The Captain's Blog

With Johnny Cueto headed to Kansas City, and the Tigers reportedly reticent to trade David Price, contenders around the league figure to be lining up for Cole Hamels. And yet, as general managers from around the league kick the tires on Hamels, should they also be kicking themselves for not signing Max Scherzer? That could all depend on the package required to obtain the Phillies’ lefty, but, with demand high, and several teams interested, it sure seems as if the best time to add an ace was during the winter.

On the surface, Hamels seems like a much cheaper alternative to the $210 million/7-year contract Scherzer signed during the off season, but if you look a little closer, the relative costs narrow considerably. For starters, Scherzer’s contract is actually valued at “only” $191 million in terms of present value. As a result, on an annual go-forward basis, the residual value of Scherzer’s contract would be $164 million over six years. In comparison, Hamels is potentially owed $95 million over the next four years (assuming his 2019 option vests). At an additional $70 million for two more years, when Scherzer will be pitching in his age-35 and age-36 seasons, it once again seems like Hamels is the more palatable deal. However, there are more factors to consider.

In addition to looking ahead, comparing Hamels now to Scherzer in the offseason requires consideration of the past, specifically the first four months of the right hander’s fantastic season. According to fangraphs,com, Scherzer has already provided $38 million in value; if pro-rated over the rest of the year, that equates to a $36 million surplus over his $27 million average present value salary. Carrying the surplus forward, the financial gulf between the two pitchers drops to $34 million over two years, and that doesn’t include the financial benefits of having the ace right hander make 20 starts (i.e., higher attendance and a more assured path to the post season), nor the potential value of an effective Scherzer at the end of his deal.

Narrowing the Gap: Relative Cost of Max Scherzer and Cole Hamels
Note: Scherzer’s annual salary is based on present value of contract. Scherzer’s 2015 surplus based on pro-rated frangraph’s valuation compared to annual present value salary. Hamels 2019 salary becomes guaranteed if he pitches at least 400 innings in 2017-2018, including 200 in 2018 and provided he does not have an arm injury in that season Otherwise, 2019 converts to a $20 million team option with a $6 million buyout.
Source: fangraphs.com and baseball-reference.com

Another part of the cost analysis involves the prospects required to obtain Hamels and the draft pick that would have been forfeited to sign Scherzer. Assuming the Phillies hold out for at least one blue chip, it stands to reason the package of players traded in a hypothetical deal would have more value than a mid-to-late first round draft pick, both in terms of potential production and the financial consideration. After all, prospects with minor league experience are often more advanced than future draft picks, and those acceptable in a deal for an ace starter are usually very highly regarded. In addition, if the prospect does not have a lucrative major league deal, and the draft pick requires a hefty bonus, it would not only be cheaper to obtain a young player than to draft him, but the development cost would be less as well.

Finally, there is the issue of relative quality. Is Scherzer at age-30 and an ERA+ of 138 in the A.L. since 2013 better than the age-31 Hamels, whose ERA+ of 117 in the same period has been compiled entirely in the N.L. East? That’s subjective, but nonetheless an important part of the comparison.

Sometimes the best trade deadline deals are the ones you make before the season begins. Although expensive free agent contracts often seem daunting, the most costly deals are often made under the gun of deadline desperation. Until a trade for Hamels is consummated, it’s hard to figure whether that lesson applies to this year’s contenders, but the fact that so many teams are in need of the lefty suggests at least a few are probably feeling those regrets.