Post a Comment On: Rany on the Royals

In my last column, I openly wondered whether Miguel Olivo would have earned the Royals a draft pick as a type B free agent had they let him move on to another team. My friend Keith Law set the record straight: Olivo would not have entitled the Royals to any compensation. This makes the decision to bring him back more palatable, though still not particularly appetizing. But it turns out that Dayton Moore had his eye on an extra draft pick after all. Yesterday, after it was long assumed that the Royals would not offer Mark Grudzielanek arbitration, the Royals caught everyone off guard by offering arbitration just hours before the deadline. And this evening, Grudzielanek responded by saying “I’m probably 95 percent, 98 percent sure I'm going to pass on it.” Let’s take this one by one. The Royals offered Grudzielanek arbitration, even though they can’t really afford him, and even though they appear to have moved on from him. Grudzielanek made $4.5 million last year; even if he had hit like the love child of Tony Pena Jr. and Andruw Jones last year, he’d be looking at an arbitration award comfortably in seven figures. Grudzielanek didn’t hit like Pena or Jones; he hit like, well, Mark Grudzielanek, batting .299 and playing his typical heady defense at second base. He’d be looking at an arbitration award in the range of about $5 million or so. And yet Grudzielanek, who is unlikely to get anywhere close to $5 million a year on the open market, is at least 95% sure he won’t take the offer. Trying to guess the market for Grudzielanek is difficult, because it only takes one outlier to alter it. But the market isn’t exactly lacking in second baseman; Cot lists Alex Cora, Ray Durham, Jerry Hairston, Orlando Hudson, Felipe Lopez, Mark Loretta, Nick Punto, and Juan Uribe as free agents at the position, and simply by virtue of age, most of those guys are going to be more desirable than Grudz. I could see this going one of two ways: either Grudzielanek finds a team that thinks he still has enough left in the tank to be an everyday player, and gets a 2 year, $8 million deal – or he doesn’t, and he’s forced to sign a 1 year, $1 million contract and fight for playing time in spring training. There isn’t much go-between, because a second baseman only has value if he’s playing every day – you can’t be a utility player if you can’t play shortstop. So why would the Royals offer Grudzielanek more money than he’s worth, and why would Grudzielanek decline it? I’m the last guy to believe in a conspiracy theory – I’m the guy who checks every forwarded email with Snopes.com, then embarrasses the sender by hitting “Reply all” and replying (with proof!) that the United States is not actually minting the “Amero” coin and discarding the dollar. But this time, well, call me Mel Gibson. I think – and this is only an educated guess, not predicated on any kind of insider knowledge – that Moore and Grudzielanek have reached some sort of gentlemen’s agreement, in which Moore has offered Grudzielanek arbitration with the understanding that it won’t be accepted. Why? Well, it’s a win-win situation, or at the very least, it’s a win-no lose situation. The Royals get themselves a supplemental first round draft pick, which is a very valuable commodity. The Royals got one of those last year when David Riske left, and used it to select Mike Montgomery, a high school left-hander who was named the #1 prospect in the Arizona League and the Royals #4 prospect overall by Baseball America. But because Grudzielanek is a Type B free agent, this supplemental pick would not be taken away from his new team; this is an extra pick created solely for the purpose of compensating the Royals. A Type A free agent would cost his new team their first or second round pick, but a Type B free agent is free to his new team from a draft standpoint. Therefore, Grudzielanek’s Type B designation is irrelevant to any team interested in his services, which means his price tag should not be affected at all. So the Royals get themselves a very valuable commodity, and Grudzielanek does his old team a favor with no skin off his back. To the best of my knowledge, there’s no way for the Royals to compensate Grudzielanek for his participation in this charade with anything more than their gratitude, but that might be enough.
