Why the Royals should wait to extend Witt and company until next year

While the Kansas City Royals failed to clinch a playoff berth or winning season in 2022, they were doing something else that was reminiscent of a similar movement a decade ago: debuting lots of young players. Nine different rookies accumulated at least 100 plate appearances with the team, including the likes of former second overall pick Bobby Witt Jr. as well as top prospects MJ Melendez and Vinnie Pasquantino.

As a small market club, the Royals’ only real chance of keeping these players for the long run lies in extending them before they hit free agency. Again, we’ve seen this play out already, as the Royals lost Eric Hosmer, Lorenzo Cain, and Mike Moustakas (eventually) as they signed lucrative deals with other franchises.

Last week, MLB reporter Jeff Passan was on Soren Petro’s 810 Sports Radio show to talk about the new Royals front office and overall regime under owner John Sherman. He said that if the Royals announced they had extended their core, they would be well on the right path.

While that quote is an opinion and not a spicy insight into how the Royals are operating, we know that the Royals are kicking around the idea of extending their best young players because they have told us as much in late September:

During a meeting with reporters on Saturday, Royals general manager J.J. Picollo said there have been very general discussions about a long-term deal with Witt, who was the second overall pick of the 2019 draft and made his debut this season.

“It’s loosely been discussed,” Picollo said. “There’s got to be a lot of creativity in that. It is something (chairman and CEO) John Sherman has asked our department if that’s something we’d be interested in, and we are, but it’s in the very I would say infantile stages. We have a long way to go to get deeper into those discussions.”

It is, of course, extraordinarily good news that the owner of the team is the one asking the baseball operations department about extending Witt, a budding star who regularly showed off his grab bag of tricks and skills this year. To extend Witt, already a millionaire from his draft signing bonus and the son of a millionaire former MLB pitcher, would take a lot of money, enough money that it would spook more than a few owners.

Looming in the background of all this is the odds-on Rookie of the Year favorite, Julio Rodriguez. The Seattle Mariners inked Rodriguez to a very expensive and very complicated extension with a potential value of over $400 million back in August. At its minimum, it guarantees Rodriguez 12 years and $210 million.

When Rodriguez signed the extension, discussion about a potential Witt extension naturally bubbled to the surface. Would you give Rodriguez’s extension to Witt right now? What is Witt worth? And would Witt sign an extension in any case?

But as Passan rightly noted to Petro on the radio, Witt isn’t the only extension candidate in town. Those questions should extend to the others who have shown some success, namely Pasquantino and Melendez. What would it take to extend them, and would they sign an extension if they were given one?

Thanks to MLB Trade Rumor’s Extension Tracker tool, I took a look at large extensions given out to similarly young players over the past five years. Examining only contracts valued at $30 million guaranteed or more, I filtered the results by contracts greater than five years in length to players with a service time of under three years. Below, the table includes WAR (an average between Fangraphs and Baseball-Reference) and WAR per 150 games, with Witt, Melendez, and Pasquantino’s performance figures as reference.

MLB teams offer extensions to players in order to secure their services at a discounted rate in their free agent years, while players sign extensions to get guaranteed money. Each party gives up something in the deal: teams end up paying players much more than they would have otherwise made in years leading up to free agency, while players delay their free agency which therefore lowers their overall earning potential.

But, importantly, players don’t have to sign an extension. They can simply play out their initial contract and hit free agency as early as possible. And because players can still earn millions in arbitration, there exists only a small sweet spot where extensions make sense to both the player and the team and when they make sense to sign.

All of this is to say that, as you can see from the above chart, Witt and Melendez are not in the sweet spot. The key reason is that they simply aren’t good enough. Players with more than zero service time and less than two years of service time tend to sign extensions only if they are worth a lot of money—look at Wander Franco, Ronald Acuna, the aforementioned Rodriguez. Right now, Witt and Melendez haven’t performed to the level that they deserve $100 million in guaranteed money. And while the Royals would probably feel pretty good about offering $50 million in guaranteed money, Witt and Melendez are unlikely to sign such a comparatively small extension. At that point, they could just play it out, earn $20-$30 million through arbitration, and hit free agency in their late 20s.

From a performance standpoint, Pasquantino has been really good. But his age makes an extension tricky, as he’s already signed through his age-30 season. So does his position as a first base/designated hitter. Is it worth extending him? If Pasquantino turns into Joey Votto, then yes; those age-31 through age-33 seasons become a better deal if Pasquantino regularly hits 40 to 60 percent above league average.

The Royals should absolutely think about pursuing an extension for their young players. But their young players are really, really young, and are unlikely to sign for the kind of under-$30 million guaranteed extensions that the likes of Hunter Dozier and Whit Merrifield have signed in the past. Despite that, the Royals’ young players haven’t played to such a level that you would feel good offering them mega deals.

The good news is that, just as the players don’t have to sign extensions, the Royals don’t have to offer extensions right now. For these young position players, waiting a year is probably the smart move.