Twenty-four hours later, judging from the reaction in every part of Royals Nation, I think my incessant drumbeat for this contract to get done – going back to May of last year – has been vindicated. Rarely does a baseball transaction meet with such unanimous support. The only people unhappy with this contract are covetous Yankee fans (which is to say, all of them).
So with the acknowledgment that this is a tremendous coup for the Royals, let’s take a step back for a second and peruse this contract with cold, beady, analytical, little eyes. Greinke signed a 4-year, $38 million contract, which breaks down as:
2009: $3.75 million
2010: $7.25 million
2011: $13.5 million
2012: $13.5 million
The contract evenly splits into two parts: Greinke gets paid $11 million for his two arbitration years, and $27 million to surrender two years of free agency.
Between this year and next, Greinke was almost certain to make at least $11 million in arbitration awards – the midpoint between his offer and the team’s for 2009 was $3.9 million, and as a five-year player next winter he would have been able to use contracts signed by free agents as comparables when arguing before the arbitrator. Assuming he stayed healthy enough to make 30 starts in 2009, he almost certainly would have been awarded $7.1 million in 2010; if he had another year like 2008 in 2009, he probably would have made $8-9 million, and if he had a breakthrough season this year, he could have made a case for eight figures.
The $27 million guaranteed in 2011-12 also seems to be a reasonable discount any way you slice it. Put it this way: if Greinke were a free agent today, even in this economy, does anyone doubt that he’d get at least $13.5 million a year? Derek Lowe just got a four-year, $60 million contract from the Braves, and if you asked 30 GMs who they’d rather have under contract for the next four years, I’d have to think the majority would pick Greinke. Greinke’s ERA+ the last two years are 123 and 127, Lowe’s are 118 and 131. Lowe has proven durability and groundball tendencies, but then, he’s also 11 years older than Zack.
I think 4/$60 is a good ballpark for what Greinke would earn in a free market today, and that’s a baseline – if even two teams think he’s about to blossom as a Cy Young contender, that could easily get pushed into the $18-20 million range. The Royals signed Greinke to, conservatively speaking, a 15% discount for the next four years even factoring in the arbitration awards. That seems a reasonable tradeoff from Greinke in exchange for guaranteeing him enough money to ensure that he’s never forced to work outside of baseball a day in his life.
The only sour note in the contract is the lack of an option year. Even one additional season of potential club control would dramatically alter my perception of the contract, but I don’t think it’s fair to harp on this omission for too much, for the simple reason that I think that Moore and the Royals understood how valuable that option would have been and would have found a way to insert one if they could have.
Greinke deserves credit for committing to the Royals into his free agency years, but let’s be frank: this is still a franchise that has one winning season in the last 14 years, and it would neither surprise nor disappoint me if Greinke put his foot down and said, look, I want to stick around, but if we’re still the laughingstock of the league in 2012, I’m out of here, and there’s no way you’re getting me to give up that option. Under those circumstances,
The best way to evaluate this contract is to compare it with the ones signed by comparable pitchers, starting with Scott Kazmir, who we’ve used as Greinke’s best comp since Kazmir signed his contract last May. Here’s the two contracts side-by-side:
Year Kazmir Greinke
2009 $6 M $3.75 M
2010 $8 M $7.25 M
2011 $12 M $13.5 M
2012 $13.5 M* $13.5 M
Total $39.5 M $38 M
*: or $2.5 million buyout
Greinke and Kazmir are extremely comparable pitchers not just because of their track records and the fact that both were 2002 first-round picks who are the same age (Greinke is three months older), but also that their service time is almost identical: Greinke has 4 years, 57 days of service, Kazmir is at 4 and 42. Their contracts are structured differently – Greinke’s is more backloaded, and the total compensation is less, but his fourth year is guaranteed, whereas the Rays can walk away from $11 million in the event of a serious injury.
From a team standpoint, Greinke’s contract saves you about $2 million over four years, but Kazmir’s contract comes with an $11 million insurance policy. I’m not an actuary, so I have no idea which contract is worth more in the abstract, but I’m sure it’s pretty close. The difference is that Kazmir signed his deal with nearly three years until free agency, whereas Greinke signed his just two years away. For a small-market team trying to get a player to give up years of free agency, time is money – but it would appear that waiting an extra eight months to get this deal done didn’t cost the Royals a dime. Certainly the economy plays a role in that – David Glass continues to weather the recession as well as anyone – but regardless of the economy, the Royals did very well for themselves.
A player that I’ve never used as a comp before, but probably should have, is the Tigers’ Jeremy Bonderman, who two years ago (when, like Greinke, he was two years away from free agency) signed a four-year contract. Bonderman had just come off a 14-8, 4.02 season, 214 innings, 214 hits, 64 walks, 202 Ks – very similar to Greinke’s 202 innings, 202 hits, 56 walks, 183 Ks. Bonderman was actually a year younger than Greinke is today. He got $38 million, exactly what Greinke got, and it was a little more frontloaded ($4.5, $8.5, $12.5, $12.5).
