Why the Royals traded for rentals: its all about future payroll

Two weeks ago, Royals acquired pitcher Johnny Cueto and infielder/outfielder Ben Zobrist in an exciting trade deadline period. While the moves were hailed by most, some expressed reservations at the Royals trading for "rentals", players signed only through the end of the year, when they can then file for free agency. Some fans wanted a player signed to a long-term deal like Cole Hamels, who was dealt to Texas, or a reunion with former Royals pitcher James Shields.

It just wasn't going to happen.

Even setting aside the high price in prospects that likely would have cost the team (Hamels was dealt for six players), taking on the contract of a player signed beyond this year would have made things very difficult financially for the Royals.

Let's take a look at the payroll.

Eligible for free agency this winter: Johnny Cueto, Ryan Madson, Franklin Morales, Chris Young, Ben Zobrist

This is a general overview, you'd still have a backup catcher, a reserve infielder, a few relievers to fill out that roster a bit that will cost at least a few million, but that's the bulk of the money situation for the next few seasons.

Let's first focus on 2016. The Royals have ten players under contract for next year plus a $550,000 buyout for Jason Frasor, totaling $60.1 million. If Jason Vargas misses all of next season due to his Tommy John surgery, insurance will cover $6 million of his salary.

Wade Davis and Alcides Escobar will definitely have their player options picked up, totaling $13.25 million. I think its safe to assume the Royals will decline players options on Alex Rios and Jeremy Guthrie, requiring a total buyout for those players of $4.7 million next year. We can expect Alex Gordon will decline his player option.

So that is $72 million in commitments for 2016. The Royals have seven arbitration-eligible players, although it is safe to assume they will likely non-tender Tim Collins and Drew Butera. That leaves five arbitration cases - Greg Holland, Lorenzo Cain, Mike Moustakas, Danny Duffy, and Jarrod Dyson. It is important to note that players in arbitration almost always see pay upgrades (see this guide to arbitration).

• Greg Holland earns $8.25 million this year. Conservatively, even with a bit of a down year, he will earn in excess of $10 million in 2016.
• Lorenzo Cain earns $2.725 million. With his fantastic season, Lorenzo can probably expect to earn about $6.5 million next year, using Austin Jackson's career as a comp.
• Mike Moustakas earns $2.64 million. Using Carlos Gomez as a comp, a player with underwhelming offensive numbers but good defense who took a big step in 2012, Moustakas can expect to earn around $4.5 million next season.
• Danny Duffy earns $2.425 million. Dillon Gee, another talented pitcher with an inconsistent track record, can serve as a comp, so Duffy can probably expect to earn around $5.5 million next season.
• Jarrod Dyson earns $1.225 million. Craig Gentry is a good comp as a fourth outfielder known for defense, and he earned $1.6 million in his second year of arbitration, which is what Dyson can expect.

With those salaries, that adds another $28.1 million to the payroll, putting it to $100.1 million, which looks like this:

That still leaves nine spots on the roster to be filled with Vargas being out, leaving large voids in left- and right-field, and rotation spots to fill as well.The club would probably like to make a run at bringing Alex Gordon back and there has even been talk of bringing Ben Zobrist back. That will be difficult under the current payroll situation, and would have been near-impossible had the Royals taken on a contract the size of James Shields or Cole Hamels.

The Royals have more payroll flexibility in 2017, thanks to mutual options on Edinson Volquez, Kendrys Morales, Kris Medlen, and Luke Hochevar. Assuming all those players are kept, and spitballing arbitration salaries for Eric Hosmer, Lorenzo Cain, Mike Moustakas, Danny Duffy, Kelvin Herrera, and Jarrod Dyson, the payroll would look something like this:

There are ways the Royals could save money of course. They could trade Greg Holland or Wade Davis. They could decline some of those 2017 options. Just don't expect them to be able to find takers for Omar Infante's deal.

It is true the club is enjoying record revenues this year thanks to increased attendance. I wrote earlier this year about how the bigger gate this year could mean an additional $75 million more in revenues as compared to 2013, when payroll was around $80 million (the Royals are now on pace to draw 2.7 million fans, or nearly $80 million more in revenues compared to 2013). Whether or not the Royals apply this to next year's payroll remains to be seen. The may be reluctant to commit to a long-term payroll increase by that much, especially if this year's attendance bump is merely temporary.

But the Royals seem to want to preserve some payroll flexibility for the future and Johnny Cueto and Ben Zobrist both fit in perfectly as elite player who can help this year, and not burden the payroll in 2016-2017. The Royals needed to make their run this year, because there is no guarantee they can keep this core together for much longer.