On Saturday morning, the Royals signed free agent starter Ian Kennedy to a 5 year $70M deal, surprising many fans. The surprise of course wasn't about the pitcher. The Royals and Kennedy were rumored to be in pursuit of a deal for a few weeks now. Instead the surprise was the terms of the deal.
The Royals essentially guaranteed Kennedy $70M in my opinion. The terms of the deal include an opt out after the 2017 season when Kennedy will be entering his age-33 season. As of right now, we still don't know the details of the contract, but I expect him to be potentially paid $50M in the final three years of the deal.
For reference, here is how I've got the Royals estimated payroll for the next several years:
Now I call this an estimated payroll for a few reasons. First it's not their opening day payroll. I know that's the more popular thing to do but I also like including the guys who aren't on the 25-man since the Royals will still owe them money. My list above includes 32 players.
For the guys at the bottom of the list is where my estimation comes in for the most part. Those guys have played in the majors before and realistically stand some shot to see MLB action again. So instead of estimating playing time then prorating the league minimum + the minor league 40-man minimum, I just gave them half of the MLB minimum. Meanwhile Jason Vargas may pitch in 2016, he may not. The Royals have insurance on him if he pitches zero innings in 2016, but it prorates from there. So instead of guessing at playing time, I concluded with the Royals ultimately paying him $4M.
So there are a lot of things to talk about, and let's just dive in.
Here's a quick valuation on Kennedy.
The 2016 projection comes from Steamer and the decline follows the standard 0.5 wins per year for guys older than 30.
There's a lot in play here with the opt out, the first of Dayton Moore's tenure, but assuming Kennedy gets the full $70M and follows the above valuation then the Royals overpaid him by about $20M.
Steamer is a bit more optimistic on Kennedy than Zips.
ZiPS is a lot more down of Kennedy than Steamer, however ZiPS God/creator Dan Szymborski personally said he'd take the over on that. Now I'm not Dan of course, but I'd imagine he wouldn't likely take the over on Steamer's projection by much more, if at all. So unless you are overly bullish on Kennedy for both 2016 and his decline, then the Royals aren't likely to have much surplus value on the deal.
Here are some examples:
High benchmark normal decline
Complete dead weight at the end
Worth exactly his deal
Now this one doesn't seem outrageous for an expected outcome, but it does assume a bit slower decline in the final three years of the deal. I'm with Steamer in that I think he'll be around a 2-win player for 2016 but also I agree with the standard decline.
Ian Kennedy's Stats
Kennedy himself seems to be an average pitcher, but the volatility is high (which I'll get into later). On the surface of his peripherals though he does well.
Always an above league average strikeout rate and by some margin. Meanwhile his walk rate has come down year over year more in line with the league average.
So you'd expect him to be well liked by metrics such a FIP which focuses on things like walks and strikeouts right?
Not so much and that's because of who Kennedy is and has been. One thing that's haunted him is his proneness to allowing home runs.
Now home runs are volatile for all pitchers and no single play can crater a pitchers value more than home runs. They are instant runs of course and most of the time no matter how good your defense is, there's nothing they can do about it. They are also something that we know pitchers mostly have control over as well.
2015 was an outlier for Kennedy, absolutely, but home runs have been an issue for him for several years now despite playing in one of the most pitcher friendly parks in San Diego.
For two of the past three years he's had a bottom 10 home run rate.
Leaving PETCO and a change of defense...
One argument for being optimistic about Kennedy going forward in regards to his performance is moving out of PETCO and into Kauffman stadium. Alongside this move brings a new defensive outfield. It's not just a slight upgrade in defenders though, but a monumental difference.
At a minimum there it's been a difference between 55 runs for two of those seasons and in 2013 is was 65 runs difference.
However there is a bit of a flaw in that logic. Yes the defense behind him should help his ERA but the defense behind him won't do anything for preventing home runs, except for maybe bringing one or two wall scrapers back in the park.
Here are the park factors for both Kauffman and PETCO the past two years:
2014 courtesy of Fangraphs, 2015 courtesy of ESPN
Now PETCO has undergone some changes. In 2013 they moved all the fences in several feet, and most recently in 2015 they moved the left field fence in between 34-38 inches. However even with the movement PETCO remains a pitcher friendly park by some good measure and much more pitcher friendly than Kauffman which is basically a neutral park overall.
And it's not just about home runs too. Since Kauffman is as spacious as it is, it also plays up doubles slightly and triples heavily. PETCO on the other hand strongly suppresses triples and doubles.
There is absolutely a jump in home runs per the park factor. However the Padres offense hit 41% more home runs away from PETCO than they did at home. Kennedy though allowed more home runs at home than he did away. Let's look though at where those home runs landed.
Here is the spray chart for Kennedy's home runs during his tenure as a Padre.
Now let's look at just 2015. Remember that the left field fence moved in a few feet this past year.
So really, the move of the left field fences inward didn't really hurt him so much. He still gave up an equal number of home runs to right field as left field and more overall away from left field.
