Thursday, August 18, 2011

The Signing Deadline.


I know I owe you an article about how the additions of Johnny Giavotella and Salvador Perez have put the finishing touches on the most interesting Royals lineup in years, if not decades. But as you know, Monday was the signing deadline for the draft, and when the dust had settled, it turned out to be a far more interesting day for the Royals than I would have expected.

The interesting part of the day had little to do with Bubba Starling. There was no real danger that Starling wouldn’t sign, not when it was clear that his football skills didn’t match his baseball skills (run-first Nebraska quarterbacks are not exactly elite NFL prospects), not when it was clear how excited he was to be drafted by his hometown team, and not when – most importantly – the Royals have made it abundantly clear over the past four years that they will pay the market rate and then some to sign elite talents.

Starling did sign, as expected, and as expected, he signed so close to the deadline that the first confirmation on Twitter (from Scott Boras’ personal mouthpiece, Jon Heyman) didn’t arrive until about 4 minutes after the deadline had passed. Mildly surprising was that Starling signed for $7.5 million, which was less than what most people expected.

On Draft Day, I had predicted this exact amount, but as we got closer to the deadline, and rumors of $10 million offers swirled and the Boras Factor got magnified, I decided to inch my prediction upward, settling in at $8.25 million. They say you should never bet the under on a Boras contract. That may be true in general, and that’s almost always true for free-agent signings, but I think we may have reached our limit with amateur players, where the money being offered is so life-changing that teams feel comfortable sticking to their offer and daring the player to walk away. Even Scott Boras has his limits.

When Stephen Strasburg got a shade over $15 million guaranteed, everyone assumed Bryce Harper would get even more the following year; it’s a rare year that a Boras client doesn’t break the previous bonus record, after all. But Harper signed for just $9.9 million guaranteed. While Harper had uncommon leverage – he was just 17, after all, and could have gone back into the draft a year later – the Nationals quite reasonably didn’t want to guarantee as much for a player still years away from the majors as they did for a pitcher who could have been a #3 starter in the majors while he was still a college sophomore. And they didn’t have to, because 10 million dollars is an insane amount of money for a 17-year-old kid to walk away from. Scott Boras is many things; he’s not insane.

The rumors – and I must emphasize that everything I’m about to write is pure conjecture – were that the Royals offered $7.5 million to Starling immediately after he was drafted. Based on that rumor, and the fact that the two sides reportedly had no contact until just hours before the deadline, I will try to connect the dots here:

- The Royals drafted Bubba Starling, and immediately thereafter made a formal contract offer of $7.5 million, spread out over five years (taking advantage of the MLB provision that allows two-sport athletes to be paid over five years.)

- The Starling camp responded with a demand for $10 million.

- The two sides spoke rarely, if at all, between Draft Day and about 10:30 on Monday night.

- At 10:30, the Royals made the same offer they had in June, $7.5 million.

- The Boras camp made a counteroffer – perhaps the same $10 million, perhaps not. The Royals refused to budge.

- The minutes counted down, and the Boras camp tried to call the Royals’ bluff. They couldn’t, because it wasn’t a bluff. I’m reasonably certain that the Royals would have held their offer all the way to the deadline.

- The Starling camp realized in the final minutes that the Royals weren’t bluffing. At this point, my guess is that Boras tried to get a cosmetic concession, asking for the $7.5 million to be paid upfront. The Royals agreed to compromise on this request, which is why Starling’s bonus will be paid out over three years instead of five. (This is quite unusual – I’m not sure I’ve seen a signing bonus paid out over three years before. It’s almost always either a five-year spread or a lump sum.)

- With 51 seconds to the deadline, according to published reports, the Royals and Starling agreed to terms.

If my narrative is correct, than the Royals got Scott Boras – or his client – to blink. On the other hand, Boras got his client $7.5 million, the most guaranteed money the Royals have ever given to an amateur player here. The Royals were winners here, but there were no losers.

