With Alex Gordon and the Kansas City Royals coming to terms on a club-record deal after a two-plus-month mating ritual often bordering on the sado-tragicomic, the Royals locked up the arguable face of the franchise for the greater part of the last decade through his age-35 season. The deal guarantees the four-time Gold Glove, three-time All-Star left fielder $72M over four years with a--*drum roll*--mutual option for 2020.
Catering to the win-now roster needs of a team loaded with talented players in their final couple years of arbitration, the deal gives Gordon an average annual salary of $18M but is structured in such a way as to give the Royals wiggle room for the next two seasons before the bulk of the team's core hits free agency following the 2017 season. The reported terms of the deal are as follows:
- 2016 - $12M
- 2017 - $16M
- 2018 - $20M
- 2019 - $20M
- 2020 - $23M mutual option with a $4M buyout
It should be noted that Buster Olney tweeted the following hours after the terms of the deal had been reported, indicating that perhaps more of the money in the deal was deferred than simply the $4M buyout in 2020:
The deferred money in the Alex Gordon deal is significant, so present-day value of the contract below $18m annually.— Buster Olney (@Buster_ESPN) January 6, 2016
Additionally, at some point in the 2017 season, Alex Gordon will pass the ten year mark in service time. As a player with ten years of service time and at least five years with the same club, Gordon will have the ability to block any trade should he find the situation or location undesirable.
Despite the Annual Offseason Statement of Financial Misdirection from Dayton Moore warning that the Royals' budget could not sustain an increase, Kansas City's 2016 payroll climbs to all-new highs once again, a boon from the increased revenue from skyrocketing attendance and two deep postseason runs. Obvious public-relations gamesmanship notwithstanding, there was legitimate concern that the Royals were not going to be able to meet the demand for Alex Gordon's services. Especially early in the offseason, it seemed like Gordon might land with a less cash-strapped club like the Cubs, White Sox, Tigers, or Giants, and the industry estimates getting thrown around were much more in the five-year, $80M-$105M range.
Fortunately for the Royals, Dayton Moore seemed to have learned from past offseasons where he jumped into the fray of the free agent market, making early splashes only to have that year's market shake out in such a way as to make those signings look bad in comparison to deals similar players later received, overpaying for players like Jeremy Guthrie or Jason Vargas. Moore patiently waited as prospective landing spots for Gordon opted into the arms race, devoting the bulk of their available resources to the bevy of pitchers available.
If one wanted to see where the demand on a player like Gordon went, one needn't look further than the 2014 World Series Champs, at one point rumored to be in the running to sign him. Brian Sabean shelled out $90M over five years on the 30-year-old perennial underachiever Jeff Samardzija. This is a microcosm of the scenario in which Gordon found himself. Gordon was limited to 104 games in 2015, leading to Gordon's least-valuable campaign since moving to left field in 2011. By either measure of WAR, Gordon was worth 2.8 wins. 2014 was the only season in Samardzija's career in which he posted a WAR higher than that.
Another rumored interested party, the cross-state St. Louis Cardinals opted to commit five years and $80M to a ~2.0 WAR pitcher in the form of right-handed shoplifter Mike Leake. The Cubs, one of the few courtiers for Gordon who didn't have a burning need for help at the top of the rotation, addressed their outfield needs by signing Jason Heyward (to make no mention of Ben Zobrist) to a huge eight-year deal while allocating further but more modest resources to middle-of-the-rotation arm John Lackey.
With Heyward and Zobrist representing the only outfielders to sign high-dollar multi-year deals at this juncture and younger players like Justin Upton, Yoenis Cespedes, and Dexter Fowler sitting out on the open market with the calendar turned to January, Gordon's options for a big payday began to fade. When taking into account the handful of desirable outfielders likely to get moved via trade and the White Sox stating that they would not agree to a deal in excess of three years, time was running out for Gordon to receive a bigger deal.
While the dwindling of Gordon's options fed into his need to sign sooner than later, the more surprising aspect of Gordon signing with the Royals was that it came just a few weeks after reports surfaced that the Royals had low-balled their star with an offer roughly $20M lower than the one upon which they eventually agreed.
