The Washington Nationals stunned the baseball world this week when it was announced that Stephen Strasburg had signed a 7-year, $175 million contract.
It turns out the contract is not what it seems. While some questioned the timing for Strasburg, it is actually a huge win for the pitcher and a brilliant ploy by his agent, Scott Boras.
The deal was surprising because players represented by Boras rarely sign extensions while still under contract as he encourages them to wait until free agency to maximise their leverage and value. That is something that certainly would have happened here as Strasburg was viewed as the big prize in what is seen as a thin crop of free agents that will hit the market this winter.
In order to get Strasburg to sign the extension, the Nationals were forced to include an “unheard of” feature to the deal: two chances for Strasburg to opt out of the deal, either after the third or fourth years. And listening to Boras describe the deal, it sounds like Strasburg will never see the final three years of the contract.
Boras was a guest on ESPN’s “Baseball Tonight” podcast where he was asked by Buster Olney about the importance of the double-opt-out and the Nationals’ reaction when he proposed the structure.
“It’s rather unheard of, so they certainly had to discuss it,” Boras said. “I made them know that one of the points of light here was that we felt economically we could certainly do as well or better in the free-agent market and I think they were in agreement … In the back of my mind, the rolling opt-out was very, very important.”
The deal was also stunning because 7-year contracts for pitchers rarely work, and the Nationals were giving one to a pitcher who has already had Tommy John surgery and has been on the disabled list seven times in seven years. Amazingly, Boras actually used this to his advantage.
With so much missed time, Strasburg has not yet lived up to the potential he showed coming out of college as the No. 1 pick in the 2009 draft. By getting opt-outs in the deal, Boras is basically delaying Strasburg’s free agency to give him a chance to reach that potential before signing a real monster contract.
Meanwhile, Boras is already looking forward to Strasburg opting out, something that sounds like a foregone conclusion.
“The goal that I foresaw was that Stephen Strasburg will be a true free agent once he has the innings and the performance record to illustrate to owners three or four years from now that he is the elite pitcher,” Boras told Olney. “I think for me, how I define a negotiation is that there is a value for Stephen Strasburg in potential leverage and there is a much higher value for Stephen Strasburg at star leverage. And these next three or four seasons of Stephen’s performance will place him in that star category.”
In other words, Strasburg got the best of both worlds. He got long-term security in case his career does go south. But he also has the opportunity to not only become a free agent and sign a bigger deal, but he can choose when to do it, something players rarely get to do.
In the end, much is being made out of this so-called “$175 million contract,” when in reality it is either a 3-year, $75 million or a 4-year, $100 million contract. More importantly, Strasburg will be a free agent when he is either 31 or 32 years old and still in the prime of his career.
Meanwhile, this contract only creates three options for the Nationals: They will either lose a good pitcher in 4-5 years, they will have to pony up an even bigger contract to keep him, or they are going to be on the hook for the last 3-4 years of the deal at $75-100 million for a pitcher who is not worth it.
None of those options sound ideal, and that’s why people call Scott Boras a super agent.
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