As the Royals are formulating their 2016 budgets, there remains one final piece of business: The Mike Moustakas contract.
The clock is ticking should the sides look to avoid an arbitration hearing, as a pair have already happened with one more on the horizon. Reliever JJ Hoover won his case against the Reds. The Astros won their hearing with Jason Castro. Brandon Belt is scheduled for tomorrow.
Moustakas has 4.111 years of service time, meaning he just missed the Super Two cutoff last year, so he is eligible for three years of arbitration eligibility before he can test the free agent waters. His first pass through the arbitration system came last winter. He asked for $3.1 million while the Royals countered with $1.85 million. They avoided a hearing and settled for $2.64 million, slightly above the midpoint. By the end of the year, he pocketed an additional $50k for his All-Star appearance and $10k for reaching 550 plate appearances. The bonuses pushed his total contract to $2.7 million.
This year, the gap is much more pronounced. The Royals offered $4.2 million while the Moustakas camp countered at $7 million. On the surface, the amount the Royals submitted is low, especially given the career year Moustakas had in 2015. Such is the system the team has to come in at an amount like this. The Royals, as you surely know, haven’t taken a case all the way to an arbiter in Dayton Moore’s tenure. By coming in low, the Royals give themselves some wiggle room for negotiations, but they run the risk of losing should the case ultimately head to a hearing.
The midpoint this year is $5.6 million. MLB Trade Rumors projected the Royals third baseman would earn $5.7 million. Funny how that happens. If last year is any guide, the Royals could throw a few dollars past the halfway point and throw a couple of incentives to sweeten the deal.
It would be shocking if the Royals and Moustakas make it all the way to a hearing, but the clock is ticking. (These hearings are somehow kept secret. You never hear about dates until after it’s happened. Usually when the finding is announced. Baseball. So full of leaks middle schoolers are breaking news, yet no one can figure out when an arbitration hearing is held. Go figure.) There are three outcomes from the current situation.
Moustakas and the Royals agree to a one-year deal.
I’m thinking the framework on this is already done or very close to happening. As the final pending arbitration case for the Royals they have had plenty of time to get this done. Besides, as I pointed out above, while the gap is large, the midpoint is acceptable. Under this scenario, the two sides reach the agreement and go through a similar dance for a third and final time ahead of the 2017 season.
My guess is a one-year deal would be around $5.9 million.
Moustakas and the Royals reach a two-year deal.
This is the Lorenzo Cain model. Doing this gives the Royals cost certainty for another of their core before nearly everyone of import is eligible for free agency.
Something important to remember is that contract extensions given to arbitration-eligible players are different from those awarded to free agents. These dollars impact all players in future negotiations, so there isn’t any kind of deferral along the lines of what we saw from Alex Gordon. In other words, the average annual value doesn’t matter so much as the year to year escalation. On the surface, the contract could appear to be backloaded, but that’s not really the case. It’s simply a progression through the arbitration process. Look at Cain again as an example. He will earn $6.5 million in 2016 and $11.5 million in 2017. Those dollar figures are in line with what he would likely earn had he performed at his expected level in ’16. It’s the economics of baseball. MLB Trade Rumors estimated Cain would bank $6.1 million for the upcoming season. So Cain actually beat his projection by just a bit.
At the time, I wrote that I didn’t really understand the Cain extension. In the prism of the current situation, maybe it’s helpful to have that contract in Moore’s back pocket. I mean, there’s no way Moustakas can earn more than Cain in 2017, right?
Keeping that in mind, I think a fair agreement for a two-year Moustakas extension would be for $6 million in 2016 and $10 million in 2017.
Moustakas and the Royals agree to a multi-year deal.
To me, this is the longest shot of the three possibilities. For starters, we’ve been disappointed by Moustakas for four seasons before he finally showed us some offensive value last summer. Do you buy that he’s turned the corner and will be an above average third baseman over the next several years, or was last year an outlier? Whatever you think the answer to that question is, you cannot say for certain, which makes locking in Moustakas to a long term deal a pretty big risk. If you buy out any of his free agency and are rewarded with a season of sub 80 OPS+, you’re basically flushing cash down the toilet.
However, if you are interested in keeping Moustakas around, should he build upon his ’16 performance, the price tag will only increase to the point where it’s all but assured he would be to expensive to keep in Kansas City.
Should the Royals take the position that Moustakas is entering his prime and last year was just the beginning of a great stretch of baseball, I could see them committing four years and $46 million. That’s basically the $16 million for his final two years of arbitration, plus $15 million for what would cover his first two years of free agency. View this through the prism of the Alex Gordon contract, where he will top out at $20 million in 2018 and 2019. Like with Cain, while Moustakas showed great strides last year, he’s not on the same level as Gordon. It’s possible by the time Moustakas hits free agency, he could out earn the Gordon deal, but that’s the compromise the player makes. Less salary tomorrow in exchange for stability today.
Of course, we’ve gone this far without mentioning Moustakas is represented by the Boras Corp. It’s certainly true Boras prefers his clients to hit the free market, he has shown a willingness to negotiate a long-term deal for a player who wishes to remain in a particular city. Think Carlos Gonzalez with Colorado a couple of years ago. Besides, the Royals have dealt with Boras often since Moore joined the team 10 years ago. It’s been a mutually beneficial relationship.
Still, I think there is too much risk involved. My money is on a two-year deal. We shall find out very soon.