Friday, April 1, 2011

Should The Royals Implement The Rays Signing Strategy?

This afternoon it was announced that the Tampa Bay Rays had signed lefty Wade Davis to a four year extension worth 12.5m. Those four years will carry him through his arbitration eligible seasons. The team then has the choice to exercise three option years, essentially buying out three years of free agency at what could be far below market value rates. Essentially, Davis gets protection against injury until his free agent years, and the Rays gain payroll certainty and stand to save many million over his free agent seasons should he remain healthy and effective.

Both sides get something important to them.

An extremely promising prospect in the Minors who posted dominant peripherals, he showed glimpses of that talent in 2009, but failed to come anywhere near them last year. After two seasons in which he's thrown a total of 204.1 innings with a 4.45 FIP, the decision to extend him carries some risk. Yes, the ERA looks better with a 4.01 career mark, but he's been the enormous beneficiary of a .279 career BABIP and 75% LOB mark.

Of course as one of the most stat-savvy teams in baseball, I'm sure the Rays know infinitely more about those issues and others than I do. What seems more likely to me is that the Rays are executing the most basic Wall-Street maneuver there is. They're buying low on an asset they know better than anyone else. Davis was a high-end prospect (not really elite) who had proven himself throughout the minors. It's likely they simply feel that with time, he'll develop into a pitcher capable of sustaining success through his own talent, and without the aid of luck that he's experienced during his first two seasons. And they're willing to put their money where their gut (and scouting reports/data) is.

Such a simple strategy could bear enormous dividends for any team. But for the Royals in particular, who have had a long and ugly history of being able to retain their core players, being able to identify key opportunities to buy low could help them assemble a core group of players who they can build their team around. With so many talented young prospects coming through the system, the team will undoubtedly benefit from at least a few who experience immediate success.

But what about the players like Davis who, despite nice ERAs, really haven't performed particularly well? Moreover, what about a player like Alex Gordon who hasn't performed well in any regard? It's one thing to want to implement a buy-low strategy, it's something all-together different to actually pull it off successfully because the choices you have to make are really, really tough.

To do so well, one has to have a combination of excellent information, be it scouting or sabermetric data (ideally both) - and a huge pair of, well, you know. Because in buying low you're raising the stakes. Anyone can play it safe and invest in a player only when they've proven their talent over multiple seasons. Those teams pay more for it though, that's just the nature of the business. The more experience you accrue, and the more proven you are as a player, the greater your leverage in negotiations.

Unfortunately for teams like the Rays and Royals who are limited in terms of their payrolls, the 'safe' strategy is generally not a winning one. While the strategy does minimize risk, it's maximizes cost. Ultimately that's not a battle a team with a 70m payroll can win when going up against one with a 150m or 200m payroll. At least not consistently.

To beat the teams with bigger budgets and safer options for investment, you've got to invest earlier, riskier, and better. The Rays have done this in different ways, including signings like Davis'. But they've done so in other ways too, like not spending on easily replaceable assets like bullpen pitchers. and making intelligent free agent acquisitions. While many are likely to simply compare the Davis deal to the much ballyhooed Evan Longoria deal, the signings have some fundamental differences. For one, the two players were substantially different in terms of their quality.

Where Longoria was always viewed as an elite prospect, Davis was more of a really good one. He was "safer" in that sense. At least to the extent that someone with essentially no MLB experience can be labeled safe. Davis came with more risk, and after two years, has done little to prove his performance from the Minors can translate to the Majors.

The Rays bought early on Longoria - like someone who bought Google stock during it's IPO would've. Google was an elite tier investment that panned out exactly as people expected, better even. They bought low on Davis - like someone investing in financial stocks (depreciated and full of uncertainty) in late 2008 would've. The two strategies share the similarity of enhanced risk/reward, but they are fundamentally different, and that's important to consider. Ultimately there is more than one way to go about making these investments.

For the Royals it'll be important to do so themselves. Perhaps that means trying to sign Eric Hosmer right out of the gate (assuming he and his agent are amenable to such a deal). Maybe it means targeting a buy-low candidate like Gordon or even Luke Hochevar. Or if Mike Moustakas or John Lamb struggle during their first year or two, signing them off bad seasons.

However it plays out, implementing such a strategy will be risky. Investing into a player like Gordon for the next 4-5 years could turn out ugly and cost the team 6-8m a year for quite awhile. It could also result in them keeping an elite level talent at far below market cost.

It's a dangerous game that requires a team to have superior talent evaluators and superior management. Given the Royals ability to identify quality players through the draft, one would have to assume they have at least a solid ability to evaluate talent (though it should be noted that the amateur scouts aren't the same ones doing the pro-scouting).  Is that talent evaluation elite? Maybe. Maybe not.

And what about Dayton Moore? He's made plenty of poor signings, and consummated his fair share of ugly trades. Does he have what it takes to sign quality contracts that evenly distribute risk between team and player? Or would he sign Gordon to a deal that pays too much for too long without the safety valves that option years provide?

I don't know the answers to those questions, and ultimately, those are the key to implementing the strategies the Rays do. You've got to know more and execute better. Otherwise, you're just rolling the dice. In that case you're not being savvy like the Rays, you're being negligent and self-destructive.

Corey Ettinger is a Senior Writer for Baseball Digest as well as a proud contributor to both,, and He also provides extensive analysis of the American League Central Division at his own blog, AL Central In Focus. Be sure to follow me on Twitter @Coreyettinger for the latest updates, random thoughts and general tomfoolery.

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