Stephen Strasburg is the latest starting pitcher to hit the jackpot. The Washington Nationals have reached a contract extension with the star right-hander, just months before he was set to become a free agent.
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The Nationals made it official on Tuesday, announcing a new seven-year for Strasburg that starts with the 2017 season. The deal is worth $175 million, according to FOX Sports. That makes Strasburg the sixth highest-paid pitcher in Major League Baseball history. The current record holder is David Price, who got a $217 million contract from the Boston Red Sox last offseason. Price’s deal is slightly more than Clayton Kershaw’s $215 million contract with the Los Angeles Dodgers.
Strasburg’s contract is the 18th largest for any player. Based on an average annual value of $25 million per year, Strasburg is tied for 11th among the richest paychecks.
However, the deal isn’t worth exactly $175 million.
The Nationals have made it a practice to defer money in big contracts—that is, the team likes to delay making payments to its highest-paid players. Before the 2015 season, the Nationals signed right-handed pitcher Max Scherzer to a seven-year, $210 million deal. But Scherzer is getting paid half the money while he’s under contract, and the remaining $105 million will come his way after the seventh year. Accounting for the deferred dollars, the present-day value of Scherzer’s contract was calculated by MLB at $191 million.
Similarly, Strasburg’s new deal isn’t as lucrative as it appears on paper. The Washington Post reported that Strasburg will be paid $70 million from 2024 to 2030. The Nationals believe the agreement would be valued at $162 million if Strasburg was to be paid within the length of the contract.
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Strasburg can help make up the difference with $7 million in bonuses based on the number of innings pitched.
The Nationals agreed to include another wrinkle in the deal. Strasburg received an opt-out clause that kicks in after the third or fourth seasons of the contract, depending on whether he chooses to enter free agency. The player option has become a common addition to big contracts. For one, Price received an opt-out from the Red Sox.
Some baseball insiders believe the move is risky for the Nationals, given Strasburg’s injury history. Strasburg underwent Tommy John surgery in 2010, and in recent seasons, the 27-year-old pitcher has dealt with shoulder and oblique issues. The choice to exit the contract after the 2019 or 2020 seasons allows Strasburg to seek a bigger contract on the open market. If he underperforms on the mound, the San Diego native can stay in D.C., and the Nationals are on the hook for the rest of the contract.
News of the deal also came as a surprise because Scott Boras, Strasburg’s agent, is known for being unwilling to negotiate contract extensions for players nearing free agency.
The contract isn’t without risk for Strasburg, though. Strasburg would have been in line for a major payday next winter as the best pitcher in a rather thin free-agent class. Last offseason, Price and Zack Greinke signed deals north of $200 million. Jordan Zimmerman, Strasburg’s former teammate, scored a five-year, $110 million contract from the Detroit Tigers.
1. David Price ($217M)
2. Clayton Kershaw ($215M)
3. Max Scherzer ($210M)
4. Zack Greinke ($206.5M)
5. Justin Verlander ($180M)
6T. Felix Hernandez ($175M)
6T. Stephen Strasburg ($175M)
7. CC Sabathia ($161M)
8T. Masahiro Tanaka ($155M)
8T. Jon Lester ($155M)
Source: Baseball Prospectus/Cot’s Baseball Contracts