On Monday, the Royals signed former Royal Joakim Soria to a three-year, $25 million deal. As it often happens the terms of the deal came more to light and the contract had a mutual option for a fourth year as well.
Source: Value of Soria's fourth year mutual option in $9-11M range. #Royals— Chris Cotillo (@ChrisCotillo) December 8, 2015
Finally on Thursday we learned that Soria had some incentives for games started in his contract and what those incentives are.
Soria can also earn up to $4 million in incentives based on games finished and games started.— Andy McCullough (@McCulloughStar) December 10, 2015
Those $4 million in incentives are per year and not overall. So potentially the Soria deal could reach up to $36 million all in, plus the $10 million option.
If you know the Royals history of spending you realize how large that figure is. It is not that large in the current landscape of baseball, but for the Royals it represents one of the largest contracts in Royals history... and it was just handed out to a 32-year old reliever.
Now the incentives are based off innings pitched, games finished, and games started (in case they ever decide to use him as a starter). So there is a strong chance it never gets up to the full $36 million. The Royals can manage Soria's workload enough that they can limit those earnings. However, at a minimum Soria will get $25 million guaranteed.
Here is where that contract ranks in terms of guaranteed money in the tenure of Dayton Moore for players signed as free agents on the open market:
Soria's deal is the fifth-largest deal in Royals history and if the incentives are reached, it could vault into tied for second. I have read some arguments that if the incentives are in fact reached then the deal would probably be worth it. I don't know if that's true or not. We don't know what the terms of the incentives are at this point. If it's games finished, then the Royals are essentially paying Soria extra for saves or ninth inning appearances. That doesn't seem like a good thing. There are also the innings incentive, but it's not like bad starting performances have stopped the Royals (ie: Jeremy Guthrie).
Now just eyeball that list above again. It's a who's who of Royals bad contracts in franchise history. Now that isn't solely on Moore necessarily as Allard Baird didn't spend much money nor did baseball have as much money up to their eyes as they do now. Dayton Moore was always going to spend more than Baird and historically speaking for the franchise. However that doesn't mean it doesn't matter what that record money was spent on. So let's see if we can figure out how well that money was spent.
To do so we can just use basic valuation tools for a cost per win. For some contracts we have to reach back to 2007. Some calculations and information didn't really start to grab a firm foothold until only a couple of years ago. There's never really been a 100% set value on $/WAR and it can be calculated with numerous methodologies (much like finding a discount value in calculating present value). It has been tried several times and different sites have different figures.
To figure mine I just took a very simplistic way. The cost of a win the past few years has grown around 5% each year, and the cost of a win in 2015 was somewhere in the $8 million range give or take a few hundred thousand dollars. So I just simply took that 5% inflation per year and back tracked it to 2007 to a figure that would ultimately equal ~$8 million in 2015. Something like this:
Again, it's not perfect but the two articles linked above have the cost of a win in 2007 ranging from $4.6-6.2M. My $5.4M sits almost in between those numbers.
So now that we have our "historical" $/WAR values we can go to work on prior contracts.
|2007||$ 7,000,000||3.7||$ 13,035,500|
|2008||$ 11,000,000||4.2||$ 12,880,150|
|2009||$ 11,000,000||0.9||$ (5,626,966)|
|2010||$ 12,000,000||-0.4||$ (14,507,415)|
|2011||$ 12,000,000||0||$ (12,000,000)|
|Total||$ 53,000,000||8.4||$ (6,218,732)|
Now I know immediately what you are thinking: Meche walked away from that last $12M. That's a valid point, but it I don't think we can just wipe away that $12M and say the deal was a success. The contract looks a little better by the good graces of Gil Meche. Dayton Moore gave him 5/$55M with the full intent of paying him all of that money.
As you can see, Meche was basically worth the money early on in the deal, but quickly by the halfway point of the deal it was nearing dead money.
We don't know how Meche would have done in 2011 so I just gave him zero value. Maybe he would have some value if he could glue together his shoulder but odds are that he would probably be worth negative wins.
|2008||$ 12,000,000||-0.9||$ (17,117,175.)|
|2009||$ 12,000,000||-2.2||$ (25,134,082.)|
|2010||$ 6,000,000||0.2||$ (4,746,292.)|
|Total||$ 30,000,000||-2.9||$ (46,997,549)|
I think we all already knew this was a bad deal. It was really, really bad. It's fun to look back at Royals Review on things like this. From what I can gather people liked Guillen and the signing a bit. However this contract turned out to be a total disaster.
