Thursday January 8th, 2015

We're into the second week of January, and while temperatures may be in the single digits in some places, we're closer to pitchers and catchers reporting to camp than to the final out of the World Series. Yet Max Scherzer, the top free-agent pitcher on the market, remains unsigned. In part this is by design, a ploy on the part of the pitcher and agent Scott Boras to let the dust settle with regards to lesser signings and trades. But with some of the wealthiest teams apparently out of the running, the 30-year-old righty's options appear to be limited, particularly if he's going to receive a contract north of the six-year, $144 million extension that the Tigers reportedly offered him last March.

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Before getting into the speculation as to where he might wind up and for how much, it's worth grappling with what he might realistically be worth. Over the past two off-seasons, I've taken swings at doing so for a number of position players, including Giancarlo Stanton, Pablo Sandoval and Nelson Cruz back in November, just before Hall of Fame coverage swallowed me whole. I haven't attempted to apply my model — which incorporates past performance, a projection of future performance, the market cost of a marginal win, inflation and aging based on top research in those areas — to pitchers, mainly because they're tougher to project. Much of the recent research has been focused on how individual components of pitcher performance — such as velocity and peripheral rates (strikeouts, walks, homers) — age, as opposed to overall value.

That's more complicated than I'm ready to get, and if I could project pitcher performance with any accuracy, I might be working for a team. But in resisting the application of my model to pitchers, it occurs to me that I'm probably over-thinking the matter by an order of magnitude, because there's one constant: All pitchers regress eventually. Most of them get hurt at some point, too. So what happens if I just simulate a steep decline?

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I'll get to that, but first, a review of the player in question. Scherzer has spent about six and a half seasons in the majors, coming up with the Diamondbacks (who chose him with the 11th pick in 2006) in mid-2008 and then being traded to the Tigers in December 2009 via the three-way blockbuster that sent Curtis Granderson to the Yankees, Ian Kennedy and Edwin Jackson to the Diamondbacks, and Scherzer, Phil Coke and Austin Jackson to Detroit. Despite Arizona's concerns about the effect his mechanics might have on his durability, he's been healthy as a horse, serving just one stint on the disabled list (shoulder fatigue, April 2009). He's made at least 30 starts in his past six seasons and an average of 32.5 over his past four, each of which has culminated in postseason work as well.

After pitching to a 3.88 ERA and 3.72 FIP through 2012, Scherzer broke out in 2013, trimming his walk and home run rates significantly and getting enough run support to go 21-3 with a 2.90 ERA, 10.1 strikeouts per nine and 6.7 WAR (Baseball-Reference version) in 214 1/3 innings, numbers that enabled him to win the AL Cy Young award. It was against that backdrop of one standout season that he spurned the Tigers' offer, which would have made him the game's sixth-highest paid pitcher.

That seemed like a crazy move at the time, particularly in light of a quick-and-dirty study that I did showing that the 21 Cy Young-winning starters from 2002 to 2012 saw their workloads drop by an average of 12 percent in their follow-up season, their strikeout rates fall by six percent, and their ERAs increase by 25 percent relative to the league. Eighteen of the 21 declined in WAR from the previous year, with the average decline of the group a whopping 33 percent.

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While he endured a rough patch about one-third of the way into the 2014 season and didn't win another Cy Young, Scherzer earned All-Star honors for the second straight year and bucked the trend, posting a 3.15 ERA across 220 1/3 innings with 10.3 strikeouts per nine en route to 6.0 WAR. In both seasons, he was a bit unlucky, with FIPs lower than his ERAs (2.74 and 2.85, respectively), though interestingly enough, his FanGraphs WARs — which are driven by FIP — have been slightly lower (6.4 and 5.6 in 2013 and 2014). I'd guess that's because the B-Ref version rewards Scherzer a bit for playing in front of such a terrible defense, something that may not hold true as he moves forward.

To begin the valuation process, I need to determine a baseline for 2016 via a 5/4/3 weighting — five times his 2014 value, four times his 2013 value, three times his 2012 value. For that, I'm going to use FanGraphs' estimates, which also include 4.5 WAR for 2012 (0.3 higher than his B-Ref version). That gives him a baseline value of 5.6 WAR for 2015, matching his 2014 performance.

