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July 21, 2017

Prospectus Roundtable

Should the Royals Buy or Sell?

by Rob Mains, Ben Diamond, Craig Goldstein, Wilson Karaman, Matthew Trueblood and Zach Crizer


Kansas City is 47-47 and within two games of both first place in the AL Central and a Wild Card spot. But with BP pegging their playoff odds around 17 percent and much of their championship core set to become free agents after the season, the Royals have a tough decision to make before the trade deadline. Our roundtable debates the pros and cons of each side.

Rob Mains: As a nominal Pirates fan, my view of what Joe Sheehan calls the Clint Hurdle Invitational is sufficiently jaded that I think playing for the Wild Card is not a good idea. Cleveland's a good team, the Twins are on the upswing, the White Sox have totally reloaded their farm system, and Kansas City can't spend with the Tigers. Need to do a quick teardown or risk another long stretch of irrelevancy.

Ben Diamond: I tend to lean toward the “what the hell, you never know in October” camp, but in this case I agree with Rob. Let’s face it, the Royals probably aren’t going to win the division over the Indians, so is it really worth buying to merely reach a play-in game? Even in that case, there’s a real chance of Kansas City having a one-and-done postseason and heading into their rebuild with an (even more) weakened farm system. The risk/reward seems awfully skewed, here. While they don’t have the resources and high-minors talent to pull off a “fast rebuild” as easily as other teams like the Yankees, selling chips like Eric Hosmer, Mike Moustakas, Jason Vargas, and Lorenzo Cain would put them in a far better position to avoid the stretch of irrelevancy mentioned above.

Craig Goldstein: I generally agree that selling is the way to go, but the counterbalance to that is the chance to make the playoffs, even if it is only a slim chance at the division and otherwise a coin flip plus getting first-round picks, via qualifying offers, for Hosmer, Cain, and Moustakas. Maybe even Vargas? Okay, not Vargas. Is the playoff opportunity combined with those picks enough to outweigh whatever they're going to get for a half-season of those three-plus guys?

Wilson Karaman: I'm firmly ensconced in the "go for it" camp, I do believe, and it's for reasons that are admittedly far more irrational than I generally approach these kinds of scenarios. Look, this is your championship core's last ride. Before their back-to-back pennants, the Royals weren't very good for a long time. After all these dudes leave next winter they definitely won't be very good for a long time to come. That's true even with an infusion of—likely moderate—assets from a fire sale of rental position players.

Yes, the possibility of a one-and-done is what it is, but going out in a fiery explosion like that's arguably a more palatable outcome for me given the team's recent history and invariably lengthy future than whimpering behind the shed after selling off their players of local importance Actually, I say my reasons trend irrationally, but how much difference is there realistically between the return on three expiring contracts vs. the value added by comp picks/bonus pools to a revenue-sharing team after those guys presumably all leave in free agency? As we saw with J.D. Martinez, it's not like an expiring bat by itself is going to net an impact prospect.

Matthew Trueblood: I agree with Wilson, and to augment that argument I'll add that, under the new CBA, KC's status as shared-revenue receivers means they benefit a bit more from holding on to a guy who goes on to sign elsewhere than another team would. In Hosmer, Moustakas, and Cain, I see three guys who (for various reasons) can be counted on to reject a qualifying offer, and at least two will probably sign for the $50 million-plus money necessary to maximize what KC would get as compensation for them.

I'm echoing Wilson here as well, but what the hell: there's something to be said for rewarding a fan base that has really turned out for this team since it made its dedication to winning clear, and for engendering the happiest possible exit for the players who made that winning happen. You want players and agents to speak well of the way you comport yourself and treat guys who bring you such success, even as their utility to you dwindles.

Now, on the other hand (this is something I can't remember having come to fruition yet, but that seems to have potential to do so every summer): do any of these guys start making waves if it seems like the Royals will neither buy nor sell? All of the prospective QO receivers would like, if they're not going to play for a winner in KC, to be dealt, and thereby to shed the drag a QO would have on their market value. They're almost stuck in a spot where if they don't sell, they have to go add something, or Hosmer, Moustakas, Cain, and Vargas all could demand trades. Then, even if you don't acquiesce, all the goodwill you might have stored up by keeping the core together will completely disappear. Diplomatically speaking, it's a tough needle to thread.

Goldstein: I don't think there's significant risk of demanding a trade because they won't find out if they've received help until after the trade deadline, and none of them are getting through August waivers. I do buy everything else Matt and Wilson are selling as reasons to hold, though. And I'd add further that I think all three of Hosmer/Cain/Moustakas are likely to reject a QO and receive more than $50 million.

We all may have different definitions of what "likely" is, but I suppose the interesting questions for Kansas City are: What are the tipping points in each situation and what does that mean for an overall direction? That might be phrased poorly, but what I mean is this: What, broadly, could you expect to get back and how likely are you to get it (for each player)? And then, after all that, weigh it against likelihood of divisional win, playoff qualifying, playoff success, and: How likely do you need each individual potential FA to be to reject the QO? How likely to get $50 million-plus in FA? And what are those picks going to be worth, in the abstract?

Diamond: This isn't really related to your point, but what you said made me think about the fact that, while KC is obviously going to want to extract full value out of every piece in a trade, they're going to lose a ton of leverage as soon as the first deal is made. The team can't go half into selling, so once they trade one player, all the others will have to go as well. Other teams will know this and can probably use it against KC

Goldstein: Of course they could also be selling different pieces to different teams and executing those deals simultaneously. I also think that type of leverage over a specific team is fairly short-lived unless there's only one suitor. If there's more than one, they need to pay the price to acquire the guy they want

Mains: In terms of what Kansas City could get, I can think of a couple big-budget teams in the AL East that could use a corner infielder or two (this is less true now than when I originally wrote it), and one has a really good farm system. I'll defer to Craig on this, but I'd think a highly regarded prospect is worth more than a sandwich pick for losing a player rejecting a QO. I do see that as the calculus: Can you get more for trading one of these guys than a mid-30s draft pick?

