Royals Sign Jason Vargas

This is going to be more of a quick take than any kind of long rambling analysis, as I have done too many of those today already, but hey, more news. This one’s not a Fielder-for-Kinsler trade, but the Royals have filled their last rotation spot by signing Jason Vargas to a four year, $32 million contract. The deal was first reported by Yahoo’s Jeff Passan.

I’m assuming the initial reaction of many is going to be the same as my initial reaction when I heard they had given Jason Vargas a four year deal; that’s nutty. Jason Vargas is a perfectly serviceable big league starter, but you don’t usually give four year deals to role players. Vargas isn’t any kind of front-of-the-rotation ace, he has moderate upside at best, and this deal covers his age 31-34 seasons, so the four year term is kind of odd. It’s entirely justifiable to say that you wouldn’t want to guarantee money to a 34-year-old Jason Vargas, given that his stuff is already marginal and he hasn’t always been the picture of health.

But there’s two parts of every contract, and the years are only half the story. You would happily give Jason Vargas a 20 year contract so long as the price was only for $1 million per season; there are different prices which justify different contract lengths. And so while we generally think of four year deals as being for significant amounts of money, this one is going to cost them just $8 million per season, and thus it has to viewed as an exchange of an extra year in exchange for a lower annual salary. And it’s a trade off that’s maybe worth making for the Royals.

Vargas projects as basically the epitome of a league average hurler in 2014. Steamer has him at +2.0 WAR over 182 innings, pretty much continuing the trend of what he’s done over the last four seasons. He throws strikes, gets a slightly below average amount of strikeouts, and usually posts lower than average rates of hits on balls in play. Whether you’re judging by ERA or FIP or some combination of the two, Vargas is going to rate as roughly average, or maybe just a tick below average depending on how much weight you put on FIP relative to ERA.

League average starters don’t sign for $8 million per year anymore. Tim Hudson, who Steamer projects for +1.6 WAR over 185 innings for the Giants, just got $11.5 million per year from the Giants. Tim Lincecum, at +2.0 WAR over 191 innings, got $35 million over two years. Sure, these pitchers have better track records than Vargas, and Lincecum has the lure of upside, but these prices are significantly higher than what Vargas got. Vargas gave the Royals a discount in salary in order to get the extra fourth year.

If this deal was 3/27, would anyone really be freaking out? That’s basically what the Royals gave Jeremy Guthrie last year, except Vargas is better and younger than Guthrie. And the league has more money to spend this winter than it did last winter.

There’s a good chance that Vargas, in year four of this deal, is going to be totally worthless, a replacement level scrub who fills a low leverage long relief role or something. But $32 million is paying for something like +5 WAR over the next four years, and even if we just project him for +2.0/+1.5/+1.0/+0.5, then we’d expect him to produce exactly +5 WAR over the life of this deal. This isn’t a gross overpay. It’s just transferring some of the cost of signing an average pitcher from 2014 to 2017. For a team with moderate financial resources trying to make a run for the playoffs, that’s not the worst idea ever.

This can’t be the Royals big off-season move. Vargas fills a hole with the expectation of reasonable performance, but he doesn’t really make them better than they were, especially since he’s replacing Ervin Santana. They’re going to have to find other ways to upgrade if they want to become a contender. But this is also a decent enough contract for a decent enough pitcher to make sure that they don’t throw away their season by handing a rotation spot to a total scrub. Jason Vargas might not raise the Royals ceiling all that much, but he does raise their floor. And there’s value in that kind of transaction.

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Dave is a co-founder of and contributes to the Wall Street Journal.

56 Responses to “Royals Sign Jason Vargas”

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  1. Professor Ross Eforp says:

    I had the same initial reaction as Dave. Once I saw that he signed for 4/$32MM I immediately knew it was Seattle, KC, or Philly. The deal really isn’t all that awful upon further review, but I’m not sure how much sense it makes for KC.

