Will suggested that I might write a rebuttal to his "second thoughts" on Greinke's long-term contract. So I'll provide a positive counterpoint. As Will pointed out, the contract is apparently:
Just to be clear, 2009 and 2010 are Greinke's second and third arbitration years, and 2011 and 2012 would have been his first two free agency years. So, was this deal a fair price for Greinke? Let's deal with the arbitration years first. Greinke was set to make somewhere between $3.4M and $4.4M this year. Even the most conservative estimates of his second year arbitration value peg him at $4M or more. So $3.75M appears to be a good value. If Greinke were to have a pretty good full season as a starter (let's say 32 GS, 180 ip and a 4.25 ERA) in 2009, his third year arbitration value would go up dramatically. His value would have been determined by his 2009 salary, his 2008-09 stats and comps with his service time. As Rany pointed out before Greinke signed this deal, he likely would have been due $8-10M for 2010. So it appears the Royals got a bargain for 2010 as well.
Then there are the free agent years. If Greinke continued to pitch as expected over the next two years, he would have hit the free agent market as a 27-year-old ace who had made it past the "injury nexus" unscathed. You don't often see healthy aces that young on the free agent market. He would have brought in huge money. There's no way $15M per year would have done it. I really doubt $17M per year would do it. Look at how much other aces are signing for.
But of course, there's some risk here for the Royals, and that's why they are getting him for under what would likely be his FA market value. Even if he takes a step backwards and is only a #2 SP, I think the Royals are getting a fair value in 2011-12 dollars. A 3.0 WAR player (just a bit better than Greinke was in 2007) is worth more than $12M right now and with salary inflation will likely be worth around $13.5M in 2011-12. And, most importantly, there's every reason to believe Greinke will be better than that.
So is this a home run? Definitely. I think Greinke's actual value is more like:
There is a collapse value lower than $42M and a very realistic estimate which would be much higher than $50M ($20M per year for the FA years is very realistic) but I wanted to keep this estimate reasonable and fairly conservative.
So, if his market value (2 arbitration years and 2 free agency years) is $42-50M and the Royals got him for $38M, then the only question is whether it was a solo home run or a grand slam