Good for the Royals in Restructuring Salvador Perez

With one of the team-friendliest contracts in all of Major League Baseball, the Kansas City Royals could have paid Salvador Perez $21.75 million to play for them for eight years. Perez signed a five-year, $7 million extension with the Royals right after his rookie season. The 2016 season marks the final final guaranteed season of the initial extension, with three team-option years set to kick in from 2017 to 2019. Now, Perez will have a new contract that will reward him for his high level of play the past four seasons.

All winter long, signs have been pointing to a willingness from the front office to restructure the contract in an effort to pay Perez a fair-market salary. Perez will now be guaranteed over $30 million of new money, with a contract running through 2021, his age-31 season. The new contract essentially represents a two-year extension from the original contract with a significant raise in salary. The Royals were never going to decline any of the three option years on the original deal, but will now pay Perez more fairly for his services. It’s a bit risky for the Royals to extend a catcher with a high innings total behind the plate, but Perez is still young enough to remain productive until the five years are up. He will likely begin taking a few turns at DH over the next few years.

The Royals were not forced to do any of this. Perez could have been controlled for three more seasons beyond 2016 at a cost of $14.75 million. Paying a Gold Glover and All-Star under $5 million per year would have been one of the biggest coups in league history. The Royals could have easily stuck to their budget-conscious ways and forced Perez to honor the original contract. No analytically-minded person would have begrudged them that.

This restructuring speaks to a few things. First, Perez is the unquestioned leader of the Royals. He is the heart and soul of the team and a fan favorite. Even without a new deal, Perez would have continued bringing the same personality and intangibles to the ballpark. These intangibles are important, and Perez has value to the Royals beyond his on-base percentage (low as it may be). Will the Royals need to begin curtailing Perez’s innings behind the plate? Yes. Are there questions about his approach at the plate? Yes. Those questions do not hide the fact that Perez has been grossly underpaid under the current deal and would continue to be so for three more years.

More importantly, this extension represents a significant change of mindset for the Royals. Perez was signed to a contract to which he agreed. A $7-million investment in an unproven catcher coming off a 39-game debut was risky. In fact, Perez played in only 79 games in the first year of the initial contract after suffering a knee injury in spring training. The Royals very easily could have been left holding the bag on an injury-prone backstop with limited on-base skills. Go ahead and ask the Houston Astros how their five-year, $10-million extension with Jon Singleton has worked out so far.

This willingness to reward homegrown talent when there was no real financial motivation could bode well for the Royals as they attempt to lock up Wade Davis, Lorenzo Cain, Eric Hosmer, and Mike Moustakas to long-term deals. The groundwork for keeping the core together is being laid in the handling of the Perez contract. It is clear that Perez has outplayed his initial deal, and he is being rewarded as such. While this overarching sense of fair play may not convince Hosmer or Moustakas to leave money on the table to stay in Kansas City, it does provide a sense entering the final years of team control that the Royals are committed to building upon the winning ways of the past two years and rewarding the players for their efforts.

When running a professional sports franchise, it can become too easy to let the financials rule the decision-making process. If that were the case for the Royals, Salvador Perez would have been forced to honor his initial contract and play out the final three years of club options. Making concessions in this case may have more far-reaching implications. With a fanbase that has shaken off two decades of irrelevancy to turn Kansas City into a baseball-mad hotbed, the Royals have the runway in place to keep a winning product on the field for much longer than two years. Laying the groundwork for that runway was the first step. Paying to keep it operational is the next, and the Royals are off to a good start.

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