More Baseball Innumeracy

James Kwak
2 min readAug 2, 2023
Photo by Andrew Jephson on Unsplash

To reiterate my point from a few days ago: The people who cover baseball have no idea what a contract means.

After trading Max Scherzer to the Rangers for a minor-league prospect, the Mets doubled down by trading Justin Verlander to the Astros for two prospects. Here’s what Tyler Kepner of the Times had to say: “The Mets are paying more than $70 million to swap two aces who could help them in 2024 for three prospects who could help for many more seasons.” And here’s Stephen J. Nesbitt of the Athletic: “When you have in one hand Max Scherzer, Justin Verlander and $54 million, and in the other three prospects, it boggles the mind to choose the option that involves parting with two future Hall of Famers and all of that coin.” (Emphasis added.) I could find dozens of examples. They are all completely wrong.

If you say that the Mets are trading Scherzer and Verlander for prospects, you have to understand what it means to “have” Scherzer and Verlander in the first place. In each case, the Mets have an asset: they control that player’s services for 1–1/3 seasons (Scherzer because he was certain to exercise his 2024 option). But they also have a corresponding liability: they owe that player about $58 million. If the Mets were simply swapping Scherzer’s and Verlander’s services for the prospects’ services, they would still owe each pitcher $58 million. Instead, the Rangers and Astros are each paying about $23 million of the money due to Scherzer and Verlander. The Mets aren’t swapping Scherzer, Verlander, and $70 million for three prospects. They are swapping the asset they have — Scherzer’s and Verlander’s services for 1–1/3 seasons — in exchange for control over three prospects and $46 million of the $116 million they already owe the two pitchers.

(Yes, now they have to pay the prospects. But minor leaguers and players who haven’t qualified for free agency make peanuts. And they control the prospects until they qualify for free agency, which is many years in the future.)

To put this another way: To a team, a player’s value has to be considered net of what you are paying him. You could have an All-Star, but if you are contractually committed to pay him more than he is worth, you should be happy to get out of that contract any way you could. Verlander is pitching well these days, but given that the Mets have written off this season, giving up his 2024 services in exchange for two top prospects plus $23 million in cash is not a bad deal.

I’m sure some baseball owners and general managers understand all this. So why do journalists insist on getting the cash flow exactly backwards in these deals?



James Kwak

Books: The Fear of Too Much Justice, Take Back Our Party, Economism, White House Burning, 13 Bankers. Former professor. Co-founder, Guidewire Software. Cellist.