Royals Authority

Alex Gordon tested his surgically repaired wrist on Monday and reported no issues. He was cleared to take some “dry” swings as the next step, meaning he will swing the bat but won’t make contact with a baseball. (Or as I termed it, he will be using The Francoeur Method.)

That’s some good news. Gordon was also in the news over the weekend as he told McCullough that he may not be so quick to exercise his player option for the 2016 season.

Perhaps a quick recap is in order.

Gordon’s current contract contains a player option for 2016, valued at $14 million. Late last summer, as the Royals geared up for their charge to the Wild Card, Gordon indicated he was going to exercise that option.

Cooler heads have since prevailed.

As fun as it was to hear Gordon pledge his allegiance to the Royals for another season, I didn’t buy it for one moment. Not that he’s ingenuine. Nothing of the sort. I think he was caught up in the moment of the pennant race and said what he felt - and believed - at the time. The Royals are the only organization he’s ever known; a franchise he grew up rooting for as a kid. Of course he would want to stay.

But to exercise that option would be lunacy.

Gordon isn’t a flashy player, but he’s incredibly solid in all facets of the game. You know this. You also know that what Gordon brings is incredibly valuable. Even if he doesn’t play a “premium” position. In the landscape of today’s game, he’s definitely one of the most valuable players in the league. And he’s been in the conversation for the last four seasons.

Gordon was so close to being a “bust” is now on the precipice of a major payday. He should collect. He owes it to himself to explore avenues to get his maximum value. Is that an extension with the Royals? Or is it through free agency? We will know more in the next several months, but at this moment the only thing we do know is that Gordon is going to get paid a whole lot of money to play baseball for the next several years. Good for him.

The Royals are in an interesting place. It’s something I’ve thought about often as I’ve watched other, larger market teams, overextend in an effort to keep together a successful core. It’s unique for the Royals because in the current economic climate of the game, they have never had what you would consider to be a successful core. Or anything approximating that. Sure, there have been extensions here and there in the Dayton Moore era (Gordon included) that were designed to keep players around during their peak years. Now the Royals are facing the future with the heart of their club and deciding if they should stand by him (and pay him) for what are certain to be his declining years.

The fan in me is optimistic. Hopeful that the Royals will do something to keep Gordon in Kansas City for the remainder of his career. And with that optimism comes the hope that he can keep playing at an elite level and experience a minor decline phase for the next several season. Naturally. The realist in me is fretful that it’s going to cost so much money the prudent thing would be to move on. Let those decline years become someone else’s headache.

Should Gordon get a five year contract in the range of $90 million, he would need to average around 2.6 WAR per season. Perhaps my bias is showing, but that seems doable. Gordon has averaged 5.6 fWAR over the last four years. Last season, Gordon finished with a 6.6 fWAR. That’s an AAV of $18 million per season and well past any deal the Royals and Moore have handed out in the past.

For 2015, Steamer is projecting a 4.4 fWAR and ZiPS is looking at a 4.3 zWAR. That’s quite a tumble for a guy who has topped that mark in three of the last four seasons. Instead, I’ll save that 4.4 fWAR mark and project that forward for the 2016 season which Gordon will play as a 32 year old. With the WAR aging factor provided by The Book Blog, and by figuring a base amount of $6.5 million per win with some inflation factored into the equation, a fair market contract for Gordon would work out to around those five years and in the neighborhood of the estimated $90 million.

It’s a major commitment, with the danger of there being little upside.

As I’ve noted, if the Royals pickup the options on Wade Davis and Alcides Escobar, their 2016 payroll is already around $75 million for a total of 11 players (and buyouts.) Add an extension for Gordon and you are approaching $95 million for 12 players. Consider the Royals are looking at a payroll of $112 million for the entire 25 man roster for 2015 and you see the dilemma of the front office. Which is why if the two parties are to come to an agreement, it probably won’t be something straightforward like $18 million a year. I’m guessing the contract would be heavily backloaded to ease some of the burden of 2016.

Not that it gets any easier. Again, assuming the club picks up options on Davis and Escobar and also Sal Perez, the team has already committed $42 million to just five players (including buyouts) in 2017. The other two? Omar Infante and Jason Vargas. Oops. See how all these moves matter?

Gordon wants to stay in Kansas City. The Royals would love to have him remain a Royal. The question is, can they find a way that is fiscally acceptable to both parties?