    As Dave said, he is replacing Ervin Santana. That sucks. Even worse, they are on the hook for three years after Shields leaves and the rotation becomes a complete crapshoot (at least in terms of known MLB quantities). It would have made more sense to me to go with a guy that at least has a chance to be as good as Santana was last year on a shorter deal. Bartolo Colon and Rich Harden both feel like guys that, while they may implode, could actually do a servicable job replacing Santana.

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    • vivalajeter says:

      Let’s wait for Colon to sign before we peg him as a ‘shorter deal’ guy. For all we know, he’ll sign for 4 years too. It sounds absurd now, but just about every contract has had some level of absurdity so far.

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      • The Foils says:

        Colon is 40. Present tense. Which means he will be 41 next year. I can only imagine how old he’d be in 4 years.

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        • walt526 says:

          “I can only imagine how old he’d be in 4 years.”

          Actually, age is one of the few things that our projection systems almost always get right.

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        • Miguel Tejada says:

          Almost always

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        • Ronald Lutece says:

          The question isn’t if he is 45, but when.

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        • quincy0191 says:

          Almost always is correct. Every projection system said Fausto Carmona would be 28 going into the 2012 season after spending 2011 as a 27-year-old, and he ended up being 31 the next year.

          On the other side, I figured Julio Franco was going to be 42 at the start of the 2001 season, and apparently he was 25 based on the subsequent progression of his career.

          Can’t always get everything right.

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        • blue says:

          He’s “40.”

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    • Couldn't Read That Clearly, I Think says:

      Did you just say Rich Harden?

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    • Balthazar says:

      Jason Vargas, reliable, flyball LHP if pitching in a deep park. He’s better than Bruce Chen or Jeremy Guthrie. I know you’ve never liked him much, Dave, but I doubt he’s worthless in Year Four. More likely he declines to a #5 guy because he’s ahead of that now. I don’t say ‘an innings eater’ because amongst the larger flaws of Vargas’ profile is that he very seldom goes deep in games, so his team needs to have a deep, versatile bullpen . . . which KC DOESN’T, so yup, Dayton Moore makes his move again. More of a little lost, little gained kind of contract, to me.

      I don’t see Hudson or Lincecum as good comps for Vargas as far as per annum costs because a) both have been far better than Vargas at peak, and b) both have much better stuff still. But the point is still valid: $8M a year is less than what league average guys are going for. In that sense, it’s a win for KC, getting a lower per annum, while a win for Jason in getting a four-year committment. If he stays healthy, it’s an OK deal. Not a steal, a deal. I like Jason Vargas as a player, and I wish him well. As for KC, the wheelspinning saga continues, doesn’t it?

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      • Trent Phloog says:

        Why do we all agree that Vargas is better than Guthrie? Using ERA-/FIP-/xFIP-:

        Guthrie last year: 99/119/115
        Vargas last year: 105/108/108

        Guthrie career: 97/110/110
        Vargas career: 109/112/111

        Arguably Vargas was a touch better last year, depending on how much weight you give FIP. But Guthrie actually had better results, and has been better for his career.

        Also using WAR, Guthrie has accumulated 12.9 in 10 seasons; Vargas 8.3 in 8 seasons.

        Basically, they both seem like the same crappy pitcher. I can’t believe I just spent this much time thinking about them, or that the Royals are spending almost $20 million combined for the privilege of employing them in 2014.

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        • Balthazar says:

          The thing about Vargas is, you can’t really get a handle on what he does in looking at aggregate statistics. He’s an extreme fly ball guy, and he has been routinely lit up in some of the better hitter’s parks. He gets above average numbers in the majority of venues and innings he pitches. His numbers are skewed by excessively bad outings in bad contexts. I’m not arguing that we throw out Jason’s worst results but simply that we see those bad results as a) context dependent, and c) not indicative of consistently mediocre performance. The misuse of aggregate numbers is endemic here at Fangraphs. In most cases, ‘it all averages out,’ but in some, no, and Jason Vargas is one of the exceptions. I say that having watched him pitch for years.

