He will still be the 6th highest paid pitcher in MLB history. But why did Washington's ace pitcher accept a long term extension early in his free agent walk year?
It was a baffling move from all sides. The Nationals have agreed to a seven-year, $175 million extension
with RHP Stephen Strasburg. Strasburg is a Scott Boras client. Boras has the reputation of getting his clients to free agency where he can leverage the biggest deals (by getting teams to bid against each other). With an extension, Boras loses leverage to make a long term deal.
For Washington, it is a seven year risk based on Strasburg's injury history. The ace pitcher has underperformed throughout his career. He will soon be on the 7th anniversary of his Tommy John surgery. The Nats had said in the past that their major concern with any pitcher post-TJ is in year 7: they don't think the repaired ligament will hold after seven full MLB seasons. There is proof of this by the rash of pitchers having second TJ surgeries. So the Nationals are going against their own medical philosophy to make this extension.
In order to make a deal, both sides must receive something they value. For Strasburg, it is guaranteed money and an opt-out. For the team, it is deferring most of the guaranteed money.
According to the Washington Post, Strasburg will take home a team friendly $15 million annually from 2017 through 2023, excluding bonuses which could reach $7 million. The remaining $70 million will be deferred without interest and paid out in
$10 million installments from 2024 through 2030. The team is spinning this extension at a "present value" of only $162 million.
Strasburg can opt out after
its third and fourth seasons. If he can stay healthy, he can be a premier free agent in 2019 at age 30. But the real value to Strasburg, given his history, is this deal acts like an insurance policy against another major injury. If his arm gets hit by a bus tomorrow, he will get paid a lot of money through 2030.
In additional minor give and takes, Strasburg won’t receive no-trade protection but the team got no
provisions relating to arm health to discount any future payouts.
The question remains why would Strasburg forego free agency? One would believe that he would have asked for a $200 million type David Price deal. Some could say that Strasburg did not want to "bet" on himself going into this off-season. Which is odd concerning in his first seven starts, he is 5-0, 2.76 ERA, 1.041 WHIP. But his body or his mind must have told him to cut a long term deal now when things are going well to take off any future financial pressures on his family.
The Nationals must believe that they got a star player at a market discount. But other teams see the revenue horizon being darker than today. Cable television model, which fueled the mega-local broadcast rights deals in the past few years, is going by the wayside. Younger fans consume their entertainment on demand and not by sitting to watch a designated game at a designated time on a designated channel. The big money spenders like ESPN have started to purge high priced talent and reign in expenses since their carriage charges are being balked at by the cable and satellite operators. In seven years, the MLB broadcast revenue could be cut in half which would make even Strasburg long term deal seem very expensive.
