Insurance policy for earnings taken out by Max Scherzer of the Detroit Tigers
The pitcher has covered himself for the remainder of the season after having turned down a contract extension.
In spring training, Max Scherzer, pitcher for the Detroit Tigers, turned down a seven year contract for $144 million, causing many people to think that he was out of his mind, except that he has now taken out an earnings protection insurance policy in the case that he should become a free agent.
This current American League Cy Young Award winner clearly has a plan in mind to protect his finances.
News of the insurance policy was first made public in Sports Illustrated. The coverage is to give Scherzer protection against potential lost earnings if he should experience an injury before becoming a free agent at the close of the current season. He explained that “This takes the injury risk out of it”. That said, he didn’t reveal how much of the $144 million would be covered by the policy.
The insurance policy took the player’s age and major league experience into consideration.
According to Scherzer, who is currently 30 years old, his agent (Scott Boras) looked into the frequency of injuries among pitchers who are approximately the same age as Scherzer. What they determined was that after four years of experience as a big league pro, the incidence of injury notably declines. He stated that the “Tommy John injuries,” are the ones that “keep happening to younger pitchers with less than four years in the major leagues.”
As Scherzer is currently working on his sixth season as a starter in his major league career, and is in his fifth season with the Detroit Tigers, this means that he is working his way out of the top risk group for injuries among pitchers. Clearly, though, he remains aware of the impact that getting hurt would have on his income opportunities before he becomes a free agent, and has taken steps to cover himself.
This new insurance policy is designed to mitigate the remainder of the risk that is left behind as he continues to play through the rest of this year’s baseball season.