          To what extent that can be minimized by intelligent usage by his manager is hard to say. Jason Vargas wants the ball every time it’s his turn, and doesn’t take well to being skipped. The point is, in most of his innings, Vargas IS appreciably better than Guthrie. He is Dr. Jekyll in 3/4 of his starts, and Mr. Hyde in the alleys of short parks who should be kept on a short leash in such places.

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  2. Grant says:

    I know you’ve defended these Steamer projections before, saying that there’s not really a better quick projection system in place, but after looking at their projections for the Red Sox, I have to say I am now questioning them quite a bit.

    Steamer projects every single Red Sox regular and starting pitcher to decline in 2014, with exception of Jake Peavy and Will Middlebrooks, and with Lackey and Gomes remaining the same. According to Steamer, Saltalamacchia, Ortiz, Napoli, Pedroia, Drew, Daniel Nava, Jacoby Ellsbury, Shane Victorino, Jon Lester, Clay Buchholz, Felix Doubront, Ryan Dempster, Koji Uehara, Junichi Tazawa, and Craig Breslow, all will be worse in 2014. A combined 15.9 WAR worse.

    The system basically says that, if sequencing/randomness is kept the same, the Red Sox, tied for best record in the regular season and World Series champions, would be an 82 win team with the same crop of players. I personally, don’t have a better system for projections, but that would seem to majorly fail the eye test.

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    • Dave Cameron says:

      Players who have good seasons usually get worse. It’s called regression to the mean.

      And no, it does not project them for an 82 win team. Steamer thinks the Red Sox are the best team in baseball by a mile. Where you got the idea that it thinks they’re not very good, I have no idea, but it’s not true.

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      • Grant says:

        Perhaps using the Red Sox was a poor illustration of my point. Looking through the 2013 leaderboards, Steamer projects 3 out of the top 50 players from last year to improve from 2013. Three. One of whom is Jose Bautista, who missed ~50 games last year.

        I understand the concept of regression to the mean, and that the projection may not be entirely inaccurate on average, but what use does the projection system serve in reference to projecting specific players when it tells us that 47 out of the 50 players in the league this year will perform worse?

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        • Eminor3rd says:

          I don’t think you DO understand regression to the mean. The top performers each year are likely having seasons that are at the top of their abilities. Therefore, it should be obvious that they will likely get worse. That doesn’t mean they’ll suck, but no player is likely to repeat his best year at any point.

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        • Grant says:

          Obviously the best players are likely not to repeat those season, but to just regress everyone by some percent and stick a fork in the process does not seem like an accurate way to get good results.

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        • Basil Ganglia says:

          “but to just regress everyone by some percent and stick a fork in the process does not seem like an accurate way to get good results.”
          Which further illustrates that you haven’t grasped how the projections work. It does not regress everyone by a specific amount. It looks at a players record of performance and compares his last year with his overall performance record, and throws in a few other factors such as expected age related declines. As has been pointed out, in any given year the players who are having the best years are likely having better years than their track record.

          You are suspicious of a projection system that predicts that most of those players will regress to something more in keeping with their recent history. Rather, you should be suspicious of a projection system that predicts that they will continue to perform at levels that are inconsistent with their history.

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        • Park Chan Ho's Beard says:

          Grant, please don’t criticize something that you very obviously don’t understand at all.

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        • Paul Wilson says:

          There’s the ever-useful CBS projection system, which regurgitates the previous year’s numbers.

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        • Eric R says:

          The top 50 players in WAR in 2012 averaged 5.04 fWAR; in 2013 those same players averaged 3.22.

          So there is your ballpark average age/injury/regression for a top player year-to-year.

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    • Eminor3rd says:

      Why? The team went from worst to WS champs — why is it unreasonable to think that a lot of its players performed over their heads?