One thing we do know is this isn’t a Billy Butler scenario. While Butler wanted to remain in Kansas City, the feeling wasn’t mutual. The only reason he played out his contract was because the Royals couldn’t trade him for a return they felt was acceptable. The Royals are aware of the value Gordon brings, so they will make an attempt to keep him around. It will be up to David Glass and the Royals brain trust to fashion a creative contract to keep Gordon forever Royal.

The streak remains intact. All hail the streak.

The Royals and Eric Hosmer reached an agreement to avoid arbitration less than 24 hours prior to his scheduled hearing in Florida. The contract not only settles the issue of 2015, it also clears the matter for 2016. In sum, Hosmer will be paid $13.9 million for the next two years of work. He earns $5.65 million for next season and $8.25 for 2016.

The Royals entered this winter with nine players eligible for arbitration. All nine reached agreements before going through with a hearing. Dayton Moore has yet to go fully arbitration monty. The last Royal to have a hearing was Jeremy Affeldt back in 2005. For you stat geeks, the Royals have had 19 hearings total dating to 1974, winning nine.

This contract represents a small gamble for the Royals. Small. If Hosmer stumbles again - think 2012 stumble - the Royals will ultimately lose money on the deal. Obviously, the hope is Hosmer can put together a full season where he is locked in at the plate. Think the last four months of 2014 (excepting August when he was injured, but you get the point) extending for the full year and erasing the stench of April and May. If that happens, then the Royals will come out slightly ahead.

The projections are somewhat bullish.

PECOTA - .278/.332/.419 with a .274 TAv and 1.9 WARP

ZiPS - .293/.346/.443 with a .344 wOBA and 2.0 zWAR

Steamer - .278/.337/.437 with a .339 wOBA and 2.3 fWAR

The consensus is Hosmer will have his second best offensive season of his career. Such are the nature of projections for an inconsistent hitter like Hosmer. No computer is willing to go out on a limb and predict a breakout simply because he’s never put together six consecutive months of at least average offense. The streaks run deep.

Will he fully realize his power potential? Last year he hit just nine home runs and finished with a .398 slugging percentage and a career-low .127 ISO. Among qualified first basemen on the Fangraphs leaderboards, Hosmer’s ISO ranked 19th out of 23. (The 20th was Billy Butler who had a .107 ISO.) If he is going to be worth his contract, he’s going to have to find that power stroke. Let’s be real, though. He’s not going to challenge the Royals franchise record for home runs. It sure would be nice if he could hit more than 20 in a year, though.

Hosmer was eligible for arbitration for the first time last winter as a Super Two. The Royals purchased his second and third year of arbitration with this deal, leaving the fourth year unsettled. Should Hosmer progress (remember, everyone is supposed to get better!) he will truly earn the megabucks in 2017. Then, free agency ahead of the 2018 season and he will make Powerball money.

The Royals remain on track to open with a payroll around $112 million, give or take a few dollars. That will be a record. I’m not sure I understand the two-year deals handed out to Hosmer and Kelvin Herrera beyond giving the Royals cost certainty heading into 2016. It’s nice they’re under contract and all, but how does that benefit either side? Both deals are well within range of what they would make in 2016. Neither player figures to regress, but the system pretty much guarantees a solid raise for each regardless. I’m guess this is all about cost certainty and the players willingness to lock in for another season. Or maybe the Royals simply believe Hosmer is about to breakout in a big way and this is how they save a few coins ahead of 2016.

I was looking for financial comps to get some perspective on this contract. This winter, David Freese was eligible for arbitration for a third time. Freese has better offensive numbers (not by much) for his career, but is five years older. He will earn $6.425 million next year. Chase Headley is another who comes to mind. (I know I’m looking at third basemen here, but I really can’t find a comparable first baseman. So corner infielder and all that. If you think of a first baseman I’ve overlooked, leave it in the comments.) His numbers were slightly better than Hosmer, is closer in age and he made $10.25 million for his third year of arbitration eligibility. Headley also had a Gold Glove to his credit. The Braves bought out the second year of Freddie Freeman’s arbitration at $8.5 million. His third year cost $12 million. Todd Frazier will earn $7.5 million for his second year of arbitration eligibility. I guess the lesson here is the $8.25 due Hosmer in 2016 isn’t crazy money, or out of scope for a corner infielder of his status. Just we can’t pass judgement on the deal until we see how the 2015 season plays out for him.

