Should the Royals sign Raúl Mondesí to a long-term deal?

The White Sox have signed shortstop Tim Anderson to a six-year, $25 million deal, after just 99 games in the big leagues. He is the first player with less than one year of service time to receive more than the $20 million deal Chris Archer signed for in 2014 (a huge coup for the Rays).

The crown jewel in long-term extensions for players with less than a year of service time belongs to Rays third baseman Evan Longoria, who signed his deal in his first week of big league action. The six-year deal was worth $17.5 million deal and with options was potentially worth $44.5 million over nine years. The Rays later renegotiated a more lucrative $100 million deal with him in 2012. Longoria has been worth ~$300M in his time in Tampa.

Here are other long-term contracts for players with less than one year of service time:

If you will recall, Singleton was basically promoted and signed at the exact same time, and rumors were that the Astros said they wouldn’t promote him yet until he agreed to the deal. If you recall at the time, this deal was seen as a wild success in regards to the team but the MLBPA (and Bud Norris) weren’t too happy.

And how those players have performed over their career:

As mentioned, Longoria was a huge success and will probably always be the gold standard. Archer and our own Salvador Perez were both good deals as well. Matt Moore has been a little bit more...controversial I suppose. He’s been a decent pitcher when healthy, but through age-27 he’s pitched 608 career innings (similar to Danny Duffy). The biggest bust here was Singleton, the guy who thankfully (for the team) received one of the smallest guaranteed amounts. Singleton never hit in the majors and his "off field" issues slowed him down as well.

Other than Singleton though, pre-arbitration deals usually work out for the team and the player really. From the team side, they lock up a player who they expect to return excess value (fWAR) to their calculated risk (guaranteed salary). You see this in a way to something akin to Capital Asset Pricing Model (CAPM). There is the risk-free rate (league minimum or a replacement level player), the risk/beta (bust rate), and the expected return (fWAR/performance). You could even use the guaranteed contract in there too for cost, and if the expected performance (discounted with risk and the risk free rate) is greater than the cash outlay, you’ve got a good deal generally.

From the player side of course it is a little hazier but still good in my opinion, for the most part. Players may be signing away higher future salaries but they are also lowering risk down to effectively zero. If they get hurt and never throw another pitch or swing a bat again, they are still guaranteed the money (unlike in basically every other sport). Would Evan Longoria made more money if he hit the open market in 2014 at the age of 28? Absolutely, and he probably would have gotten something akin to the $200M+ deal that Prince Fielder signed with the Rangers (in a class where Hanley Ramirez and Pablo Sandoval were the best position players available).

However Longoria was still given life changing money in his original deal (and then even more a few years later). Sure the difference between the $22.5M he was paid to sign away his first two free agency years isn’t close to the $200M he could have had if he didn’t, but was that worth risking the $17M he was guaranteed? If you know the outcome, it wasn’t, but you don’t ever known the outcome. Longoria could be a bean ball in the face away from regretting turning down that offer. $200M is life changing money, but so is $17M. Sure, Longoria couldn’t live an absurdly lavish life like $200M may offer but assuming he doesn’t go crazy with the money (and invests it wisely - not a small task) he and his children wouldn’t have to worry about money ever again - a security that 99% of American’s don’t have.

So let’s say Raúl Mondesí and his agent Giovanni Rodriguez come to the Royals and say "Hey let’s work out a deal?" The Royals would say probably "Okay, how much and for how many years?" The Royals would want at least a couple of free agency years and some flexibility with club options. If they are going to take on the risk of guaranteeing Mondesí money for the next six years, they want some reward for that risk.

So let’s call it eight years - six pre-free agency years and two free agent years. That locks Mondesí up through age 28 (depending on his service time but let’s just assume it’s six years from now - three at pre-arbitration and three in arbitration). Using FanGraph’s contract estimator tool, we get something like:

Now that’s making a couple different assumptions. First it uses a standardized aging curve, and like with any mean projection, there are those who fall on either side of the curve (some get worse, some get better). Also it is using Mondesí's Steamer projection for 2017, projecting him to be replacement level. You could certainly argue with that. He was pretty bad last year but maybe you can make the case with a little experience under his belt, a year older, and over a full season he could be worth something like a win or so. That of course sets a new baseline for his projection, and changes our contract estimation to something like this:

Now I think those option years are a bit high (2.5 win players go for more like $15M a year than $25M) so let’s call it $20M instead. Then you are looking at a paltry life changing amount of $11.2M guaranteed with a substantial $40M on the back end (you could even throw in $2-3M in buyouts of those years if the Royals declined it).

The Anderson deal may be used as a benchmark to negotiate a deal for Mondesí. However the two players aren’t quite comparable.

Yes, it was just a brief appearance overall for Mondesí, who looked overwhelmed in the majors but Anderson was much better. Now Anderson gets a bit more credit because he played shortstop instead of second base but he also hit much better than Mondesí. Anderson though is a few years older (24 compared to 21 with Raul), so perhaps when Mondesí is of similar age he may perform like Anderson did.

So let’s just create a deal right now. You are Royals GM "Mayton Doore" and Mondesi and his agent come to you and say how about this deal:

Part of me says "yes, absolutely." $3-6M in baseball money a few years from now is basically free, and those options years aren’t expensive enough that it would restrict a team’s budget (or buying them out for a few million). You only need Mondesí to be worth about 8-9 WAR to be worth it and everything on top of that is gravy. Alcides Escobar is one of the worst hitters in baseball during his career and has been worth 11 wins.

But part of me still says "no". Do I think Mondesí will be worth 8-9 WAR for his career? Perhaps. Would I be willing to risk around $25M on it? Perhaps. It’s just not a slam dunk. Mondesí seems to be a bit of a ways off when it comes to figuring out hitting in the major leagues. Compare Mondesí and Singleton just as hitters:

Yeah Mondesí was always a level ahead of Singleton at an equal age, but the age difference wasn’t that great. It’s not as if Singleton was a 22-year old college hitter beating up on 18-19 year olds in rookie ball. Instead he was a young high school hitter who dominated at every stop. That is, until the most important stop - the MLB.

The is risk and then there is proper reward. On the efficient frontier you have to find that optimal spot on the curve. The perfect point in that curve where inefficient starts becoming efficient, and then decide from where on up the curve you are willing to extend your risk. There’s a point with pre-arbitration, arbitration, and post-arbitration contracts where a team says "we’re out" as you climb up the unequal frontier. For the Royals, is that $30M? $40M? $50M?

That depends on both their risk and expected return. When risk lowers, so does return and vice versa when risk climbs. It doesn’t really work that way though with MLB contracts because you can overpay. The more money you are giving a player is more risk, but more money doesn’t mean the player will be better. There isn’t really a point on this hypothetical frontier for increasing reward by increasing risk. Paying Mondesí $40M and paying him $200M will give you the same result performance-wise. So instead it’s more so about weighing expected return and how much you are willing to pay for that, and depending on that expected return, how much is too much. That’s a question for you and the poll below.