And finally just the home runs he allowed at home this year
Before and after the move of the left field fences Kennedy still allowed an almost identical batted ball spray for home runs, leaning heavily to right field.
Also let's examine the park dimensions of Kauffman vs PETCO
Left field at Kauffman will actually be shorter than it was in PETCO while Kennedy will pick up some room in right field. This in theory should help him a bit as left field wasn't really an issue for him, center and right were.
So would the home runs he allowed in 2015 have stayed in Kauffman?
I've highlighted the home runs that would probably have stayed in Kauffman in red and those that were close calls yellow. We can probably shave off three home runs which would drop his HR/FB% to 15.5%. That's still a good deal above league average. If we shave off those close calls too then it's down to ~14%. Even dropping off six home runs he's still in the top 10 worst home run rates.
With the above home runs, how many parks would the ball have left?
|All 30 Parks||12|
The two home runs that would have only left one park in fact happened at PETCO. We can overlay Kauffman stadium on those home runs too.
408 feet to center
Center to Kauffman is 410 feet, so it was still pretty close.
345 feet to right
This one is definitely staying in the park at Kauffman.
My overall point here is that it's not as if Kennedy allowed a bunch of close home runs. 70% of his home runs allowed would have left 20 of the 30 ballparks in baseball. This is likely due to his contact rate.
His hard contact rate
Kennedy allows a very high amount of hard contact. In fact no qualified pitcher in 2015 allowed more hard contact.
And it's not just confined to 2015, but he has done so the past few years from 2013-2015.
One thing we can do is compare Kennedy to the 2015 performance of pitchers on the Royals to maybe get a feel for how he would have done in 2015 if he played in a Royals uniform.
Kennedy allowed more hard contact than everyone but Jason Vargas (who didn't qualify for the ERA title). What stands out to me is that he allowed much more hard contact and less soft contract than Jeremy Guthrie. Ventura and Kennedy share an identical soft% but Ventura lives much more in the medium% rate than the hard% rate.
A little more on this we can use Baseball References neutralization tool to see how Kennedy's stat would have translated on the 2014 Royals (the latest data they have).
The opt out
Alongside the money, the Royals also gave Kennedy an opt out after 2017. Opt outs are universally bad for the team. The scenario that comes across some minds is that hopefully the player is good for the years prior to the opt out, elects to opt out, then is bad for the final years elsewhere. However this logic is flawed.
We can assume that a player will only opt out of a deal if he's currently being paid a below market rate for his services. If he's playing equal or below market, he'll stay in the deal. This is where the above logic goes south. The team currently has an asset at a below market rate, locked in for several more years. However they are allowing that asset to walk free. In return they either get to
A) pay that player his market rate to re-sign him
B) Pay other players the market rate to fill the hole
C) Promote from within to fill the hole
A and B obviously are not good for the team as they'll have to increase their payroll to get the same talent they already had locked in. That's also assuming that talent is available on the open market. For guys like Kennedy it is because he's not an elite talent, but for elite level players it often isn't.
The problem with option C is that normally clubs don't have a prospect that's ready and waiting to replace their starter level talent value. Furthermore what's concerning about the Kennedy contract is the inclusion of the contract and the $70M. Normally a team includes an opt out to lessen their financial burden to the player. However Kennedy still got a big contract for his talent level with the benefit of having an opt out.
Recently MLB Trade Rumors valued an opt out at being worth ~$17M for a pitcher. If that valuation is right then the Royals paid Kennedy something like 5/$85M ($17M AAV). I've seen some thoughts that Kennedy is essentially a lock to opt out given he has an average or better performance, but I don't think that's necessarily true. While the CBA will be changed by December 1st of 2016, I'm assuming some sort of free agent compensation will still exist, but let's just assume the qualifying offer system still remains.
For non-elite players, free agents with Qualifying Offers (QO) generally get smaller contracts than those free agents that don't have one attached. Let's then assume the Royals offer the QO to Kennedy after 2017. He would then have to examine if he could do better than the ~$45-50M he'll have remaining on his deal with the QO attached. While salaries are likely to be a bit higher in the 2017 winter, many mid-tier free agent pitchers failed to top that amount.
Scott Kazmir had no QO attached to him and signed with the Dodgers for 3/$48M (roughly what will be left on Kennedy's deal) with an opt out. Marco Estrada turned down his QO then quickly re-signed with the Blue Jays for 2/$26M. JA Happ with no QO attached signed for 3/$36M Bud Norris (who projects to be as good as Kennedy in 2016) signed for only 1/$2.5M
None of those players really topped what will be left on Kennedy's deal after the 2017 season. Meanwhile Kennedy will be two years older than he is now and by good reasoning could be coming off three straight poor seasons (2015-2017).
A team will have to expect Kennedy to be ~2 win pitcher annually from 2018-2020 to pay him $50M. Kennedy hasn't put up back-to-back 2+ win seasons since 2011/2012 (ages 26-27). Would a team really expect him to do that for three straight years from age 33-35?
