Three More Years: Kennedy Bypasses Opt Out

As expected, and as reported over the weekend, Ian Kennedy committed his future to Kansas City for the next three years by foregoing the opt-out clause in his current contract.

It’s only a surprise if you haven’t been paying attention. In an interview close to the season’s end with the Kansas City Star, Kennedy said, “It would be stupid if I did (opt out)… You don’t go to the free agent market pitching how I’ve been. No one is going to want that.”

Indeed.

Kennedy had an up and down season. Mostly down. He opened strong, then suffered a hamstring injury in May. He struggled in his return, but then starting throwing his curveball more and found some success. Then he bombed in August and couldn’t find his footing down the stretch as it was revealed he was battling shoulder fatigue. He finished with a -0.2 WARP, a 5.68 DRA and a 121 DRA- (meaning his DRA was 21 percent worse than league average.) He made 30 starts, with the Royals winning only 14 of those. This comes on the heels of a decent debut campaign in Kansas City where he was worth 2.0 WARP with a 4.46 DRA and a 99 DRA-. Still, the Royals were only able to win 16 of his 33 starts.

It was always going to be difficult to justify the contract the Royals bestowed upon Kennedy following the 2015 season. Now that he’s in the fold for the next three years, it just got impossible.

If we estimate a point of WARP at $8.0 million for 2016, Kennedy was worth around $16 million in his first season in Kansas City. The Royals paid him $7.5 million for his services. So far, so good. However, he gave that back and then some with his performance last summer. If we adjust for inflation and bump the estimate for WARP to $8.5 million, Kennedy was worth -$1.7 million when he actually earned $13.5 million.

So in his two years in Kansas City, Kennedy has provided a total of 1.8 WARP at a real cost of $21 million and has likely provided $14.3 million in value. Fine. I’ll do the math for you. For the production the Royals received, they have overpaid by about $6.7 million. (Your financial calculations may vary depending on the estimates of how much a single WARP is valued.)

There was also the issue of the buyout in case he had opted out which further complicates the contract situation. The Royals got Kennedy at something of a discount for his first season, so if the expectation was he would take the opt out after year two, the Royals would kick in a $6 million buyout which would basically push his AAV for the two years in Kansas City closer to the $13.5 million he earned last year. Remember, the Royals structured the contract this way to alleviate some of the financial burden that was coming with a core group of players coming off a championship season advancing deeper into the arbitration process.

For a small market team like the Royals, spending big money to field a competitive team, the Kennedy contract counts as a big fiscal miscalculation. So far.

Now that Kennedy’s contract has locked it at an overall guarantee of five years and $70 million, we can look forward to see how he should be performing to give the Royals something of surplus value moving ahead. Let’s start with a narrow focus and look only to next season. Kennedy will make $16 million for 2018. If we bump the value of WARP up another half million (again, estimating for inflation) Kennedy will need to provide 1.8 WARP to be worth his deal for next year. Is that something he can accomplish?

Since moving to Arizona ahead of the 2010 season, Kennedy has been one of baseball’s most durable starters. In those eight seasons he’s started between 30 and 33 games. So we can at least project the opportunity will be there.

Will the results?

Here’s how Kennedy has fared since becoming a full time starter for Arizona in 2010.

He’s never really come close to the heights of 2011. That’s fine. Our focus should fall in his most recent results. Over the last four seasons, he’s finished with a WARP of 2.0 or higher twice and has been 0.5 or lower twice. Maybe his current true talent level lies close to his career average WARP of 1.3. If that’s the case, that’s bad news for the Royals. That falls short of the 1.8 WARP he will need to provide for the Royals to get value from his contract.

Looking at the big picture, for Kennedy to be worth his five year contract, he will need to post around a total of 8.0 WARP. With two seasons in the books, he’s earned only 1.8 WARP, which presents a tall order of providing 6.2 WARP over the final three years. As you can see from the table above, he’s never had a three year stretch where he was that productive. Entering his age 33 season, it’s unrealistic to think he could start now.

The juiced ball era certainly doesn’t help matters. Kennedy is a fly ball pitcher, one who was targeted by the Royals specifically for that profile. Yet in his two seasons in Kansas City, he has been repeatedly bitten by the home run bug. He posted a home run rate of 1.52 HR/9 in 2016 and followed that with a career worst 1.99 HR/9 last three season. It’s not just the home runs. Over the last two seasons, Kennedy is missing fewer bats. His strikeout rate has dropped from 9.3 SO/9 to 7.7 SO/9 last year. Meanwhile, his walk rate has increased from 2.8 BB/9 in 2015 to 3.6 BB/9 in 2017. The trends aren’t debatable.

My view on the Kennedy contract at the time was one of a calculated risk. Moore knew he had two more years with his championship core and added an arm to the rotation. If things worked out, the Royals would have another one or two postseason appearances and Kennedy would walk away from the final three years of his deal in Kansas City, freeing the Royals from paying for a mediocre starter on the the downside of his career. Yet when you also throw in the value of the first round draft pick the Royals forfeited by signing Kennedy, the cost of this piece of business increases beyond just the contract.

The Kennedy situation along with those of Masahro Tanaka in New York and Johnny Cueto in San Francisco highlight the risks teams undertake with the opt out clause. All of these pitchers are still in position to recover from injury plagued seasons and may still ultimately provide value. However, the larger market clubs have the financial wherewithal to absorb a handful of poor contracts. The Royals do not have that luxury.

And now the Royals are saddled with a poor contract on a team that will enter a rebuilding phase this winter. It’s a less than ideal situation for this team and one that will have a ripple effect for the next three seasons.