Goldstein: Sure—if you can get a highly regarded prospect. I think the biggest return probably comes for Cain, of the three. But it's not just a sandwich pick, right? It's the bonus slot that comes with it. If they did get three picks in addition to their other first rounder, they'd probably border on the top bonus pool in the league (we can probably approximate most of this). That type of bargaining power and flexibility could be really valuable, depending on the strength of the forthcoming draft class.

Trueblood: I think leverage in July does mostly come from the volume of possible partners. That's why buyers tend to overpay: they tend to have fewer options than sellers. At the same time, I agree that you don't want to end up selling on just half of this group, because of the above: each additional first-round-equivalent comp pick delivers more marginal value than the last, because of the bonus pool system. I think there is some case, though, for trading away Vargas but retaining the other three potential QO players. Starting pitching is more of a seller's market than any single position is, and Vargas is probably the least likely of the bunch to provide any kind of compensation if he reaches free agency.

Zach Crizer: I'm late to the party, but after much waffling, I think I'm ready to throw my support behind going for it. Let me attempt to muster an explanation.

First, I think recent events are enough to make us, and probably the Royals' front office, skeptical of the returns they could expect for Hosmer, Moustakas, and Cain. Now, should you trade all of them for market value—packages no one mocks and no one hails as wizardry—then you stand a decent chance of hitting on at least one significant contributor, I'd imagine, and maybe another role player. None of this is happening in a vacuum, however. Once you dangle one guy, the threat of holding on to the other two becomes fairly empty. That's not the biggest deal, but it's something.

Put all the factors together and it's clear the Royals are not in an admirable position to jump-start a full rebuild. They don't have the assets to pull off a White Sox-style farm rejuvenation, or even a Phillies-style boost. And it's not even clear that the Phillies' version is working very well. There is huge risk in committing, or even appearing to commit, to such a course of action.

What actually has me in this camp, though, is a bit squishier. I don't have any idea how this process usually goes, but how does Dayton Moore communicate this to the players? They have stormed back into contention. You can chronicle their rising confidence through Danny Duffy's tweets, for instance. Does he tell them about his plans before the rumors start swirling? Does he wait until he pulls the trigger on the first one and risk blindsiding them? It is certainly possible that any effects of such a "betrayal" could vanish in one offseason, or that there wouldn't be any at all. Maybe not, though?

Or, maybe there is simply the potential for a positive effect on the other side. Duffy has signed an extension to stay with the club, theoretically showing an intention on both sides for him to be a starter on the next good Royals team. Instead of considering the decision as a binary between trading all three or reaping three picks (I'm just ignoring Vargas here because ¯_(ツ)_/¯), what if there is a choice that includes, say, two compensation picks and the next five years of Moustakas? As Jorge Soler can illustrate from Omaha, there is comfort with known quantities for a reason, and the Royals shouldn't feel the need to part with all of theirs to pursue the club's next iteration.

A run this season is unlikely to bring about any sort of lasting glory, of course, but it could keep some things about the club—tangible and otherwise—intact and make the inevitable upcoming transition a bit smoother.

Trueblood: In light of the White Sox-Yankees deal: is there the potential for a package deal that yields the kind of impact guy unavailable if trading just one at a time? If so, does it change the calculus for anyone? Seattle's charge really makes any case for buying harder to defend. They just seem like a better version of the Royals, and now they're one of the teams the Royals have to chase.

Mains: I still think the Royals should sell. It seems to me they could get a more certain return via trade than the draft. That being said, I think that the right answer for the Royals and their fans is for David Glass to spend what it takes to keep his best players. He bought the Royals for $96 million in 2000. Forbes estimates the team is worth $950 million. That means he's realized a 14.4 percent annual return before any operating profits. So why should we care if he makes money? But that's a discussion for another time.

Trueblood: "Owners should spend more of their own money on their teams and bitch less about free-market labor rules" is a conversation for every day and time.

I think enough good things are happening there (hi, Whit Merrifield, and hello, Jorge Bonifacio) that the fastest possible path through an inevitable rebuild doesn't have to be the one they choose. Cain is having a dazzling season—already a career-high in walks, some of that sweet 2017 power, and 15 steals without being caught. The pitching staff is better than their overall numbers say; they had a dreadful April but are back on track. Given the soft factors that also color this particular situation, I say hold, and lean toward buying if the right deal comes along. Worst-case scenario is a Sunday in early October just chock-full of hugs and curtain calls and fans being grateful for one more good moment.

Rob Mains is an author of Baseball Prospectus. 
Click here to see Rob's other articles. You can contact Rob by clicking here
Ben Diamond is an author of Baseball Prospectus. 
Click here to see Ben's other articles. You can contact Ben by clicking here
Craig Goldstein is an author of Baseball Prospectus. 
Click here to see Craig's other articles. You can contact Craig by clicking here
Wilson Karaman is an author of Baseball Prospectus. 
Click here to see Wilson's other articles. You can contact Wilson by clicking here
Matthew Trueblood is an author of Baseball Prospectus. 
Click here to see Matthew's other articles. You can contact Matthew by clicking here
Zach Crizer is an author of Baseball Prospectus. 
Click here to see Zach's other articles. You can contact Zach by clicking here

Related Content:  Kansas City Royals,  Roundtable

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