The part of the narrative I’m most certain about is that there was virtually no negotiating between Draft Day and August 15th, which was true for the majority of first-rounders – 23 of the 33 first-round picks had not agreed to terms going into Monday, and 22 of those 23 wound up signing. If we didn’t know it already, the two-month delay between the draft and the signing deadline is a complete waste of time. I’d rant more about this, but with a new Collective Bargaining Agreement being hammered out behind closed doors, I’m fairly confident that the signing deadline starting next year will be July 15th, if not sooner.

Anyway, Starling’s signing was a foregone conclusion; the intrigue came elsewhere in the draft. Whatever money the Royals saved by holding firm with Bubba, they spent and more. The Royals had already given second-round pick Cameron Gallagher $750,000 to sign – a little over the “recommended bonus” for his draft slot of $562,500. But on Monday, David Glass put on red tights and a fake white beard and stuffed a pillow under his shirt.

Fifth-round pick Patrick Leonard signed for $600,000. Slot money for his draft position was $161,100.

Fourth-round pick Kyle Smith signed for $695,000 – slot was $227,700.

Third-round pick Bryan Brickhouse, who before the draft was rumored to be demanding $1 million to sign, got his million – and an extra $500,000 to boot. Slot was $358,200.

Those signings were largely expected, although Brickhouse’s bonus was awfully surprising. But that wasn’t it. The Royals dispensed several other large bonuses to late picks who dropped in the draft because they were considered difficult signs.

Jack Lopez, the Royals’ 16th-round pick, was a Florida high school shortstop with the polish you’d expect from the son of the Reds’ bullpen coach. He got $750,000 to sign.

Jake Junis, an athletic two-way player from here in Illinois, had been drafted in the 29th round. The Royals signed him as a pitcher for $675,000.

In the 30th round, the Royals selected Mark Binford, a 6’7” right-hander whose high school career had been interrupted by Tommy John surgery, but has significant projection. They inked him for $575,000.

All told, according to Baseball America, the Royals spent a shade over $14 million in the draft. This smashed the previous all-time record – the Nationals had spent close to $12 million last year – but was only the third-richest draft haul this season, as the Nationals spent $15 million and the Pirates set the new record at just over $17 million.

The Nationals spent most of their bonus money on their first four picks, notably giving third-rounder Matt Purke, who came into the year as a projected Top 5 overall pick, $4 million and a major-league contract even though his arm may be damaged goods at this point. The Pirates spent $13 million of their $17 million on just two players – #1 overall pick Gerrit Cole, and their second-round pick Josh Bell, who was considered to be unsignable given his stated desire to go to college. By comparison, the Royals spread the wealth around a little more.

Look at it this way: the Royals, with just two picks in the first two rounds, spent more money in the draft than the Tampa Bay Rays, who had twelve picks in the first two rounds. That’s largely because the Royals had the chance to draft Starling, of course, who himself accounted for more than half the money the Royals spent. But consider this: the Royals handed out bonuses of $575,000 or more to as many players – eight – as the Rays did. That’s impressive.

Tempering my enthusiasm is that while the Royals gave out a lot of big bonuses, none of the guys they gave them to were elite, first-round-caliber talents that fell in the draft. There was no Wil Myers or Chris Dwyer or even Tim Melville in this draft – with the exception of Bubba, no one the Royals signed would have been a first-round pick in a world where signability wasn’t an issue. These were all second-to-fifth round talents. The Royals were willing to spend, but whether they get a return on their investment depends on their ability to scout.

It’s notable that the late-round signings – Lopez and Junis and Binford – were scouted throughout the summer, which allowed the Royals to get a better read on their abilities. Presumably, if they hadn’t liked what they saw, the Royals wouldn’t have been willing to cough up half a million dollars to sign them. A player’s stock can rise dramatically in the course of one summer – Albert Pujols famously showed a glimpse of what was to come between the time the Cardinals drafted him and when he signed. But all three late-round signings got the equivalent of second-round money – suggesting they are fine players, but not can’t-miss prospects by any means.

