On Tuesday the Kansas City Royals signed RHP Jeremy Guthrie to a 3-year, $25 million deal. My initial reaction was that it was a terrific contract and a great move for the Royals. Then the criticism started to fly that, among other things, the team overpaid for Guthrie, gave him one year too many or erred in signing him regardless of the terms.
I’ve been locked in the world of college basketball for the last week so I’m a bit late to the table with my take, but I’m stunned by the negative reaction(s) to this move. While the deal may wind up going badly for the Royals, from where things stand today the criticisms and negative reactions are flat out unfounded.
Too Much Money
At the outset of the offseason, Guthrie was reportedly looking for a 3-year, $34 million contract and based on the way the pitching market looks to be setting up it’s not a stretch to believe that a team would have met those terms if he wanted to wait things out. But let’s set aside what he might – and in my belief would – have received and take things as they stand. He was looking for a three year deal in the ballpark of 34 million. The Royals gave him a third year but got him under contract for $25 million. Just on the surface of things Dayton Moore locked up Guthrie for $9 million less than he was initially looking for.
If you want to be a pessimist – and if you’re a Royals fan that attitude is both understandable and justified – you look at the dollars and simply declare that Guthrie and his representation realized he wasn’t going to get what he wanted on the open market. Operating under that assumption they jumped on the Royals offer because they felt it was the best he could do.
If you’re an optimist, which I am in this case, I look at the fact that Guthrie moved $9 million off his demands to stay in Kansas City and the Royals moved off their two-year stance by offering him a third year on the contract. It was clear from the moment Guthrie joined the team in late July that both team and player wanted to continue their relationship into 2013 and beyond. Both sides worked together to make that happen in a compromise that gave Guthrie a fair market deal. They also worked together to structure a deal that benefits the team greatly in 2013 and beyond, but we will tackle that in a moment.
Whether you are a glass half full or glass half empty person, it’s way too early to start making any sort of declarations on whether the Royals over or underpaid. The World Series ended on October 28th which means we’re not even a full month into the offseason. The market has yet to bear many contracts for starting pitchers so we can’t truly assess whether the Royals over or underpaid in this instance.
The Market So Far
Including Guthrie, five starting pitchers have signed contracts thus far, another four had their club options picked up and one signed a two year extension. While the “options” group isn’t really apples to apples, those options getting picked up do help set the market and also limit the available options teams have to choose from. It is important to remember however that these options will generally represent good value for the teams since the terms were set several years prior.
- Yankees sign RHP Hiroki Kuroda (37) on 11/20: 1-year, $15 million plus incentives less than $1 million
- Cubs sign RHP Scott Baker (31) on 11/13: 1-year, $5.5 million plus $1.5 million in performance bonuses
- Athletics re-sign RHP Bartolo Colon (39) on 11/3: 1-year, $3 million plus $2 in performance bonuses
- Rangers re-sign RHP Colby Lewis (33) on 11/2: 1-year, $2 million plus $4 million in roster/performance bonuses
- White Sox extend RHP Jake Peavey (31) on 10/30: 2-years, $29 million with a potential $15 million player option for 2015 and a $4 million buyout of his previous contract.
- Mets pick up option on RHP R.A. Dickey (38) on 10/30: Will make $5 million in 2013 based on deal signed in January 2011
- White Sox pick up option on RHP Gavin Floyd (29) on 10/30: Will make $9.5 million in 2013 based on deal signed in March 2009
- Braves pick up option on Tim Hudson (37) on 10/30: Will make $9 million in 2013 based on deal signed in November 2009
- Indians pick up option on Ubaldo Jimenez (28) on 10/31: Will make $5.75 million in 2013 with an additional $500,000 in incentives based on deal signed January 2009
Speaking of average, he has a career 103 ERA+ over the course of 1,202.0 career innings which puts him slightly above major league average over a good sample size of innings. Ranking the ten pitchers from the above list in terms of their 2012 ERA+ we find that Guthrie as a Royal stacks up very well. For an additional point of reference I’ve included their career ERA+ and number of innings pitched in parenthesis.
- R.A. Dickey: 140 (105 in 1,059.1 IP)
- Colby Lewis: 133 (96 in 723.2 IP)
- Jeremy Guthrie: 130 (103 in 1,202.0 IP)
- Jake Peavey: 129 (116 in 1,800.1 IP)
- Hiroki Kuroda: 126 (116 in 918.2 IP)
- Bartolo Colon: 116 (112 in 2,393.1 IP)
- Tim Hudson: 110 (126 in 2,682.1 IP)
- Gavin Floyd: 101 (100 in 1,127.0 IP)
- Ubaldo Jimenez: 72 (112 in 1,093.0 IP)
- Scott Baker: DNP (102 in 958.0 IP)
Dickey of course has been a revelation and the ultimate case of catching lightning in a bottle for the Mets. Lewis (16), like Guthrie (14), has a more limited 2012 sample size compared to the rest of the group. In the case of the former, that sample size is due to injury, a problem that has plagued him throughout much of his career. Each of the ten above pitchers has their own story and set of circumstances, but Guthrie stacks up rather well in this group.