      That’s pretty much what happens with every championship team, really. Most of their players have really good years. It doesn’t make sense to project players to perform at the high end of their talent levels. Remember, these are projections, not predictions.

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    • Luther says:

      In case of World Series winners, wouldn’t we expect them to have over performed their expectations?

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      • JuanPierreTakesSubtracterol says:

        If you expect anyone to over-perform expectations, the I expect you will get stuck in an infinite expectation loop.

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  3. Eminor3rd says:

    The problem for me wasn’t the terms, but the fact the the move screams “consolation prize” and it’s only November 21st. It’s not a horrible rate for him, but it’s still good chunk of money guaranteed to a guy who will almost definitely not perform as well as his replacement. If this team is all-in, they really need to be looking at more substantial upgrades this early in the offseason.

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    • ralph says:

      Yeah, I am line with this thinking. It makes a lot more sense at the end of the offseason when there is very little opportunity cost to the move.

      But with Shields, Duffy, Ventura, and Guthrie, they don ‘t have a spot to gamble on a guy like Phil Hughes if it looks like they could get him for a good price. Not to mention the fact that they didn’t hold on to Felipe Paulino, who seems more intriguing than Vargas.

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      • Balthazar says:

        On Paulino, agreed. KC knows his medicals, so there’s that. Still, I’d love for my org to pick up Paulino on a looksee, and the org that does may have a very good bargin bin payout.

        The thing about ‘other than Vargas’ is that the years-and-$$$ being requested on anyone significantly better who is ALSO willing to go to KC likely looked enough worse that it’s time to take consolation whilst one still can. I can see this as disappointing in KC . . . but that team’s not going anywhere in 2014, so to me it’s just the first nip of the big bite to come.

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        • Funkatron says:

          Paulino helped the Royals so much last year with his 0 IP…

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        • Balthazar says:

          Good thing nobody tried to acquire him last year when his ligament splice was grafting then, right? Now that he’s likely physically capable of pitching again, that value counter may change its reading.

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    • JayT says:

      The thing is, with the way teams are throwing money around, there might not be a similar contract to be had at the end of the offseason. Also, they had something like $15 million coming off the books with Santana and Chen leaving, so they still have a decent amount of money to spend before they have to raise payroll, which is something they’ve said they are willing to do.

      If this is the end of their moves this offseason, then yeah, it was a bad move. If they can still add in a decent 2nd baseman and some roll players, then they might be pretty decent.

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  4. Erik says:

    Once again the Angels miss out on a compensation pick. And once again the Halos let go of a reasonable pitcher in the hopes of filling two rotation spots for ‘a little bit cheaper.’

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    • Michael says:

      Are you suggesting that Vargas wouldn’t have taken 14.1 MM for a year cause that’s…ridiculous. He would have just taken that money. It’s almost double money compared to what he got.

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      • Erik says:

        The $14.1 mill is less than half of what he got, not double.

        Im sure he would’ve taken it, but I’m looking at the opportunity cost here. I’m not sure which two starting pitchers they will be able to get who are better & cheaper.

        Last year they did the same thing with Ervin Santana and Dan Haren, with DiPoto proclaiming a more productive duo for significantly less money. They will be paying Blanton for nothing this year, and Jordan Walden will be pitching for Atlanta with those same two spots needing to be filled. At least with a qualifying offer we are only concerning ourselves with a few extra million that affects the 2014 season only.

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      • Balthazar says:

        Look, folks are evaluating the QOs all wrong, they look at the price tag, but the players look at the years, a (1) and the total payout. Players want longer-term deals at higher total dollars, because a) they’re paid more in total, and b) they have a much greater committment of future playing time since they are owed the money. NO player is going to take a one-year deal if he has reason to think he can beat the total on a multi-year deal. Which most do. It is not like players are guaranteed to stay healthy or have a good season. If they take a one-year, and tank, they may never, ever see good money again. THAT is the reality of taking a QO.

