The Royals, Extensions and Cautionary Tales of Big Contracts

A key tenet of Dayton Moore’s Process is developing homegrown players. Since taking over, he’s rebuilt the Royals farm system back from a fallow period after Allard Baird either neglected or couldn’t push ownership to invest in the minor leagues. It’s considered the right way to build a team.

Once a player hits the big leagues, the team retains their rights for six – or, with some manipulation, seven – seasons. Beyond that, though, they become a free agent and can go anywhere. That is, unless the team works out an extension beforehand.

Under Moore, the Royals have been aggressive when seeking deals with their young players. When they recognize someone they see as a part of their core, they’ve tried to wrap them up. Joakim Soria, Zack Greinke, Billy Butler, Salvador Perez, Alcides Escobar and Alex Gordon were all signed to extensions that bought out (or will buy) seasons where they’d have otherwise been free agents.

All of the deals, with the exception of Gordon’s and Greinke’s, were considered club-friendly, while the exceptions are considered market value. For a small market team like the Royals, that’s as good as you can do. They locked up key players without breaking the bank.

Other teams aren’t as lucky.

Joe Posnanski looked at the status of Joe Mauer. Hometown hero, one of the best hitters in the game since his debut, and one of the more marketable players in baseball. He’s also been injury-prone and his contract extension keeps him a Twin until he’s in his mid-30s and well past when most players have entered the downswing of their careers. The Twins placed him on waivers, not necessarily to dump him off, but to see what happened. Still, it’s a hint that someday, they’ll have to recognize that it’s a contract they may have to dump.

Posnanski brought up other examples – Ryan Howard, Joey Votto, Matt Kemp. All will be hitting their twilight when their megadeals finally run out. Votto, for example, will make $25 million starting at age 34 until 2023 when he’ll be 39 years old. The Reds have a team option to pay him $20 million when he’ll be 40 years old. If Votto doesn’t age well, how much will that deal hamper the Reds? Granted, salaries will likely continue to inflate and Votto’s could still look large relative to other contracts.

Big contracts aren’t limited to hometown extensions, of course, and they aren’t all good deals. For a team like the Royals, free agency is usually a game of sifting through the leftovers or the bargain bin and finding the gem that was undervalued, polishing it, and later selling it back for profit. The big name players usually don’t come here. Free agency is where players cash in. The Royals can get priced out quickly and if they do sign a big deal, if it goes south, they’re sunk.

Posnanski likens some of the contracts to deferring payment for a good meal. In a six year deal, a team might get four very good years and two very expensive and average or worse years – but they still got the very good years even if they pay extra later in the deal to get access to them. Yes, the Twins and Reds get MVP-caliber players for years but they’ll pay well into their twilights for it.

Votto’s extension might look okay in the future as salaries continue to climb and it might not be uncommon for a player to make $20 million, homegrown or otherwise. There are a number of players making above $15 million a year today. If it’s within range of other players and the signee is productive, teams may not care that much. Still, Alfonso Soriano is one of those big money players after signing a big contract with the Cubs. Sure, his salary isn’t far off from those of other highly paid players, but he’s been just a bit above average offensively since signing it and the Cubs have been looking to dump the contract for a few seasons now.

The Red Sox traded for Adrian Gonzalez and gave him a big contract this winter. After drama within the organization and with Gonzalez and Boston struggling this year, they moved him. If a team’s winning, a big contract isn’t too bad, but for the Cubs, Red Sox and Twins, those contracts suck up resources that could be used to rebuild. Boston was able to move their big money player when they pressed the reset button, but the Cubs look stuck with Soriano, and while Mauer should have a few good seasons still, the Twins have to consider that he’ll be an albatross down the line.