For a franchise whose previous record for money committed to a player was $55M (a total twice handed out but most recently nearly a decade ago to pitcher Gil Meche) tethered to the ground floor through 2019 with self-made shackles thanks to one of the worst Regional Sports Network deals in the game, the sum of $72M is a significant investment in a player who turns 32 on February 10. For a franchise whose previous record Opening Day payroll sat at a shade under $113M (before ballooning to nearly $129M after a pair of blockbuster deadline deals), this pushes them to the verge of matching last year's year-end payroll with a couple holes yet to fill.
At first glance, the deal seems relatively equitable for both parties. While lower in total guaranteed money than some projected before the offseason took shape, the $18M Average Annual Value is firmly in the $16M-$21M range that most expected he would get. He may not have gotten the fifth year he wanted, but he still got paid handsomely and probably not for the final time.
From the Royals' standpoint, the bulk of the surplus value they can expect will be at the front end of the deal. Such is the relationship between the aging curve and free agent contracts. With the estimated value of a Win Above Replacement on this year's market sitting between $6.5M and $8.0M and a 5% increase per Win each subsequent year, a quick comparison of what the Royals are paying for depending on what the $/WAR ends up being and Gordon's projected value shows a favorable situation for the Royals.
Even with the more conservative projections for both Gordon and the cost of the Win, the Royals are likely to at least break even on this contract, at least in terms of dollars spent.
Obviously projections are less than an exact science and serve to give a baseline of what to expect. Any projections for an individual player has a fair amount of variance, as it's a 50th-percentile projection (or the most likely outcome). Moreover, the most heavily weighted season in any projection system is going to be the most recent one. With Gordon having missed seven weeks this past season, the most important season in the projection happens to be the first since 2009 that Gordon went on the disabled list. There is no denying the correlation between aging and likelihood of injury for players.
However, if there was a player who treats his body like a shrine and could possibly stay healthy throughout the duration of the deal, it's Gordon. Just ask the tingling loins of Royals fans of all sexual persuasions. After winning the World Series, Gordon had a carb for the first time since the Reagan Administration. His need to remain a paragon of physical fitness is ingrained into his DNA.
It is also unclear how Gordon's skill-set will age. One presumes his speed will diminish as the contract plays out, cutting into his defensive value, though much of that value is tied to his arm. There aren't a lot of defensive star outfielders who derive a huge chunk of their value on that front from their arms. Gordon's non-sexy but historically strong baserunning may also take a hit as the years sap his speed. Fortunately, his profile at the plate seems well suited for aging beneficially for both Gordon and the Royals.
What can be said is that in the past five years, Gordon has thrice exceeded 6.3 rWAR and 5.5 fWAR. If he does this again in just one of these seasons, he'll be half of the way toward providing the Royals with the value they paid for with three years to spare.
Loss of prospective draft pick
No conversation about value is complete without making mention of the fact that the Royals would have netted a compensatory sandwich pick between the first and second round of the 2016 amateur draft had Gordon signed with another team after he declined their qualifying offer. This pick would have been somewhere around the 30th pick of the draft and is worth the equivalent of an estimated $15M.
So there is a little more lost opportunity cost for the Royals in not having that draft pick, though it's not as though they signed a free agent to whom another team had extended a qualifying offer thus forfeiting their higher first round pick. Of course, the potentially closing competitive window and the Royals' position on the win-curve places a much higher premium on the value of the win now versus the potential of surplus value down the line, so it isn't quite as cut-and-dry as "the Royals also lost $15M because the compensatory pick went away," but any evaluation would be incomplete without considering its lost value in the abstract.
As is the case with any situation in which you're dealing with such small statistical samples, comparisons between players receiving similar deals in length or money are inexact. While player comps on such a small scale border on being of worth in merely the anecdotal sense, comparing Gordon to players who signed similar deals can at least give one a sense of the spectrum in which this signing will have landed when looking back upon the deal five years down the road.
In terms of comparable deals in dollars and cents, Gordon signed for roughly the same contract that then-36-year-old DH Victor Martinez signed last offseason (four years, $68M). That looks like an awful deal just one year in, but the two players couldn't be more different. One was just beneficiary of an owner on borrowed time hoping to buy a ring before he moves on to greener pastures.
If one wants to look at comps in general, Jeff Sullivan wrote the following in his effusive write-up on the deal at FanGraphs:
The last four years, Gordon has been an outfielder worth 18.6 WAR. Over the last 30 years, there have been 23 outfielders worth something within 2.5 wins of that between the ages of 28-31. Between 32-35, those same outfielders averaged 12.5 WAR. These are just the simplest possible Gordon comps, but if you projected Gordon to be worth 12.5 WAR over the next four years, you’d expect him to sign a contract worth about $100 million.