All eight players, it should be noted, are high school guys. The Braves’ philosophy has always been high school-heavy, and it’s usually worked for them. It’s worked for the Royals by and large since Dayton Moore was hired. But there’s added risk involved, and an added delay in seeing a return on their investment.

And let’s not forget: the Royals already gave $3 million to Elier Hernandez and $2 million to Adalberto Mondesi (Raul Mondesi’s son), both 16-year-olds out of the Dominican Republic. (Hernandez is an outfielder, Mondesi’s a shortstop.) They are the two largest bonuses ever given to an international amateur player by the Royals (Noel Arguelles aside; Cubans are always counted differently for some reason.) Both are 16 years old and have huge risk profiles. But with huge risk comes huge reward; the player who previously held the Royals’ record for the highest bonus given to a Latin American talent, Cheslor Cuthbert, is raking in the Midwest League at the age of 18 and is one of the best prospects in the system.

So counting the money spent in Latin America, the total outlay for amateur players by the Royals this summer checks in at around $20 million. (Thanks, Gil!) Amazingly enough, I’ve been told that’s not a record. What is almost certainly a record, though, is this: the Royals have spent more than half as much money ($20 million) on amateur players this year as they have on their entire major-league payroll ($36 million). I highly doubt any other team has ever done that.

Let me rephrase that: if my assumptions are correct, the Royals have devoted a larger share of their player budget to amateur talent than any other team in the history of baseball.

I fervently believe that the Royals can be competitive next year, and I fervently believe that they should be competitive in 2013. If they are not, heads deserve to roll.

But it’s worth remembering that, even if the worst-case scenario happens and Dayton Moore is shown the door in two years, he will have left the organization with a great deal of depth in the farm system. It took years to get the hamster wheel to start moving at full speed, but now that it is, it’s running of its own accord – the talent that’s making its way to the major-league roster is being replaced at the lowest rungs of the minor leagues just as fast.

Every player who has made his debut with the Royals since Opening Day is under contract through 2017. Maybe the Royals stumble next year, and maybe they stumble the year after that. But they’ve got six chances to get it right. With all the talent already on hand, and $20 million worth of ballplayers just now added, you have to figure they’re going to get it right at least once before time runs out.

Meanwhile, only two organizations spent less than $3 million in the draft: the Detroit Tigers and the Chicago White Sox. The Royals don’t have to focus on beating the Yankees and Red Sox – they simply have to beat the four other teams in the AL Central. And, at least when it comes to amateur talent, the Royals out-spent half of their divisional rivals this summer by the margin of nearly seven-to-one. If you’re looking for a reason to dream about the Royals not just winning, but dominating their division in a few years, well, stop looking.

15 comments:

Bryan said...

Thanks for the post Rany. Good stuff.

Prospects are such a roll of the dice.

There are plenty of 2-5 round talents in the big leagues now. I would much rather have 8 of those than 2 supposedly can't miss talents.

Please let us know what you think of Gio and Perez. I am really impressed with Perez and I didn't think I would be just because Ned really seemed to like the guy.

I really like the lineup. The only thing needed is Cain. I think Cain would make a huge difference defensively. Will he hit in the bigs?

kcghost said...

I do like the new lineup, other than Melky and Frenchy. It actually looks like something that a major league team would put on the field. You can't complain about the performance of M&F this year, but I guess I will prefer it when those spots are occupied by Cain and Myers.

mark said...

"but there were no losers." I'm not sure what leverage Bubba had. Personnally, I wish they had punished him for risking an injury in Lincoln by taking away 5 or 10 percent of the original offer. If he wanted to be a baseball player Bubba is a loser for throwing his summer away if he didn't get more then his original offer. The Royals will be a loser if he is a bust, not only the money but the draft pick. The fans also aren't going to be getting any of the Meche rebate but I guess we are supposed to be in the back of the line anyway.

