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Why the Royals should not sign Lorenzo Cain to a long-term deal

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Or "How I learned to love Lorenzo Cain and then let him go."

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Yesterday Royals 2014 ALCS MVP Lorenzo Cain nearly hit arbitration. Under General Manager Dayton Moore, no Royal has ever gone to arbitration, instead deciding to settle on a mutual value. Whether or not the player or the Royals left money on the proverbial table is another article for another time, but Moore hasn't had to cross the arbitration bridge just yet.

Cain and the Royals settled on a deal worth $2.75M yesterday thus extending Moore's perfect record for at least one more arbitration date (Greg Holland's impending February 21st arb date may break it). So let's ramble about that salary figure and whether or not the Royals would benefit from a long-term deal with Lorenzo Cain.

In 2015 the cost-per-win is expected to be worth ~$7.5-8M. Lorenzo Cain just came off a 5-win season which FanGraphs (whose $/WAR automated table values are low by about ~$2M) pegged at being worth $26.8M. For his 2014 efforts, Cain was compensated with $546,000 spread over the season, thus creating ~$26M in surplus value for the Royals (and that's using the low $/WAR value). If you use the more realistic cost per win of $7M for 2014 then you're looking at  $34.3M for his 2014 season and ~$33.5M of surplus value.

For the Royals fanbase, Salvador Perez is known as having the best team friendly/value contract. In 2014 he was paid $1.5M and was worth 3.3 wins. FanGraphs put that as being for $17.9M good for a surplus of $16.4M. With the more realistic figure being used he was worth $23.1M and $21.6M in surplus value. You should recall the paragraph above mentioning Cain was worth $26/33.5M in surplus. Even his low $/WAR surplus was worth more than Perez's realistic value figure.

Last year Cain, by fWAR, was one of the top-30 or so players in baseball despite not technically qualifying for the batting title (he had 502 PA, and I believe 502.2 PA is the minimum - correct me here of course if I am wrong). Below, you'll find Cain and 29 other players who finished top-30 in fWAR for 2014 alongside their 2014 salary, $/WAR, and surplus, sorted by surplus highest to lowest.

Name Team WAR Salary $WAR Surplus
Mike Trout Angels 7.8 $    1,000,000.00 $  54,600,000.00 $  53,600,000.00
Michael Brantley Indians 6.6 $    1,500,000.00 $  46,200,000.00 $  44,700,000.00
Anthony Rendon Nationals 6.6 $    1,800,000.00 $  46,200,000.00 $  44,400,000.00
Josh Donaldson Athletics 6.4 $        500,000.00 $  44,800,000.00 $  44,300,000.00
Jonathan Lucroy Brewers 6.3 $    2,000,000.00 $  44,100,000.00 $  42,100,000.00
Andrew McCutchen Pirates 6.8 $    7,200,000.00 $  47,600,000.00 $  40,400,000.00
Anthony Rizzo Cubs 5.6 $    1,200,000.00 $  39,200,000.00 $  38,000,000.00
Kyle Seager Mariners 5.5 $        540,100.00 $  38,500,000.00 $  37,959,900.00
Alex Gordon Royals 6.6 $  10,000,000.00 $  46,200,000.00 $  36,200,000.00
Giancarlo Stanton Marlins 6.1 $    6,500,000.00 $  42,700,000.00 $  36,200,000.00
Jose Altuve Astros 5.1 $    1,200,000.00 $  35,700,000.00 $  34,500,000.00
Carlos Gomez Brewers 5.9 $    7,000,000.00 $  41,300,000.00 $  34,300,000.00
Josh Harrison Pirates 4.9 $        513,000.00 $  34,300,000.00 $  33,787,000.00
Lorenzo Cain Royals 4.9 $        546,000.00 $  34,300,000.00 $  33,754,000.00
Yasiel Puig Dodgers 5.1 $    2,000,000.00 $  35,700,000.00 $  33,700,000.00
Ben Zobrist Rays 5.7 $    7,000,000.00 $  39,900,000.00 $  32,900,000.00
Todd Frazier Reds 4.7 $        600,000.00 $  32,900,000.00 $  32,300,000.00
Jason Heyward Braves 5.1 $    4,500,000.00 $  35,700,000.00 $  31,200,000.00
Jose Bautista Blue Jays 6.3 $  14,000,000.00 $  44,100,000.00 $  30,100,000.00
Jose Abreu White Sox 5.3 $    7,000,000.00 $  37,100,000.00 $  30,100,000.00
Buster Posey Giants 5.7 $  12,500,000.00 $  39,900,000.00 $  27,400,000.00
Adam Jones Orioles 5.4 $  13,000,000.00 $  37,800,000.00 $  24,800,000.00
Adrian Beltre Rangers 5.8 $  17,000,000.00 $  40,600,000.00 $  23,600,000.00
Jhonny Peralta Cardinals 5.4 $  15,500,000.00 $  37,800,000.00 $  22,300,000.00
Ian Kinsler Tigers 5.4 $  16,000,000.00 $  37,800,000.00 $  21,800,000.00
Hunter Pence Giants 4.7 $  16,000,000.00 $  32,900,000.00 $  16,900,000.00
Miguel Cabrera Tigers 5.4 $  22,000,000.00 $  37,800,000.00 $  15,800,000.00
Jayson Werth Nationals 4.8 $  20,000,000.00 $  33,600,000.00 $  13,600,000.00
Robinson Cano Mariners 5.2 $  24,000,000.00 $  36,400,000.00 $  12,400,000.00