Projecting that out over seven years, using $6 million as the cost of a win in 2014, 5.4 percent annual inflation and an aggressive decline of 0.8 WAR per year such that he'll be a below-average pitcher in the last two, here's what I get:

year age war market $/w value
2015 30 5.6 6.32 $35.4
2016 31 4.8 6.67 $32.0
2017 32 4.0 7.03 $28.1
2018 33 3.2 7.40 $23.7
2019 34 2.4 7.80 $18.7
2020 35 1.6 8.23 $13.2
2021 36 0.8 8.67 $6.9
    22.4   $158.0

That set of assumptions yields a value of $158 million over seven years, an average of $22.6 million per year — less than the Tigers were offering on an annual basis. If I move the rate of decline by 0.1 in either direction, it yields 24.5 WAR and $174.8 million ($24.97 million per year) on the more gentle estimate and 20.3 WAR and $141.3 million ($20.2 million per year) on the steeper one, which includes just 0.2 WAR in the last of those seasons. If I move the baseline estimate a bit lower, to 5.2 WAR (matching a 5/4/3/2 weighting that includes his 2.6-WAR 2011 season), that produces yields of 21.4 WAR and $151.8 million at a 0.7 WAR/year rate of decline, 19.3 WAR and $135.1 million at 0.8 WAR/year decline, and 17.2 WAR and $118.4 million at 0.9 per year decline, with values of 0.7 and -0.2 WAR in his final two seasons under that last scenario — a reasonable proxy for years mostly lost to injury.

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Of course, things could get worse than that. Even without an injury that knocks him out of action for a significant stretch, he could go through what (former?) teammate Justin Verlander has gone through, losing velocity rapidly and suddenly becoming a much more ordinary pitcher. Via FanGraphs, Verlander was worth 7.0 WAR in 2012 and 7.1 WAR per year from 2009 to 2012, but he slipped to 5.2 in 2013 and 3.3 in 2014; in other words, he lost roughly half his annual value from ages 29 to 31. If I project Scherzer to do that — say, delivering 3.0 WAR in 2016, with a more modest fade of 0.5 WAR per year thereafter — he would come in at 16.1 WAR and a value of $112.1 million over the next seven years, not far off from the steeper decline I've simulated above.

Given that Jon Lester's six-year, $155 million deal with the Cubs makes him the game's second-highest paid pitcher on an annual basis ($25.83 million per year) — still well behind three-time Cy Young winner Clayton Kershaw's $30.7 million per year — it's unlikely that Scherzer and Boras settle for any annual rate or dollar value that doesn't place him in between those two. Seven years at $26 million per year is $182 million, $2 million more than Verlander's 2013-19 haul, which absorbed the final two years of his previous deal at the same price. Getting to $182 million in value using that initial 5.6-WAR estimate and my other assumptions suggests a decline of 0.66 WAR/year, with a value of 4.0 WAR over the final two years — an optimistic assumption, but then what pitcher contract isn't?

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As to who might pony up, if the Yankees, Dodgers, Red Sox and Cubs are all out — the first two explicitly based on their executives' statements and the other two by inference in relation to Lester, whom the Sox would have had reasons to prefer to Scherzer given their familiarity — then it's unclear who can afford that. Fox Sports' Ken Rosenthal and Jon Morosi reported earlier this week that the Cardinals could be interested in the Missouri native, though they're also considering trading for Cole Hamels and David Price. If they do deal for the latter, presumably with the intention of signing him to a long-term deal, that could reopen the possibility of returning to Detroit, despite all that's been said. Owner Mike Ilitch has a strong relationship with Boras, and as Prince Fielder's nine-year, $214 million deal from January 2012 shows, he can be talked into spending big money late in the offseason.

Beyond that, there aren't any obvious suitors, which makes it all the more fascinating as to where Scherzer might wind up. Somebody is going to surprise us, but it should hardly shock us if Scherzer has a tough time living up to that big contract.

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