--mainly because Scherzer's not getting an eight-year extension on top of his one year of control unless a GM starts feeling particularly frisky.

A more reasonable expectation for Scherzer would be a 2014 salary at around $11 million--he's third-year arbitration eligible--with an extension that covers his age 30-34 seasons--with roughly 16 wins coming over that span. This would put a deal signed this off season covering the next six years for Scherzer at:

6 years/$133 million (AAV of $22.17 million)

The Market for Scherzer

With the cost of prospects reflecting the James Shields deal/what is expected from David Price's trade and the aforementioned expected extension, the number of reasonable suitors for Scherzer is few and far between--that is unless the team is willing to give up prospects and not sign Scherzer. The latter option sounds silly, but getting Scherzer and his five wins for around $11 million dollars is enough of a money-saving, team-improving deal that it might be worth moving a guy who might produce 15 cheap wins over the next six years--assuming the prospects obtained are close to MLB ready and the team acquiring Scherzer can get compensation for him in free agency.

This actually may be where the prospect of a Max Scherzer trade dies. Let's look at a few teams mentioned in the David Price article:

Texas Rangers

It was mentioned in the comments on the Price article that the Rangers have pitching depth and may look for offensive upgrades this off season. Due to Price's control, I still believe the Rangers are an option, but things are different for Scherzer--the one-year upgrade in pitching probably isn't greater than a potential upgrade at another position--especially relative to cost.

Chicago Cubs

Simply said, the Cubs wouldn't have the leverage to extend Scherzer that they would have with Price, and that's likely to reduce their interest in trading for him.

St. Louis Cardinals

They have the pieces and the need, but after seeing how much Shelby Miller and Michael Wacha have improved, it's possible St. Louis has two future #2 starters sitting behind Adam Wainwright. They might focus more on upgrading at shortstop or even center field.

Boston Red Sox

The thought of a deal here is more realistic than with Price because: A) Xander Bogaerts wouldn't be on the move and B) the deal wouldn't occur within the division. That being said, I doubt the Tigers are going to trade Scherzer to a team that they will have either beaten or lost to in the previous year's ALCS.

Los Angeles Dodgers

At last, a team that makes all kinds of sense. The Dodgers certainly have the money to extend Scherzer, and if the prospect cost is less than with Price--which it very well could be--then the Dodgers have to be considered players.

A pair of dark horses

Keep an eye out for the Pittsburgh Pirates and San Francisco Giants. Both have the prospects to complete a deal for Scherzer, and both would benefit from either a one-year or multi-year agreement with the starter. For San Francisco, they would have another top starter to pair with Madison Bumgarner. For Pittsburgh, they would have a true front line starter to pair with Gerritt Cole.

Conclusion

The debate over the value of a free market win is an interesting one. If you read the comments in Lewie's piece by Dave Cameron, you will notice that his new estimation based on a new calculation for fWAR puts the value he sees in a free market win at close to six million dollars. With these two distinct models, the cost for Scherzer could range from 126 to 157.5 million dollars over the next six years. Regardless of what teams value Scherzer's projected performance at, this is another case where the inherent risk outweighs the potential reward.

Since a spike in Scherzer's performance seems unlikely as he approaches age 30, the cost of trading prospects to get him paired with the cost of extending him to a deal that the market would deem reasonable--seeing as he'll have plenty of leverage with only one year of control remaining--makes trading for him a huge cost that is likely not worth the 21 wins he could produce over the next six years. As long as the Tigers can be effective at evaluating the prospects they get in return--a strong point for Dombrowski in the past--they should be able to win any Scherzer deal--especially when the additional payroll flexibility is added on to the prospects obtained in a deal.

That being said, it is likely best for the Tigers to hold onto Scherzer. The market likely wouldn't bear the fruit to make it all worth it for Detroit.

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All data courtesy of FanGraphs and Baseball Reference.

Ken Woolums is the Transactions Editor at Beyond The Box Score. You can follow him on Twitter at @Wooly9109

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