Looking at these numbers, I have to think that Bonderman’s contract was prominently used in these contract negotiations as a standard. The market value for a budding ace in his early 20s had been set, and Greinke was willing to accept that market value without inflation. This tells me that, as much as I would have liked this deal to have been done a lot sooner, the holdup had nothing to do with the money.
So while it’s easy for me to whine that the contract is for “only” four years, the fact is that there is very little precedent for a team going beyond four years with a young pitcher, and in every other way Greinke’s contract compares favorably with those doled out to his peers over the last few seasons. It’s not an A+ move from
I can see the argument, as cogently expressed here by Will McDonald, that the Greinke contract is a solid move but not a tour de force by any means. All that the Royals accomplished, in a sense, was the rights to a single player for two additional years, and in return they awarded that player the two largest single-season salaries in franchise history. And in two years, we’ll be right back where we were last week, with Greinke two years away from free agency and another deadline looming.
But I disagree with this assessment, because to me the Royals didn’t just get Zack Greinke to commit to the franchise for the next four years. They got Greinke to commit to the franchise for the next four years and kept open the possibility for an even longer commitment. The sense of urgency that I’ve had this past year to get Greinke signed wasn’t simply out of concern that Greinke’s price tag might increase beyond the Royals’ ability to pay. I wasn’t worried that Greinke would leave in two years because he was too expensive; I was worried that Greinke would leave in two years because he wanted to leave. Period.
We’ve seen this pattern before, and I was becoming increasingly worried that we were seeing it again. The Royals had started to get sorta kinda serious about signing Carlos Beltran to a long-term deal by 2003, but by then Beltran had already made his mind up that he was testing the market come hell or high water. I don’t blame Beltran for this, because there was a time when he was willing to sign an extension that might have bought out a year or two of free agency, and the Royals botched that window badly. But the reality is that once that window had closed, there was no way the Royals could re-open it.
I’ve been saying all along that, on paper, Greinke seems like the kind of player and person that might just be willing to stay in
Until yesterday, that was all a theory. I thought Greinke would be comfortable playing in a medium-sized city where he can have all the anonymity he wants, that he didn’t have a case of wanderlust, that he appreciated how the Royals stood with him in his darkest hours. I thought all that, but I didn’t know. Now I know, and that’s what makes this contract particularly sweet. At the risk of coming off as a naïve and sentimental sap, I believe (and have been told this by other sources) what Sam Mellinger said in his column: that this deal got done at least in part because Greinke saw the way that he was received by Royals fans on the caravan, and the way that David Glass treated him in a heart-to-heart, and decided that maybe the grass under his feet was green enough.
My inner fan says that between the Royals Caravan and the FanFest, Greinke felt the love from Royals fans, and decided to reciprocate. (My inner analyst was about to respond, but my inner fan decked him before he could talk, then stomped on his glasses and pocket protector for good measure.)
Now, having signed him once, it ought to be easier to sign Greinke again. For a player about to reach free agency for the first time, two years away seems to be the cutoff – once a player gets into the penultimate year before free agency, he’s too close to the finish line to surrender a taste of the free agent market. But with Zack having already established that he’s willing to re-sign, I don’t think the urgency that we had this winter will be there two years from now. The Royals can probably go into the 2011 season before they need to re-visit the issue of another extension, and possibly even until the 2011-12 off-season, when Greinke enters the final year of his contract.
This is going to be a very interesting season, because the error bars on so many players are just so darn high. From Mike Aviles to Alex Gordon to Billy Butler to Kyle Davies to even Jose Guillen, there are an inordinate number of key Royals who could make the All-Star team or be on the bench by July, and right now you could tell me the Royals will win anywhere from 69 to 89 games and I wouldn’t flinch.
With Greinke unsigned, a season closer to the lower end of that range would have likely spelled the end of his tenure in
The year 2011 has long stuck out for me as the year the Royals could really make a statement – not only is every player above under contract, but Mike Moustakas might be ready to join the lineup somewhere, and with a ton of money being freed up after the 2010 season when Guillen’s contract expires (to which we can now add Coco Crisp’s, Kyle Farnsworth’s, and Willie Bloomquist’s), there’s a ripe opportunity for Moore to augment a built-to-win roster with a premium free agent or two.
But that calculus didn’t work so long as Greinke could walk after the 2010 season. With that loophole closed, Moore & Company can focus on building a long-term winner without having to worry that short-term considerations might impede their ability to keep their young nucleus of talent together.
Not that the Royals should stop trying to bind that young core to the team. Since