Now you may be screaming at me as you read this that I can’t just ignore what Guthrie did in Colorado and to some degree you’re absolutely right. We do need to account for his 76 ERA+ over 15 starts with the Rockies. However, he was ill-suited to pitch at Coors Field from the jump and his stats bear that out. He logged 41.2 innings at Coors Field allowing 67 H, 44 ER, 14 HR and 12 BB while striking out 18. If you prefer standard numbers, that works out to a 9.50 ERA, 1.90 WHIP and 1.50 SO/BB. He was victimized by the long ball at high altitude, but as we all know that’s not going to be a significant problem pitching at Kauffman. He also benefits from having Comerica Park and Target Field as frequent road destinations in the AL Central. I’m not dismissing what he did in Colorado, but compared to the rest of his career since he established himself in 2007, those mile-high innings stick out like a sore thumb. They are far more the exception to the rule for a guy with 183 major league starts on his resume.
The Brilliance of the Deal:
I mentioned up above that the structure of Guthrie’s contract will be greatly beneficial to the Royals, so let’s dig into that a bit more. First off we have the brass tacks of the deal:
- 2013: $5 million
- 2014: $11 million
- 2015: $9 million
According to FanGraphs, Guthrie has pitched to a value of $52.3 million (in free agent dollars) since 2007 which works out to an average yearly value of $8.7 million. Those numbers include the negative $2.5 million he was worth in his half season in Colorado. In his three months with the Royals he was worth $6.9 million and I don’t think there’s anyone out there that would argue that his 2013 salary of $5 million is too much for his services. The Cubs, for example, will pay Scott Baker between $5.5 and $7 million in 2013 even though he’s coming off Tommy John surgery and didn’t pitch in 2012. I remain firm in my belief that the Cubs will get good value from that contract and that the Royals missed out on Baker. If I’m willing to gamble $5.5 million on a pitcher like Baker, you better believe I’ll happily pay $5 million to a healthy, durable pitcher like Jeremy Guthrie.
In 2014 his salary jumps to $11 million and that is admittedly a fairly big number. Going back to FanGraphs, the only year he provided more value than that was back in 2008 when he was worth approximately $11.8 million, though he was close in 2007 at $10.7 million as well. Of course those numbers are in a vacuum and we know that value to the Royals, given their options, and value to another organization are two entirely different things.
We also have to recognize that the $11 million is really $16 million spread over the 2013 and 2014 seasons. By giving the Royals a break in the upcoming season, Guthrie and his representation gave Dayton Moore additional payroll flexibility to potentially make more moves in the free agent and trade markets. In 2014, as Guthrie’s salary doubles, Ervin Santana will be off the books and Danny Duffy and Felipe Paulino will have reclaimed their spots in the rotation. At that point the Royals can easily absorb the additional salary on Guthrie’s deal as they should have several cost-effective options lined up for their rotation including Jake Odorizzi – who should get plenty of experience in the coming season – and perhaps John Lamb.
The Third Year
The $9 million salary in 2015 seems to be the real sticking point in this deal for most people and I can understand the reasoning. He will be 37 years old during the bulk of that season but even if he turns in below average results, there’s plenty of reason to believe, given escalating salary trends, that a $9 million payroll hit won’t look that bad.
Of course that assumes he will be in decline at 37 years old and that is simply an assumption I’m not willing to make. Just based on the above list of starting pitchers that have gone off the market in the last month we have four - Kuroda, Colon, Hudson and Dickey – that are all 37 or older currently and all of them pitched at an above major league average level in 2012.
Guthrie has been very durable in his career throwing at least 175.0 innings in each of his six full seasons in the majors. At 33 he’s never had a significant arm injury and has made at least 20 starts every year since he was drafted back in 2002 by the Indians. There are no red flags in his motion, arm action or delivery which would suggest either his elbow or shoulder are working on borrowed time. Mechanically he’s fairly clean and he’s beyond the point when pitchers generally have the bulk of their arm troubles. I believe Rany calls this the injury nexus for pitchers. While we can never predict with any certainty that a player is going to avoid injury and stay healthy, Jeremy Guthrie is a pretty safe bet to finish his three year contract with his arm intact.
He’s never been a particularly hard thrower, but he’s not a finesse guy either and has held his fastball velocity in the 92-93 mph range every year of his major league career. The velocities on his slider (83.9), curveball (74.2) and changeup (84.2) have also remained relatively consistent over the course of his career.
If he was 37 today and we were projecting his performance three years beyond then I could understand all the skepticism and dissatisfaction with the deal. But that’s not what the Royals did. They signed a durable major league starter to a three-year deal that covers his age 34, 35 and 36 seasons at an average cost of $8.33 million per season. They signed a starter that since 2007 has never finished a year with an ERA+ under 90, has three years over 108, and turned in an ERA+ of 130 in his half season in Kansas City.
There’s nothing here to suggest he’s going to fall off a cliff in terms of his production. As long as that doesn’t happen and as long as he stays healthy, this deal will wind up being a huge success for the team. Had a team other than the Royals locked Guthrie up to the exact same terms the rhetoric surrounding his contract would be far more positive and complimentary.
That’s the reality.