Cain is at 15th overall on that list when sorted by surplus value. On a per fWAR basis Cain was ranked as the 27th best player of the group. There's clearly an axis when it comes to $/WAR and actual salary in regards to surplus value. For instance Jose Bautista was a full win better than fellow "Jose" Jose Abreu, but was worth the exact same value due to his higher salary. On the other end, Josh Harrison was really cheap this year (cheapest contract on the list) but didn't necessarily have the highest surplus. Meanwhile despite being a full win better than Lorenzo Cain, Carlos Gomez only provided slightly less than $1M more in value.

You rarely see pre-arb eligible players on a list like this, mainly because you have to be a 4+ win player to really show up and most 4+ win players are making more than the league minimum or so. Only five of the 30 players listed are making around the league minimum with two of them being in the top-10. Josh Donaldson (like Cain) is a bit of a later bloomer with highly regarded defensive skills (offensive skills as well for him) meanwhile Kyle Seager just signed a contract for $100M over the next 7 years. MLB Trade Rumors expects Donaldson to see a raise from the major league minimum-ish to $4.5M at his upcoming arb date soon. Furthermore there is Todd Frazier who is the same age as Cain and Josh Harrison, two years younger than Frazier/Cain. Harrison is most certainly a breakout performer as all of his previous years combined were worth about 1/4th of his 2014 performance. Frazier meanwhile has gotten better each year similar to Cain.

It's basically either be really, really good on a normal contract, or be very good on a minimum contract. This isn't groundbreaking stuff here by any means and should be obvious in the formula/function of value.

Remember that Cain didn't exhaust his rookie eligibility until his age 24 season (2010) and from 2010-2012 (age 24-26) he played in just 104 games and his first true "full" season came in 2013. So in a slanted way you could argue that he could have been a rookie in 2013.

The point there being that a late-age rookie eligibility bodes well for the Royals if Cain continues to be good for a couple reasons.

First off, Cain doesn't have the skills that the arbitration process likes/loves. Home runs are thought to be the #1 ranked stat for "getting paid" (or having a higher r-squared). Cain hit just five home runs this past year, the same as noted power-less outfielder Denard Span (and a near equivalent ISO). From 2012-2014 he has just 16 home runs, two less than former Royal Nori Aoki.

