The Royals have inked free agent pitcher Ian Kennedy to a $70 million dollar deal, but is Kennedy worth the price the Royals are paying?
Another pitcher is off the board.
News broke on Friday of Ian Kennedy agreeing to a five year contract with the Kansas City Royals. Despite his poor 2015 season overall, and the draft pick compensation attached to him signing a contract, the Royals still pulled the trigger on the move.
With the departure of Johnny Cueto via free agency, it was pretty clear that the already weak Royals rotation needed further upgrades. Kennedy does provide that upgrade, but at what cost?
ian kennedy, royals in agreement on $70M, 5-yr deal
— Jon Heyman (@JonHeyman) January 16, 2016
At $70 million over five years, Kennedy is not what you would call a “bargain.” Relative to pitchers like Zack Greinke and David Price, who are set to make over $30+ million annually over he next six or seven years, Kennedy may look like a bargain. However, Kennedy is not, nor has he ever been, a pitcher of the caliber of either of those guys. Realistically outside of one good season in 2011, Kennedy has been nowhere near the level of either of those pitchers or really any other pitcher who has signed a big contract this offseason. At this point, Kennedy is on an island all by himself.
When discussing Kennedy’s contract, and whether he is worth that sort of money, there is one important caveat that must be mentioned. That is the opt-out that is a part of his new contract with the Royals. Kennedy is under contract for five years with the Royals but he does have the choice to opt-out of the free agent market after the 2017 season, so two years into his new contract. Kennedy will turn 32 this December, meaning he will be able to test the free agent market again at the age of 34 following the 2017 season. It remains to be seen whether he will actually do this, but it is an important consideration.
Back to the money involved and whether the Royals made the right choice in signing this deal. In an offseason in which Mike Leake got an $80 million contract over five years, perhaps Kennedy’s deal wasn’t too over the top. However, that isn’t really a fair comparison, as that contract may not play out well in the long run either. The more important consideration here is that the Royals have given up their 24th overall pick in this year’s Amateur Draft. That pick will go to the Padres and will be the 26th overall pick. Giving up draft picks is never easy, especially for a team who built their team through the draft, and may need reinforcements sooner rather than later.
It was pretty evident going into this offseason that Kennedy’s future earnings would take a significant hit because of the qualifying offer. However, not many people expected him to get a contract of this volume with that pick attached. At the onset of the offseason, many projected Kennedy for a contract in the $40 to 50 million range given the penalty of the draft pick compensation. At mlbtraderumors.com, Kennedy was projected as the 19th best free agent overall, with a projected contract value of $52 million over four years. In the contract Kennedy signed he is getting one million more each year in terms of annual value as well as an extra year.
After a successful season in 2014 in which he finished the year with a 3.5 WAR, which followed a 0.6 WAR showing in 2013, Kennedy finished 2015 with a 4.28 ERA and less than 1 WAR overall. In 2015, Kennedy pitched like a replacement level pitcher, but is getting paid to be more than that. Based on that performance, his contract seems like a bit of an overpay.
Over at fangraphs.com, August Fagerstrom did a contract estimate using Kennedy’s 2.0 WAR Steamer projection for 2016, and came up with a contract of $51 million over five years. This contract estimator also takes into account normal regression with the aging curve, meaning Kennedy will likely get worse overall the life of the deal. With an estimate of $8 million per WAR used, Kennedy is worth just over $10 million a year over five years, rather than the $14 million a year he got over those same five years. With the loss of a draft pick, valued around $10 million, the Royals seem to be overpaying by a good $30 million for Kennedy’s services. Fora a small market team like the Royals, this could be quite a big mistake.
As a mercy, only showing ZiPS for year 1 of Kennedy. And this is his best projected-WAR for an AL team. pic.twitter.com/2Kb5O4HiYx
— Dan Szymborski (@DSzymborski) January 16, 2016
To add to the potential of disaster, Dan Szymborski, best known for his yearly ZIPS projections, projected Kennedy as an AL pitcher immediately after the signing. What Dan came up with is rather bad if you are a Royals fan or supporter. Kennedy is projected for a 4.80 ERA and 0.4 WAR in 160 innings as an American League starter. That is quite a significant regression from 2015 and makes Kennedy look more like a $4 million a year pitcher rather than a $14 million a year pitcher.
Despite all this doom and gloom, the Royals do still have some things they can hope for. Despite Kennedy’s struggles in San Diego, he will be shifting to an even better pitcher’s park in Kansas City while pitching in front of one of the best defenses in all of baseball. This should definitely help inflate his numbers, poor projections or not.
Another thing the Royals can hope for is Kennedy performing well over his first two seasons and then opting out of his deal. Obviously no team wants a player to opt-out, but it may actually be better for the Royals if he does. With the aging curve in mind, Kennedy may be a disaster waiting to happen at his current contract rate. If Kennedy performs decently enough, he may opt-out in order to try to secure a better payday on the open market. He is a Scott Boras client after all.
At the end of the day, the Royals are taking quite a big risk here. For a small market team like the Royals, taking these risks is certainly out of the norm. Many felt the Royals weren’t going to be able to re-sign Alex Gordon. Not only have they re-signed Gordon for a not insignificant sum, but they have also signed Kennedy to a large amount as well. It was clear that the Royals needed pitching this offseason, and Kennedy certainly fits the bill. However, even with the possibility of Kennedy succeeding in KC, there is just as big, if not bigger, chance that Kennedy’s contract will be a disaster in a few years. The Royals know what they are paying for. They will either bear the fruits or suffer the consequences going forward.