The reason I'm so certain that the Royals can frame this in a way that makes it worthwhile for Grudzielanek is that this has almost certainly been done before. After the 2006 season, the San Diego Padres hit upon a bonanza of extra draft picks, as no fewer than five of their free agents signed with other teams, earning the Padres compensation. One of them, Woody Williams, was a Type A free agent, earning them a supplemental first rounder as well as the Astros’ second-round pick. (How’s that working out for you, Drayton?) Then Type A free agent Dave Roberts signed with the Giants, earning another supplemental first rounder and a fourth-rounder (because the Giants were busy giving up all their higher draft picks to other teams.) Then things got interesting. Chan Ho Park, who gave the Padres a 4.81 ERA in 2006 (and had a 5.74 ERA in 2005), was mysteriously offered arbitration – and declined. Alan Embree, who had a 3.27 ERA as a LOOGY in 2006 – but a 7.62 ERA the year before – was offered arbitration. He signed with Oakland instead. And finally, Ryan Klesko, who was injured almost all season and had nine plate appearances all season, was offered arbitration. He signed with the Giants. Park, Embree, and Klesko were all Type B free agents. Embree and Klesko were the two lowest-rated Type B free agents to sign with another team. Yet the Padres got extra draft picks for all of them, and wound up with six of the first 64 picks, and eight of the first 87 picks, in the 2007 draft. Park signed with the Mets, for one year and $600,000. In 2006, he earned $15 million in the final year of the ridiculous contract the Rangers gave him in the 2001-02 off-season. I find it…hmm…odd that Park would decline arbitration, and then accept what amounted to a 96% pay cut with another team. (It’s extremely rare to see a player awarded an arbitration salary lower than the previous year, and almost unheard of for their salary to decline more than 20 or 30%.) In 2006, the Padres paid Klesko $10 million, then another $500,000 to buy out his 2007 option. In 2007, Klesko declined the team’s offer of arbitration in order to sign with the Giants for $1.75 million – a pay cut of more than 82%. Like I said: odd. Even, dare I say it, suspicious. It’s possible that Grudzielanek could stab Moore in the back (I believe the technical term for this is that he might “Boozer” the Royals), but Moore has an out. As Bob Dutton reported, “The Royals retain some financial wiggle room if Grudzielanek accepts arbitration because arbitration-determined salaries are not guaranteed. Teams must pay only one-sixth of a salary if they release a player with 45 or more days remaining before opening day.” If that were to happen, Grudzielanek could respond with one final salvo of his own: he could file a grievance. Once again, we have the Padres to thank for the precedent here. It seems that after 2006, one of their players didn’t get the memo: Todd Walker, who was offered arbitration along with all of his friends, gleefully accepted, and won his arbitration case to the tune of $3.95 million. A month later, the Padres released him. “This is strictly a baseball decision,” general manager Kevin Towers said, adding that Walker's salary “didn't factor into the decision. We're two-time NL West champions and want to win again. For us it's putting the right 25 guys on the field to start the year and we felt there were people that were ahead of him.” While I have found evidence that Walker and the MLBPA were considering a grievance, I can’t find any confirmation that it was officially filed, and certainly there’s no evidence that he won. I’m not anticipating any of this with Grudzielanek, mind you; I’m simply pointing out what options each side has if this deal were to sour. I have no reason to think either Moore or Grudzielanek are anything other than honorable, so the odds are slim that this will blow up in the Royals’ face. Assuming it doesn’t, this is a huge under-the-radar win for Moore and the Royals: they basically acquired a top prospect for nothing. In fact, even if Grudzielanek were somewhat likely to accept arbitration, the potential reward of an extra draft pick would make this a worthy gamble. We can’t say just how worthy a gamble this is until we calculate the value of a draft pick. Fortunately, my colleague Nate Silver already did this in a column from back in 2005. What he found was that late first-round and supplemental picks (basically any pick from #26 through the end of the supplemental round) returned an average of $4.24 million in value, above and beyond a player’s salary (but not his signing bonus) over the course of his career. The average signing bonus for these players was about $1 million – so after accounting for the cost of signing the player, earning an extra draft pick was worth $3.24 million. Accounting for salary inflation over the past three years, we can revise that number upwards to about $4 million. On the other hand, if Grudzielanek decides to accept arbitration after all, then he’ll cost the Royals about $5 million, and is unlikely to deliver that much value in return. Let’s say that he’s worth about $2 million, which seems reasonable for a second baseman with declining range and no secondary skills, but someone who can still punch the ball to right field. So if the Royals offer arbitration to Grudzielanek and he leaves, the team earns a draft pick worth $4 million. If he accepts, the team flushes $3 million down the drain. If these numbers are accurate, the Royals should offer Grudzielanek arbitration whether he’s 100% certain to decline, or 95% certain, or even 50% certain. The break-even point is 42.9% - if Grudzielanek is more than 42.9% likely to decline, they should offer him the deal. That number is obviously approximate, and based on a number of assumptions, but if it's not 42.9%, it's 37.1% or 57.3% - not 95% or 98%. This is a low-risk, high-reward move.
Since I started this blog, I’ve written fewer words about Grudzielanek than almost anyone else on the roster, even though he was an everyday player. Like a good umpire, I suppose the mark of a good veteran player is that no one ever talks about him. Grudzielanek joined the Royals in 2006, and for three years did exactly what he was expected to do: hit about .300, rope some doubles, and turn the pivot as fast as any second baseman in the game. And he did so with eerie consistency: in his three years he hit .297, .302, and .299, and finishes his Royal career with a batting average of .29955 – which conveniently rounds up to .300. (Only two other players have hit .300 or higher as a member of the Royals, with at least 1000 plate appearances: Jose Offerman and George Brett.) Grudzielanek won a surprise Gold Glove in 2006; while his range isn’t what it used to be, he still turns double plays very well. He goes down as one of the better free agents the Royals have ever signed, along the lines of Greg Gagne, who was an exceptional defender at shortstop for the Royals from 1993 to 1995, hit with better-than-expected pop, and (this isn’t something I say very often) did all the little things right. So Grudzielanek, if this is goodbye – and nothing personal, but I hope it is – then thank you for all you’ve done for this team. Playing for a team that was usually remembered only for its gaffes, thanks for being the forgotten man. Thanks for proving those of us wrong who thought you were too old and too average to help the Royals when they signed you in 2006, and when they picked up your option in 2007, and when they picked up your option in 2008. And thanks for the parting gift. Dayton Moore might have thought it up, but it was very thoughtful of you to deliver it.