In the Royals case, Butler is extended through 2015 when he’ll be 29 years old. Alex Gordon‘s deal keeps him in Kansas City until after 2016 when he’ll be 32. Both of those contracts may coincide with the right time to bail out – Butler is a great hitter, but he may not age well with his build (of course he could keep crushing the ball until he’s 37 – that’s part of the gamble). Gordon’s best years will likely be behind him once his contract is out, and in the early weeks of 2012, it almost looked like he was already a lost investment. Thankfully he turned it around.

That makes the deals for Escobar and Perez look even better. They’re under long-term control (Escobar through age 30 in 2017, Perez through 2019 at age 29), they provide near-elite defense up the middle with potential for strong offensive production, and the highest salary in one season in their deals never exceeds $6.5 million dollars (Perez’s final year pays $6M, Escobar’s final year is the $6.5M figure). Those are fantastic contracts, even if both are merely average at the plate.

But the high profile deals provide a warning for teams, including the Royals. There may be a time where the Royals look to rework Butler’s deal and he could end up with a big salary at age 35. If he’s producing, I don’t think anyone will mind, but it could anchor the team to someone on the decline who’s also soaking up payroll. They may rework Perez’s contract and end up with a big catcher who’s already had knee surgery playing into his mid-30s. I love Sal Perez, but he could be a guy who declines fast once he starts down that path. I hope I’m wrong. Sandy Alomar Jr. is his most-referenced comparison, and while Alomar played for 20 seasons, he only surpassed 100 games in four of them due to injury. He was 33 years old the last time he had an OPS+ above 100. He played until he was 41.

Then there are the cases of Eric Hosmer and Mike Moustakas. Before the season and while it seemed every other Royal was signing a long-term deal, the fanbase was abuzz looking for news on their signing a big deal to stay in Kansas City as well.

Obviously, that hasn’t happened yet.

Moustakas has been streaky in his Royals career. Hosmer is only now waking up somewhat from a sophomore slump. The scouting reports see both as everyday big leaguers, with potential for all-star games and more possible, but they haven’t shown it consistently yet. Moustakas will turn 24 within the next two weeks. Hosmer will be 23 in two months. Both are still young and have plenty of time to realize that potential – and when they do, the Royals will try to lock them up past when they’d become free agents.

That’s unlikely in the first place since both are represented by Scott Boras, who typically wants his players to get to free agency unless they get a great offer. But let’s say the Royals do get something locked up in 2015 – what size of a deal will that be for either player? Let’s say it’s 2015 and they both sign for $100 million-plus until their mid-30s. What if their performance falls off? What if they get hurt?

Remember Mike Sweeney‘s deal. He signed at the age of 28 in 2002 after playing in 456 games from 1999 to 2001 and putting up a .918 OPS. Then he started running into back injuries and other ailments and would still produce – when he was actually in the lineup and not on the disabled list. The deal turned sour pretty quickly.

I’ve said in the past that the Royals should get Hosmer signed up as soon as they can. Maybe in this context it’s better that they haven’t. Or, given his history as a top prospect both in the draft and in the minors, plus his rookie season and at least salvageable second half, maybe it’s still something to be aggressive about this offseason and beyond. That’s the game. There wasn’t much to indicate that Sweeney would be hurt year after year and both Hosmer and Moustakas seem like safe bets to stay healthy. You just never know.

It’s a constant measurement of the benefits of knowing you’ll have X player for X years weighed against the potential for regression, decline and collapse. All the while, the player in question is taking up millions in payroll. If they hit, great. But if not, or if they become injury-prone, it’s money that could have gone to someone else. Nobody knows the future so there’s always a risk. Then there are times where a team wants to trade a player away – like the Cubs could have in Soriano – but they’re faced with the problem of the contract and another team won’t give up much in prospects to take on the salary. Either way, the team loses value, either in payroll or in prospects received.

Not all long-term deals are bad. Not all big salaries are bad. Every situation is different, but the Royals and their market size and payroll trends have to hit. They have to be smart. With their core of players being very young, it’s not as much of a risk right now, but when the time comes to reevaluate deals that are expiring, the tough decisions start to surface. The deals of the past can provide lessons for the future.