Retaining your good players, what a concept!
Seth Lugo was near the top of all “top trade candidates” articles last week. There was speculation he might just walk into the opposing dugout after his start against the Cubs at Wrigley Field last week. Sure, there were some reports that the Royals had some interest in keeping Lugo long-term. But surely that was posturing, trying to get teams to improve their offers.
Turns out, the Royals did want to keep Lugo. And he wanted to stay.
Reports last night surfaced that Lugo had reached a two-year deal with the Royals that will pay him $20 million in each of the next two seasons, in addition to a $3 million signing bonus. There is a third year for $20 million that would vest if Lugo hits certain performance bonuses (likely innings pitched or games started to protect against injury) or the Royals have a $17 million club option if it does not vest. If that third year is not exercised at all, Lugo receives a $3 million buyout. The deal guarantees Lugo $46 million, and he can earn up to $63 million over the deal if he stays healthy and effective.
The Royals will effectively be paying $23 million per year for what has been the seventh-best pitcher in baseball over the last two seasons, according to fWAR, and yet the deal puts him at just the sixteenth-highest average annual value (AAV) for a starting pitcher in baseball. Fangraphs values his performance over the last two years at $46 million so far, with two months left in this season.
But contracts are about future, not past performance, and Lugo turns 36 this November. A longtime reliever, Lugo pitched a career-high 206.2 innings last year, and he’s on pace to finish with around 175 innings this year. He also has the largest difference between his ERA (2.95) and FIP (4.27) in baseball, suggesting he could be due for regression.
There is definitely some risk here, although the contract mitigates against some of that risk with the vesting option. ZIPS projects Lugo to be a 3.7 fWAR pitcher over the next two seasons combined, which would put his value around $30 million. That is a bit shy of what the Royals would pay him, although he still has the upside that he showed last season, when he was a 4.6 fWAR pitcher worth a projected $37 million. By 2027, the Royals will be spending over $35 million on Lugo and Wacha, who will both be over 35 at that point. Lugo isn’t a fireballer, more of a cerebral pitcher who uses a deep arsenal to fool hitters, so perhaps he defies the aging curve a bit.
There is also the opportunity cost risk. By not trading Lugo, or even letting him walk via free agency and getting a compensatory draft pick, the Royals are giving up the opportunity to get anything for him, at least this year. The Royals have downplayed the offers they were getting for Lugo, but a contender likely would have blinked for a pitcher of his caliber in what seems like a thin market. And there is good reason to think a pitcher of his quality could have netted a premium prospect or two, sorely needed in a thin Royals farm system. A more “transactional” team would trade Lugo to get some value for him.
However, prospects are just prospective, and the odds are many will fail. Prospects are fun because they could be anything. They could be a bust, they could be a star, they could even become the next Seth Lugo! But the likelihood the Royals – or any team- can find players that can prove to be more valuable than a frontline starting pitcher are not great. The Royals gave up what was considered a steep package in 2015 when they got Johnny Cueto. But does anyone miss trading Cody Reed, John Lamb, and Brandon Finnegan now?
The Royals are no longer a poverty franchise that has to trade away all their good players. Despite playing in the third-smallest market in baseball, with a bad TV deal, playing in a 50-year-old stadium without many modern revenue generators, the Royals have been 20th in payroll spending in each of the last two seasons and are 17th in allocations for next year. Gone are the days where the Royals lose star players over a $1 million squabble. Bobby Witt Jr. wanted to stay in Kansas City. Michael Wacha wanted to stay in Kansas City. Seth Lugo wants to stay in Kansas City.
The Royals are building something. This isn’t a team that has to rebuild. They were in the playoffs last year. They have the second-best pitching staff in baseball, with all their key pitchers under contract for next year now. They have an emerging young lefty in Noah Cameron. They have a shutdown reliever in Lucas Erceg and an All-Star closer in Carlos Estévez. They have an above-average slugging first baseman in Vinnie Pasquantino and an emerging All-Star third baseman in Maikel Garcia. And they have one of the best players in baseball in Bobby Witt Jr.
That’s the core of a team that can contend. Yes, the outfield stinks, but that’s a manageable problem (that admittedly hasn’t been managed, yet). Yes, the playoff odds the rest of this year aren’t great at this point. But the Royals have a window where they have a generational talent in Bobby Witt Jr. Any chance they have to push for contention, they need to take it.
The Royals are clearly not going to be as “transactional” as perhaps some expected when J.J. Picollo took over. This isn’t a team that will have the roster churn seen in Cleveland or Tampa Bay. And that’s fine. There is more than one way to build a contender. And I haven’t seen any flags being raised in those stadiums in a while.
But they’re also not the poor Royals whose fans have to worry about a player being traded away as soon as he becomes good. This is a franchise that retains its good players to build toward contention. This is what most teams do! And as a fan, its nice to have a team more concerned with winning now than selling a dream for a future that may never happen.