Guillen was almost immediately suspended for 15 games by the MLB after signing his deal. His defense declined rapidly due to his injuries and his offense just wasn't there once he put on a Royals uniform. Mercifully the Royals DFA'd him in the second half of 2010.
|2014||$ 7,000,000||2.2||$ 9,762,787|
|2015||$ 8,500,000||0.4||$ (5,299,831)|
|2016||$ 8,500,000||0||$ (8,500,000)|
|2017||$ 8,000,000||0.5||$ (3,589,767)|
|Total||$ 32,000,000||3.1||$ (7,626,811)|
The sentiment at the time of this signing was mixed according to our poll. Fangraphs felt that maybe this deal wasn't a gross overpay but it wasn't really a good one. Keith Law felt that the Royals didn't need to go four years with Vargas. Our own Scott McKinney felt poorly about it.
The years sucked, and it was really strange to give Vargas a deal of that length. The money isn't so bad on a year to year basis, but when you get zero value out if it it sucks.
We don't know what value Vargas will provide this year but I'm assuming it's nothing. Meanwhile we don't know how he'll come back in 2017 either so I just gave him a courtesy half a win. It's not a given at all that he'll even be of positive win value.
|2014||$ 7,000,000||0.5||$ (3,190,275)|
|2015||$ 8,500,000||-0.9||$ (15,700,379)|
|2016||$ 8,500,000||0.2||$ (6,819,911)|
|2017||$ 8,000,000||0||$ (8,000,000)|
|2018||$ 2,000,000||0||$ (2,000,000)|
|Total||$ 34,000,000||-0.2||$ (35,710,566)|
Well...we at least didn't hate this deal immediately. How wrong we were though. This one went south basically after like April of the first year and it's handcuffed the moves of the 2016 Royals this year and will do so again next year. Then the Royals will have to pay Omar Infante $2 million in 2018 just to make him go away.
Who even knows how to value this one really. Relievers are weird players and Soria wasn't that good in 2015 by fWAR. Yet Dayton went out and guaranteed him one of the largest contracts in Royals history that could get larger.
However I do want to mention this:
Darren O'Day just inked a 4/$31M deal with the Orioles ($7.75M AAV) while Soria got 3/$25M ($8.3M) AAV) that could get higher with incentives.
As witnessed above, O'Day has been a better pitcher the past two years than Soria, yet a slightly lower AAV (perhaps due to the extra year). O'Day is only a year older too.
|2013||$ 5,000,000||0.5||$ (1,190,275)|
|2014||$ 11,000,000||1||$ (2,999,578)|
|2015||$ 9,000,000||-0.9||$ (16,560,398)|
|2016||$ 3,200,000||0||$ (3,200,000)|
|Total||$ 28,200,000||0.6||$ (20,750,252)|
We all hated this one and rightfully so. Guthrie hadn't been a good pitcher in a few years and he was traded for the mess that was Jonathan Sanchez. Then Moore gave him 3/$25M and rode him through every possible inning he could get out of him.
|2015||$ 9,000,000||2.6||$ 11,801,095|
|2016||$ 11,000,000||1.7||$ 3,280,751|
|Total||$ 20,000,000||4.3||$ 15,081,847|
Hey finally a deal that looks good! We are using Steamers 2016 projections so it's not a given, but as long as Volquez isn't miserably bad the Royals should come out comfortably ahead on this deal thanks to an above average 2015 season (I spread the $3 million buyout over the two guaranteed years). So that's every contract of $20 million or higher by Moore.
If you add it all together you get around -$100 million in surplus value. If you remove the Volquez signing this year it's even worse. A counter argument to all these bad signings is how well Moore spent on his 2015 signings, and they definitely provided surplus value, but that doesn't make up for the bad...
|Madson||0.9||$ 850,000||$ 6,350,379|
|Volquez||2.6||$ 7,500,000||$ 14,341,149|
|Morales||2.1||$ 6,500,000||$ 12,022,975|
|Young||0.9||$ 2,500,000||$ 5,835,338|
|Total||6.5||$ 17,350,000||$ 38,549,843|
So basically it took four really good, lighting in a bottle signings to offset the Omar Infante contract...then there's still everyone else. This is without taking into consideration Alex Rios, Kyle Farnsworth, Bruce Chen, or the other names that appear on the list.
I'm pretty vocal that I don't think Moore is a good general manager. I don't think winning a World Series cures all. Ruben Amaro Jr has a World Series ring as a general manager and he's an awful, awful general manager. In fact 93% of the 10,000 responses to this poll in 2014 thought Amaro should be fired.
What does this all mean? I think it means that Moore historically does a poor job of spending money on free agents. This seems to be a popular sentiment. For every Edinson Volquez or Kendrys Morales, he's paid much more money to Jose Guillen and Gil Meche. He continues to give longer term deals to older players who aren't likely to return value.
There are of course other aspects of being a good or bad general manager (drafting, trading, international spending). That's another article for another time. However I think we should be able to agree that Moore doesn't spend money well, and when you see that he's giving out $20 million+ to a player...it probably isn't going to work out well.