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The Kansas City Royals and $40 million pitching rotations

Baseball’s Pitching Rotations, by projected salary of top six starters for 2013:

-Los Angeles Dodgers $78.2 million
-Philadelphia Phillies $72.7 million
-San Francisco Giants $69.5 million
-New York Yankees $58.2 million* (excludes $8.5 million sent to Pittsburgh w/AJ Burnett)
-Toronto Blue Jays $50.45 million (excludes $8.5 million received from Miami in six player trade)
-Boston Red Sox $47.6 million
-Los Angeles Angles $46.9 million (exclues $1 million sent to KC with Ervin Santana)
-Detroit Tigers $45.2 million
-Chicago White Sox $41.25 million
-St. Louis Cardinals $40.1 million
Kansas City Royals $40.1 million (excludes $1 million relief from Angels for Ervin Santana)
-Pittsburgh Pirates $38.5 million* (excludes $13.5 million relief team has for AJ Burnett and Wandy Rodriguez)
-Chicago Cubs $37.4 million
-Cincinnati Reds $36.3 million
-New York Mets $34.1 million
-Washington Nationals $32.0 million
-Seattle Mariners $29.8 million
-Texas Rangers $23.3 million
-Cleveland Indians $20.6 million
-Atlanta Braves $19.85 million
-Baltimore Orioles $19.1 million
-Colorado Rockies $17.1 million
-Arizona Diamondbacks $16.7 million
-San Diego Padres $16.1 million
-Tampa Bay Rays $15.7 million
-Miami Marlins $15.15 million (excludes $8.5 million sent to Toronto in six player trade)
-Milwaukee Brewers $14.5 million
-Minnesota Twins $13.3 million
-Oakland Athletics $10.75 million
-Houston Astros $6.3 million (not counting $5 million owed to former pitcher Wandy Rodriguez)

All data via Cot’s/Baseball Prospectus

The Kansas City Royals appear out of place on this list, relative to their market size.  Actually, they’re just out of place on this list in general.  When you look at the small market teams on this list, they’re pretty much universally collected at the bottom: Oakland and Tampa have made the playoffs recently as have the mid-market Diamondbacks.  But low-revenue teams such as the A’s, Brewers, Marlins, Padres, Rays, Indians, and Pirates (considering salary relief) are all paying between $10 million and $25 million for entire rotation, which comes out to between $2 and $4-5 million per pitcher.

Broken down into a wins above replacement argument, small market teams are almost universally structured so that the money they pay to their pitching rotation year after year comes in under an average of 1 win per pitcher on the open market.  It’s practically impossible to not operate with a surplus in return on investment, because small market teams are highly invested in young arms who can get hitters out without costing the team a lot.

$40 million rotations on the other hand mean that the team sits between 1-2 wins above replacement per pitcher in terms of average compensation.  Only 10 rotations in baseball are at this pay-grade,  and every team (perhaps with the exception of the White Sox) is in go-for-it mode every year.  You can’t rebuild while paying $40+ million for your starting rotation: it’s lunacy.  The risk of losing your payroll dollars to the disabled list is extremely high.

Whether the Royals are spending their payroll most efficiently is a different argument entirely.  Their overall payroll isn’t extreme: it will be a fraction under $80 million this year, but the mid-market Twins consistently held an $100 million payroll when they were competing for the division every year, and there’s little doubt that most teams can do the same.  The Indians are in exactly the same financial situation as the Royals, and are spending the same amount.  But the percentage of the payroll the Royals have put towards pitching IS extreme.  The Royals have just three position players on their roster making more than $3 million this year: RF Jeff Francoeur, DH Billy Butler, and LF Alex Gordon.  Their entire rotation, with the exception of Wade Davis, will make more than $3 million each.

The Indians are invested very differently.  They spent the same kind of money the Royals did this offseason, but waited out the market and ended up signing hitters instead of pitchers.  They signed four position players this offseason (OF Michael Bourn, OF Nick Swisher, IF Mark Reynolds, IF Mike Aviles), committing a grand total of $116 million in salary, though just $26.25 million for this season.  To upgrade their rotation, they acquired Brett Myers (most recently of the White Sox), and will convert him to the starting rotation.

Both teams saw a relative opening in the AL Central, and tried to fix their biggest weakness to get there.  The Royals got 7.5 wins from their rotation last season, which would essentially be worth $40 million on the open market.  But it’s not like the Royals had to keep their entire rotation from hitting the market, nor would they have paid that amount to keep those guys had they needed to.  The Indians got 4.6 wins from their rotation last season, which is worth about $25 million on the market.  From a salary perspective only, neither team can expect to receive a boost in terms of pitching performance from last year.

It’s a weird position for the Royals to be in because it’s the same position that large market teams find themselves in year after year: paying big bucks to remain relevant/not lose ground.  The Yankees have been in this cycle for years.  The Dodgers appear ready to enter it.  The Phillies are stuck in it.  The Giants are still winning world series, but have no way of improving their run prevention at this point.  The top of this list suffers from this investment effect every year.

The problem of course is that the Royals won 72 games last year and the Indians won 68.  Paying for arms is not going to improve either team, so the improvement has to be made on the other side: with the position players.  Both teams are hoping that they improved enough from the outside (Indians) or through internal development (Royals) to make their financial investments worth the trouble.  The Toronto Blue Jays, who only received 5.5 wins from their rotation last year (and won just 73 games), are hoping for the same kind of thing: they’ll be expecting at least 2-3 more wins from their rotation this year.

There may not be an optimal strategy here, but simply spending money on the rotation has worked for National League teams in recent years such as the Pirates and the Cardinals, not to mention large market teams like the Giants, Nationals, and Phillies.  It hasn’t worked quite as well in the American League, for a number of reasons.  Instead, teams like the Rays, Athletics, Orioles, and Rangers have won in spite of their abilities to shed large contracts to players while the Red Sox, Tigers, Yankees, and Angels, who spend the most on pitching, consistently have the weakest results.

I’m skeptical that the Royals’ investment is going to work out for them.  It certainly can, but there will likely be other factors at play here, including the improved health and training/development of their current staff.  If that had worked over the last three years with their young pitchers, the Royals wouldn’t have been in this position to begin with.  So the team’s methodology must improve across the board.  And in the American League this year, there are enough bottom feeders to keep a team like Kansas City afloat.  But to get to the playoffs, their approach is going to have to prove stronger than teams in like situations, such as the Indians and Blue Jays, and the track record of high pitcher salary in the American League in recent years is simply not that good.


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