Here are players with a similar amount (13-20) of home runs as Cain from 2012-2014

Name PA HR WAR
Denard Span 1898 13 10.8
Lorenzo Cain 1188 16 9.2
Michael Bourn 1765 18 8.3
Jon Jay 1598 14 7.9
Jose Altuve 2009 19 7.9
Angel Pagan 1377 16 7.8
Gregor Blanco 1408 13 7.2
Nori Aoki 1811 19 6.2
Leonys Martin 1143 15 5.9
Mark Ellis 1146 13 4
Darwin Barney 1405 17 3.9
Ichiro Suzuki 1603 17 3.8
Jean Segura 1346 17 3.4
Kurt Suzuki 1261 14 3
Nate McLouth 1053 20 2.5
Derek Jeter 1447 20 2.2
Casey McGehee 1043 13 2
Alexi Amarista 1162 15 0.4
Michael Young 1216 16 -1.8

For similar power skill set (we care more about home runs here than ISO) Cain is near the top of those players that feature mostly middle infielders and center-fielders (aka two of the most defensively important positions).

Of the top five there only Jon Jay reached arbitration and last season agreed to a deal of $3.25M with a 2015 projection of $4.5M.

For players who don't hit for power but derive their value more from defense, often see their salaries kept down compared to these players who hit well but don't play defense at a good rate. Jay is near the sweet spot here where he isn't necessarily a great hitter or great fielder, but "merely" a slightly above average hitter (112 career wRC+) and average or slightly below defender.

You should note that despite being a win or so worse than Cain, Jay received a half-million dollars more than Cain in his first arbitration filing.

For RBI, Cain ranks 173rd overall from hitters with 1000+ PA from 2012-2014 so we can rule out him being paid through that skill either.

That leads me to my second point that there's a good chance that Cain is in his peak season(s) right now or starting to move past it. Our own Jeff Zimmerman took on this idea in 2013 when he asked the question "are aging curves changing?" hinting that players no longer peak, they decline. By that model, Cain is about to start one of the more precipitous drops from 29-31 during his team controlled years. By the older model Cain is still near, but past, his peak while the larger drop off(s) won't start until really after his arb-years.

By an older study, again by Jeff, he found that speedier players generally decline better/later than other types. I don't think of Cain as a super-speedster per say, like the type of say Michael Bourn/Billy Hamilton/Brett Gardner, but he's a pretty fast runner and the fan scouting report agrees.

I don't think we reasonably can expect Cain to get better than his 2014 season (again the one where the Royals received a very high amount of surplus value), but a large drop-off over the next few years could be kept at bay.

Steamer suggests a 2.7 win Cain for 2015 while the fans say 4.7 wins. A two-win difference is certainly a sizeable difference as the fans are more bullish on his hitting (95/104 wRC+ by Steamer/Fans) and defense (10.5/15 FLD). Even splitting it down the middle would put Cain as a 3.7 win player. At a $/WAR base of $8M and that win value, Cain would be worth $26.85M in surplus value. We can continue this forecast in a few different ways.

Year .25 decline $/WAR .50 decline .75 decline 1.0 decline
2015 3.7 $    29.60 3.7 $    29.60 3.7 $    29.60 3.7 $    29.60
2016 3.45 $    27.60 3.2 $    25.60 2.95 $    23.60 2.7 $    21.60
2017 3.2 $    25.60 2.7 $    21.60 2.2 $    17.60 1.7 $    13.60
$    82.80 $    76.80 $    70.80 $    64.80

I used a stagnant $8M per win value there and you could add 5% inflation or so each year but the idea is still the same. Even with an aggressive approach with decline of one-win per season, Cain has a nice base line of 3.7 to draw down from and still create nearly $65M in value.

Now we can add in some salary figures.