Fast Eddie said...

It seems like you don't hear anything about Cain anymore.

I think the reason the Royals, Pirates, and Nationals are paying more is because they have been perceived as lousy organizations that a player who has another choice might not choose to play for. Thus, they were forced to pay more than, say, the White Sox in order to build a strong farm system. The opposite side of the coin is the Astros, not a glamour organization, who drafted cheaply and poorly over the past several years.

ChaimMKeller said...

I definitely hope they move up the signing deadline significantly. Drawn-out drama doesn't serve any useful purpose, except perhaps to generate a few extra newspaper stories. Rarely has there been a prolonged negotiation that couldn't really have been done more quickly and reached the exact same conclusion.

Kyle said...

This has been a great month or so for the organization. I know these guys aren't can't miss, that doesn't exist in prospects. But to graduate 10 top 20 prospects, and still be one of the top 3 farm systems in baseball says something. There is alot of top of the line talent to go along with a TON of depth.

Cain has been doing a fine job in AAA, and would be an improvement in CF. I don't think that he would be an improvement over Cabrera or even Frenchy in the lineup though. He has some power potential and speed, but the way Cabrera and Frenchy have been hitting, there is nothing wrong with keeping them.

George said...

Kcghost, get used to it; Frenchy was just resigned through 2013.

Steve N said...

The word is that the Royals have signed Francoeur to a 3 year ?13.5 million contract. 4.5 a year is not crippling and he does bring some value.

Steve N said...

Sorry, it seems to be for 2 years. Sorry. Overpaying by a fair amount.

Jim M said...

Rany's twitter feed... one stop shopping for everything that I need to stay up to date in the world!

Nice to have disco thrown in... my dermatologist appt is next week (in Colorado... if a bit closer I would figure out how to visit)... I will compare the music.

McGoldencrown said...

Damn you Rany for making me check your site thrice a day. If you were my drug dealer, Id be driving by, tapping on your back windows........I meant, IF I had a...

The latest shipment is primo as always.

Jacob said...

All they need now is a #1 and #2 SP and they are ready to go. Where are they getting those from again?

Mayo said...

Rany, your assumption of how the negotiations with Bubba played out are wrong. I think your assumption that the Bubba camp blinked is exactly what the Royals want projected, but the facts are not correct. The Royals blinked. The Royals offered $6.8 Million with 10 MINUTES to go before the deadline and only came up to $7.5 Million with literally seconds to go before the deadline when the Bubba camp did not blink.

Rough Carrigan said...

Rany.
I posted this in a game thread over at the Sons of Sam Horn after hearing about the Francoeur contract extension. Someone suggested to me that I send it to you. So here it is:

The Royals fandom frog and the scorpion Dayton Moore came to the banks of a river.

"Carry me across on your back," the scorpion Dayton Moore pleaded.

"No," answered the Royals fandom frog. "If I let you on my back you'll sting me and I'll drown."

"But that would not be in my interest," said the scorpion Dayton Moore. "Then I would drown, too."

Reluctantly, the Royals fandom frog agreed.

He started swimming across when right in the middle of the stream he was struck by a terrible pain.

"Oh!" he cried out. "You signed Jeff Francoeur to a 2 year contract. What the fuck's the matter with you?!"

"It is my nature," said the scorpion Dayton Moore, adding "It's a process," as they sank below the surface.

Rany said...

Mayo,

That's an interesting observation. I (obviously) do not have any direct insight into the negotations. My guess on how the negotiations went is based on the fact that rumors were floating well before the deadline that the Royals had offered $7.5 million - since that was the exact number he signed for, I assumed that wasn't a coincidence.

If you have inside knowledge, than you know better than I. If you'd like to be discuss specifics privately, there are ways of contacting me by email - I'd certainly welcome the information.