The draft pick
The other significant part of this contract is the loss of a draft pick for the Royals. They'll lose the 24th overall pick and something like $2M in draft pool money. They of course "lost" a potential pick for re-signing Alex Gordon too. Now the Royals won't pick until the 66th overall pick in the 2nd round. The Royals haven't have their first pick that late since 1990 when they lost their 1st and 2nd round picks in part to signing Mark Davis.
This is where they are really burning the boats too. We know there is an impending exodus of free agents and a pending rebuild in 2018. The Royals did not win a Competitive Lottery Pick this season, and by re-signing Alex Gordon, will not receive a draft pick as compensation for him, so giving up their first round pick slows down that rebuild. Meanwhile the Royals also can't sign any international prospect for the next two years for more than $300K, due to exceeding their cap last year, so that rules them out of the middle to high level talent.
Draft picks have value too. Matt Murphy at The Hardball Times estimated the value of a draft pick in the 21-25 range as being worth ~$18M.
If you put it all together, the Kennedy deal looks something like:
Spending the money elsewhere...
One overall problem I've had with this offseason wasn't necessarily the money that was spent, but who that money was given to. I wasn't a fan of signing Soria at first we were working under the assumption that the Royals weren't likely to exceed $130M in payroll. I still wouldn't have allocated that money to Soria and instead searched for another outfielder.
Using ZiPS and Steamer projections plus the money spent we can estimate what the Royals bought for 2016 so far.
Simple division shows us essentially that the Royals spent ~$6.7M per win. That's below the market rate of ~$8M per win (that number is arrived at differently than just simple division). However that's heavily skewed due to the discount they are getting from Alex Gordon in exchanged for his later years. If you remove him it looks like
Now we're looking at nearly $12M per win, far above that market rate. Furthermore we can extrapolate that and estimate the total value of the wins they purchased over the life of the deals.
With that value the Royals spent ~$8.2M per win. Very close to the market rate, but again it's heavily skewed by how good Alex Gordon is. Removing Gordon you get $11.7M/WAR. Very much so above the rate.
This is where my problem lies too. I'm happy to have Alex Gordon back, but the other $105M spent bought ~9 wins. A figure that I'm not including the opt out and draft pick loss for Kennedy.
I perhaps would have preferred the below plan
The Royals would have bought double the amount of wins for an almost equal amount of money. Meanwhile you don't give up a first round pick. The Royals would have spent $3.1M/WAR.
Now of course I know there is no guarantee that Kazmir/Zobrist sign here for the amounts they signed elsewhere. Also the Royals sign one less starter and one less reliever under that scenario, but I'm fine with signing Young for what they did. You could also swap Kazmir for JA Happ and get similar value.
Let me ask you this...if I told you the Royals were going to shoot well past their 2015 opening day payroll and give out the two largest contracts in their history would you have expected that actually class of signees? I would have expected Gordon to be included, but certainly not the other three.
Capital comes in many different forms in baseball, but in the end everything can have a dollar value assigned to it. Money, prospects, draft picks, free agents, etc... If the Royals had $70M to spend and a hole to fill, why use only cash as the capital? Moore has made basically no trades this offseason (other than Tony Cruz). In fact, it seems like Dayton doesn't like doing trades in the winter for the most part. Last winter he acquired Jandel Gustave (then traded him away), Reymond Fuentes, and Brian Flynn. His last big winter trade came in December of 2012. In 2013 he acquired starting outfielder Nori Aoki as perhaps one of the only two times this decade he's acquired a starter through trade in the winter.
Now I don't think Dayton is opposed to during winter trades, nor do I think he explored all his options either. It seems though he felt like he had to pay a free agent to fill the teams holes. We've talked about trading for James Shields who projects to be better than Kennedy, slightly cheaper, and doesn't cost you a draft pick. What instead it would likely cost is a few prospects, but I wouldn't think it would be anyone better (even in combination) than the 24th overall pick. Shields also doesn't come with an opt out in his contract.
Sticking with the Padres, how about Andrew Cashner? Matt Moore of the Rays? Jump on Shelby Miller earlier. Matt Garza, Jorge De La Rosa, Jimmy Nelson, Kevin Gausman, Anthony Descalafani, Chad Bettis, Charlie Morton, Wily Peralta. There are a lot of pitchers out there with similar or better projected production as Kennedy that would likely cost much less. Heck, even CJ Wilson doesn't project to be much different than Kennedy. He has just one year left ($20M) and wouldn't cost you anything more than your 15th best prospect likely.
Do we really think another team was offering near 5/$70M? All this offseason we heard of 2-3 year deals for Kennedy and something in the $40M range or so.
Then you wake up on Saturday morning and read that Moore gave Kennedy double the money and years.
Again, I'm the usual skeptical one here however I'll continue to fulfill this meme. I dislike this contract. I feel like Dayton Moore just gave in to the demands of Ian Kennedy and agent Scott Boras. The Royals overpaid and cost themselves a draft pick. Times may seem good right now, but eventually the Royals will have to pay the piper.