$500,000 raise each season

Year Salary .25 surplus .50 surplus .75 surplus 1.0 surplus Average
2015 $             2.75 $    26.85 $          26.85 $    26.85 $           26.85 $    22.03
2016 $             3.25 $    24.35 $          22.35 $    20.35 $           18.35 $    17.73
2017 $             3.75 $    21.85 $          17.85 $    13.85 $              9.85 $    13.43
Total $             9.75 $    73.05 $          67.05 $    61.05 $           55.05 $    53.19

$1,000,000 raise each season

Year Salary .25 surplus .50 surplus .75 surplus 1.0 surplus Average
2015 $             2.75 $    26.85 $          26.85 $    26.85 $           26.85 $    22.03
2016 $             3.75 $    23.85 $          21.85 $    19.85 $           17.85 $    17.43
2017 $             4.75 $    20.85 $          16.85 $    12.85 $              8.85 $    12.83
Total $           11.25 $    71.55 $          65.55 $    59.55 $           53.55 $    52.29

$1,500,000 raise each season

Year Salary .25 surplus .50 surplus .75 surplus 1.0 surplus Average
2015 $             2.75 $    26.85 $          26.85 $    26.85 $           26.85 $    22.03
2016 $             4.25 $    23.35 $          21.35 $    19.35 $           17.35 $    17.13
2017 $             5.75 $    19.85 $          15.85 $    11.85 $              7.85 $    12.23
Total $           12.75 $    70.05 $          64.05 $    58.05 $           52.05 $    51.39

$2,000,000 raise each season

Year Salary .25 surplus .50 surplus .75 surplus 1.0 surplus Average
2015 $             2.75 $    26.85 $          26.85 $    26.85 $           26.85 $    22.03
2016 $             4.75 $    22.85 $          20.85 $    18.85 $           16.85 $    16.83
2017 $             6.75 $    18.85 $          14.85 $    10.85 $              6.85 $    11.63
Total $           14.25 $    68.55 $          62.55 $    56.55 $           50.55 $    50.49

$3,000,000 raise each season

Year Salary .25 surplus .50 surplus .75 surplus 1.0 surplus Average
2015 $             2.75 $    26.85 $          26.85 $    26.85 $           26.85 $    22.03
2016 $             5.75 $    21.85 $          19.85 $    17.85 $           15.85 $    16.23
2017 $             8.75 $    16.85 $          12.85 $       8.85 $              4.85 $    10.43
Total $           17.25 $    65.55 $          59.55 $    53.55 $           47.55 $    48.69

Even with an aggressive decline of one-win per season and aggressive raises of $3M per season, Cain still provides $47.55M in surplus value for the Royals.

Now I only went out to Cain's final arbitration season for a reason: the Royals should keep him going through the arb process then consider releasing him after the 2017 season. Many fans are calling for an extension of Cain, but it's just not smart to keep him out of the arbitration process and for longer than his pre-free agency years right now.

Cain is likely never going to provide more surplus value than he did last year and there's a chance every year going forward Cain should decline in some manner given the modern aging curves. The Royals shouldn't be looking to lock him into either current arb eligible years for more money than he'll receive through the process or for longer than his pre-free agency years necessarily. Remember that he'll be 32 years old going into his first post-free agency season. The list of players who stayed relatively as good from age 32-35 compared to ages 28-31 is probably a pretty short list and players who got better is likely shorter. Now, if Cain wanted to sign with KC for $2-3M a year from ages 32-34/35 then that's another conversation, but it's unlikely that Cain would settle for that amount. For instance Michael Bourn will receive $48M to cover his age 30-33 seasons with a $17M vesting option for his 34th.

I love Lorenzo Cain. I truly do, but if the Royals didn't maximize their value from him in 2014 then there's a good chance they won't do so ever. Cain has struggled with injuries for most of his career and generally those don't stop as you age.

We could be looking at the Golden Age of Lorenzo Cain for the next 2-3 years and given his salary they should provide excellent surplus value, but that will come to an end eventually and the Royals should part ways.