Max Scherzer’s contract has present-day value of $191.4 million
Because of deferred money, pitcher Max Scherzer’s $210 million, seven-year contract with the Washington Nationals has a present-day value of $191.4 million by the calculations of both Major League Baseball and the Major League Baseball Players Association.
The structure is designed to pay him $15 million annually for 14 years and shield much of the money from District of Columbia income tax, since he plans to become a Florida resident.
Scherzer gets a record $50 million signing bonus, of which $5 million is due this year and $15 million each in 2019, 2020 and 2021. The money is due in 12 equal semimonthly installments in those years from April through September.
He receives salaries of $10 million this year, $15 million in each of the next three seasons and $35 million in each of the final three years. That $105 million total due over the final three years will be deferred without interest and paid in $15 million installments each July 1 from 2022 through 2028.
Because of the deferred money, the deal has a present-day value of $191,401,086, by Major League Baseball’s calculation. In yearly payrolls, which include salaries and prorated shares of signing bonuses, both discounted for deferred money, Scherzer’s value is $17,142,857 this year, $22,142,857 for each of the following three years, $37,405,562 for 2019, $35,920,616 for 2020 and $34,503,480 for 2021.
His signing bonus and the salaries for the first four seasons are not discounted because they are paid by the time the contract expires. The $35 million salaries for the final three years are discounted to $30,262,705 for 2019, $28,777,759 for 2020 and $27,360,623 for 2021.
The Major League Baseball Players Association calculates the present-day value at $191,409,858.
Scherzer’s deal counts as $28,689,376 annually for purposes of baseball’s luxury tax, which uses a different methodology.
His contract also includes several award bonuses. Scherzer would get $500,000 each time he wins an MVP award, $250,000 for finishing second, $150,000 for third, $100,000 for fourth and $75,000 for fifth. He would earn similar bonuses for Cy Young finishes.
He would receive $250,000 if he is World Series MVP, $150,000 for League Championship Series MVP and $100,000 for making the All-Star game, winning a Gold Glove and winning a Silver Slugger.
He also gets a hotel suite on road trips.