In terms of AAV, Gordon's deal is virtually identical to the one Hunter Pence signed heading into 2014. Pence was a year younger when the deal was signed and got the fifth year, but the Giants paid him an AAV of $18M through his age-35 season. Pence missed 2/3 of his age-32 season this last year due to an injury sustained when his band the Spin Doctors reunited for a one-off at the Fillmore.
Also signing in 2014 was Shin-Soo Choo, who turned 32 during the second half of the first season of his deal. In the five years leading up to the deal Choo was worth 20.8 rWAR and 20.3 fWAR compared to 27.2 rWAR and 25.1 fWAR for Gordon in the five years leading up to his reaching free agency. Choo signed for a deal through 2020 (seven years) for $130M. Choo has been worth 3.6 rWAR and 3.6 fWAR over two combined seasons since signing his deal.
Curtis Granderson signed his current four-year, $60M deal with the Mets a year older than Gordon at the time of signing. Bolstered by a big 2015, he has been worth 6.4 rWAR and 6.4 fWAR over the first two years of his pact.
Nick Swisher hit free agency at the same age as Gordon, inking a four-year, $56M deal heading into 2013 after putting up just 11.4 rWAR and 15.7 fWAR in the five years leading up to the deal. Thanks to two consecutive below-replacement-level seasons, Swisher's been worth 1.2 rWAR and -0.2 fWAR over three years.
Perennial disappointment B.J. Upton hit free agency heading into his age-28 season, got a five-year, $72.5M deal. He has hovered around replacement level for three years.
Adam Dunn--who at this point in time provided little value to whichever team signed him past his keen eye and long balls--was below replacement level for the four years of his $60M deal for his age-31 through age 34 seasons. Jason Bay's four-year, $66M deal with the Mets in the same 2010 offseason was similarly disastrous, seeing him get designated for assignment and banished to Seattle for his crimes against the Mets. Aaron Rowand hit free agency at the age of 30, signed for four and $60M, and was also barely above replacement level.
Torii Hunter is one of the better comps for Gordon. Hunter was worth 15.5 rWAR and 11.2 fWAR through the first four years of his $90M deal with the Angels. Roughly the same age (a few months older) as Gordon when signing, he had been worth significantly less than Gordon in the five seasons heading toward free agency.
Often injured before signing his five-year, $70M deal in 2007, J.D. Drew still managed to be worth 11.4 rWAR and 12.8 fWAR over five moderately healthy seasons.
The last deal in the Gordon range for Moore's tenure was Carlos Lee, who signed a six-year, $100M deal with Houston heading into the 2007 season. Only worth 15.2 rWAR and 14.9 fWAR in the five-year lead-up to the free agency, Lee provided the Astros (and eventually Marlins) 8.4 rWAR and 7.7 fWAR from ages 31-36.
A lot of those deals don't look particularly good, but many of those players don't really compare to Gordon. The fact that he was so much more valuable than virtually every one of those players signing four-or-more year deals leading up to the signing speaks to a higher true-talent level. The most similar profiles amongst would probably be Granderson, Pence, Choo, and Hunter among those players. That he signed for less guaranteed money than all but the older Granderson speaks to the comparative value inherent in this signing.
To frame the discussion slightly differently, one could look at the money owed Jacoby Ellsbury. Five months older than Gordon, Ellsbury is under contract for five more years, owed $21.1M in each of those years with $5M buyout for 2021. Over the past five years, Gordon has been worth 7.2 rWAR and 4.0 fWAR more than Ellsbury. Ellsbury is owed $110.5M over five years compared to the $72M the younger, better, and generally healthier Gordon is owed over four.
While many of the comps above really only fit in terms of length of the deal signed, the handful of similar players seem to have aged relatively favorably. Furthermore the value that the Royals got in signing a player of a much higher talent level than most of the above players is inarguable.
The deal may not provide Dayton Moore and the Royals with the value for which they're paying, but at the time of signing it certainly makes sense, especially for a team with a window that seems to be closing at the end of the 2017 season. The value of Gordon's production in these two crucial years of presumed contention is higher than if the Royals were unlikely to be in the playoff picture. While there are always free agency cautionary tales, one can stand on solid ground while hoping for the deal to turn out well for all involved.