Looking large picture, what’s going to happen for the Royals in 2016? Assuming the Royals will pick up the options on Wade Davis and Alcides Escobar, the Royals are already committed to over $77 million in player contracts and buyouts for the 2016 season. If Alex Gordon makes good and exercises his player option, that total nudges to $90 million for 12 players who will actually play for the Royals and three players they would buy out of their options. With Greg Holland, Lorenzo Cain, Danny Duffy and Mike Moustakas all on the arbitration merry-go-round again, the club would be in record territory with 16 players under contract. They are set to blow past the $115 million mark for 2016. Are they prepared to handle that fiscal burden?

Either way, the manner in which this team is built, the expanding payroll is inevitable. The cost of doing business. The team is going to need some creativity going forward and if there’s one thing Moore, Jin Wong and the rest of the front office have shown is the ability to construct contracts that actually do give the team some financial flexibility. (That’s not to say they spend wisely. Those are two separate issues. Longtime readers know where I stand on how they spend.) There’s a method to their two-year deal madness. It will just take a little bit of time before the larger picture becomes clear.

The next several months will be very interesting and will tell us much about the future of this team.

Two signings to report from Tuesday as the Royals reached deals with Lorenzo Cain and Mike Moustakas. The deals mean both players will avoid an arbitration hearing.

Cain - profiled here - will earn $2.725 million in 2015. As the sides exchanged figures last month, Cain asked for $3.6 million. The Royals countered with $2 million. The settled amount is $75,000 below the midpoint. Also included in his contract is an incentive clause of $25,000 if he reached 505 plate appearances. That means, he will have to avoid his annual trip to the disabled list. If he is named to the All-Star team, that’s worth an additional $50,000.

As I mentioned in his profile, Cain will be a massive bargain for the Royals. His glove alone is worth millions. Even if he regresses at the plate, as I believe he will, he will still bring plenty of value. Plenty.

Apparently, the Royals got this deal done at the 11th hour.

cain’s $2.725M royals settlement barely averted hearing scheduled for today. @jflanagankc 1st w/ the settlement figure.

— Jon Heyman (@JonHeymanCBS) February 3, 2015

Cain was this close to being the first Royal under Dayton Moore to have a hearing. With a difference of just $1.6 million, it’s surprising the deal just got done ahead of the hearing. This also raises an interesting point. Often these hearings are held in secret. We know the general fact that hearings are scheduled over the next couple of weeks. We lack the specifics of who will have a hearing and at what date.

Moustakas will make $2.64 million next season. He had asked for $3.1 million and the Royals answered with an offer of $1.85 million. Midpoint was $2.475. His profile is found here.

This raises another interesting point about the inequity of the arbitration process. Both were eligible for arbitration for the first time. Cain was worth 4.9 fWAR in 2015 and hit .301/.339/.412. For his career, he’s posted a slash line of .279/.326/.392 with a cumulative 10.3 fWAR.

Meanwhile, Moustakas hit .212/.271/.361 en route to a 0.9 fWAR. In his career, he’s hit .236/.290/.379 and has been worth 5.3 fWAR. Most of his value came in 2012 when he finished with a 3.1 fWAR.

Quite the discrepancy of production. It hardly seems fair they are within almost $100,000 of each other. Such is the failing of the arbitration process. Also, these one-year deals won’t preclude the Royals and the players from talking a long-term deal. If there’s interest. Remember a few years ago, Alex Gordon avoided arbitration and a few weeks later the Royals and Gordon reached a deal for a contract extension. Although I couldn’t imagine why they would sign Moustakas to anything beyond this year. And as I mentioned in the Cain profile, I don’t think he’s a good candidate for an extension.

I’ve mentioned this before, but I have always been confused by the love showered upon Moustakas. I wonder if that will start to change now he’s elevated from the ranks of minimum wage earners and is now set to make his first million (actually two-plus million) in a single season. Will there be a perception that he’s overpaid? Will he start to hear more boos than Moose calls? A little million dollar fallout? Maybe not this year. Maybe next year or the year after when his paycheck figures to increase even more.

With Moustakas and Cain reaching deals, the Royals have four pending hearings: Danny Duffy, Kelvin Herrera, Eric Hosmer and Greg Holland. If I were a betting man, I’d wager the next two down will be Duffy and Herrera. Of course all of that falls by the wayside should Hosmer or Holland have a hearing scheduled in the next day or so. I still think the Royals get everyone under contract without a hearing.

Here is the Royals current payroll estimate. The red numbers are the midpoints between team and player. The players at the bottom are estimated to make close to the major league minimum. Remember from my last payroll post, the names for the players making the minimum may change - I’m not betting Brandon Finnegan will make the Opening Day roster. It also includes Luke Hochevar and Kris Medlin who will likely open the year on the DL.

Not surprising, they are still on target for around a record $112 million payroll.