        This offseason is the one time in his career Jason Vargas will ever have a realistic shot at a multi-year deal. Of course he had to take that, and it’s worked out very nicely for him. Other than KC being the present venue—and don’t presume that Vargas will be staying there for all of this deal. He’s a reliable lefty on a moderate contract, which means he would be very moveable, and likely finishes this deal elsewhere. If Vargas took the Angels’ QO, and got injured, he wouldn’t be looking at $8M-for-several in 2015; he’d be looking at a Spring Training invite. And he’d never get his quote back up to even this number.

        I agree that the Angels came up short on Vargas. I think they’d have been better signing him to a similar deal, and then moving him when and as they had a better alternative. Not a lot of forward thinking in Anaheim. Unless they pull off a major swap for a front of the rotation starter and need the salary space for that. It’s a bit early for disappointment in Orange Acres: there’ll still be plenty available to go sour on in good time.

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        • TKDC says:

          There has to be a point where a player takes less money for fewer years. Maybe a guy would rather have 4/32 (and really, I think it is fair to say the price might have been more like 4/28 or so if the comp pick were attached), than 1/14, but there is a limit. You know damn well he wouldn’t rather have 4/20 than 1/14 because it would be almost certain that he could make 6 million the next 3 years, and there is potential for a lot more.

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    • BJsworld says:

      They didn’t miss out on anything other than paying a 1.5 WAR pitcher $14M.

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  5. BurleighGrimes says:

    I like this move for the Royals. DMGM has done a lot of asinine things, but getting a league-average starter for $8m/year in this market seems completely reasonable to me, especially if it’s coupled with moves that would improve the Royals below-average offense.

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  6. JTO says:

    “You would happily give Jason Vargas a 20 year contract so long as the price was only for $1 million per season”

    Im not sure about that.

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  7. Old School says:

    Vargas has a career ERA over 4 and more losses than wins.

    Four years and $32 million for a poor pitcher is a bad deal.

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  8. Basil Ganglia says:

    I’m surprised that Dayton Moore didn’t tack on a fifth year, so that Vargas would know he would still be around when the rebuild is done.

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  9. Insayne says:

    I don’t think he’s Ervin Santana’s replacement, but rather Bruce Chen’s replacement. The Royals are likely looking at top prospect Yordano Ventura to be Santana’s replacement.

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  10. Colin says:

    This is a very Royals signing.

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  11. Dyson says:

    Vargas is not much higher than replacement level.
    There is a misunderstanding in the community 1 WAR = 5 million, 2 WAR = 10 million.
    This is not the optimal way to allocate resources. Instead, players who are superstars are worth exponentially more, since a team only has a certain number of roster slots.
    As an example, a 1 WAR player is not worth 5 million, but maybe half as much. While if you told me a player is going to be 6 WAR – he is certainly worth more than 30 million/year.
    That said, it is much easier for the Royals to find someone who can produce 1 WAR from their farm or free agency pool for less cost, with higher upside.

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    • What is that? says:

      Not exactly true. All that value concentrated in a few assets is more risky than diversified assets, obviously. Dave Cameron touched on this recently and many times in the past. 0-2 WAR players are not freely available pieces.

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    • Chickensoup says:

      the money is certainly not exponential. Exponential would put Mike Trout being worth about eleventy kazillion dollars.

      But seriously, the numbers that are given (4-6 million per WAR) are actually pretty accurate if you look at contracts that are actually given out. Where it usually breaks down is in the higher end contracts, but only at the end of the contract. These are the albatross years that the team pays to secure players at market rates.

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      • Bookbook says:

        If you’re knowingly paying for albatross years to secure a player at “market rates”, then you are paying more than market of course. We need a converter to help us think about these contracts–almost an inverse NPV calculator. If we inflate the dollars paid per expected WAR in year one by ten percent per each additional year of the contract? Would that make this a $5.2 million payment per expected WAR, or does each year need to compound? Ah! English major alert.

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