CBS Sports is a registered trademark of CBS Broadcasting Inc. Commissioner.com is a registered trademark of CBS Interactive Inc. site: media | arena: mlb | pageType: stories | Much like Florida and Texas, which don’t have a state income tax, playing in D.C. provides a significant boon for out-of-state athletes, said Robert Raiola, a CPA who specializes in helping athletes. To make up for the loss with the deferrals – because of inflation and lost interest-earning opportunity, future money is worth less than present – Scherzer will receive $50 million in the form of a signing bonus spread over multiple years, the source said. Get all the sports news you need, direct to your inbox.

And as a bonus, he goes from one perennial World Series favorite to the presumed 2015 World Series favorite, depending on what more adjustments the Nats make to their currently stacked rotation. section: | slug: max-deal-scherzer-gets-105m-in-deferrals-could-earn-big-tax-breaks | sport: baseball | route: article_single.us | 6-keys: media/spln/mlb/reg/free/stories, at

Except that it's not, really. “His goal was to get over $200 million,” Raiola said. Max Scherzer 2014 ERA and Runs Allowed | FindTheBest. 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. The Home Rule Act, established in 1973, exempts nonresidents from paying state income taxes at the capital’s 8.5 percent rate. Some of the financial information was first reported by Ken Rosenthal of FOXSports.com and Jeff Passan of Yahoo. That is a question that might never be answered. The benefit to structuring the contract as such is that because his permanent residence is outside the District, Scherzer will not be subject to a state income tax on money earned in Washington, D.C.
Scherzer will get $15 million a year for the next 14 years, deferring half the money until after the contract expires. Baseball’s collective-bargaining agreement calls for the Nationals to start funding the deferred payments by July 1, 2017, with enough money in a liquid asset to cover the first payment in 2022.

The structure is designed to pay him $15 million annually for 14 years and shield much of the money from … The Washington Nationals have reportedly signed Max Scherzer to a seven-year, $210 million deal. So at a base, the deal is probably worth at least $195 million, even before figuring the tax breaks.

Zack Greinke feels Dusty Baker trusts him more than A.J. Either way, the deferrals do eat significantly into the actual value of the deal. And the tax effect is substantial, particularly since $50 million is to be paid in a bonus spread evenly over the 14-year term ($3.4 million per year), and the final $105 million in payments come (exactly half the deal) come after the seven-year term of the deal, meaning it is technically no longer work income. Any way you look at it, though, the deal is a home run considering no free agent pitcher has ever gotten more, projections were closer to $175 million, and it represents up to a $66 million gain over the $144 million Tigers offer he spurned in spring. Average annual salary per payment: $15 million. He rejected a seven-year, $160 million offer last spring from his old team, the Detroit Tigers, and ended up with the best team in baseball on the richest free-agent contract ever signed by a pitcher, no matter how much of it he’ll receive in 2028. CBSSports.com first reported Scherzer had a seven-year agreement with the Nationals. That's a lot of money! All Rights Reserved.


(Of course, he carried insurance and there was some unknown cost to that.). His signing bonus and the salaries for the first four seasons are not discounted because they are paid by the time the contract expires. 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. However, the issue is much more complicated than even that. One calculation similar to what Major League Baseball uses pegs the deal at a net present value of around $185 million, an average annual value of about $26.4 million a year. 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.