Opinion

Royals' risk aversion needs to change

Kansas City appears to be on yet another road toward 90-plus losses, and gallons of ink will be spilled trying to figure out why this team that began with so much optimism failed to live up to the hype. The reason, though, shouldn't be that complicated to find and can be stated in one word.

Risk.

The Royals’ problems are not because David Glass is cheap (he is not) and it is not because he's disinterested in winning (I don't think he likes the ridicule he receives from fans - he is human you know).

The Royals problems are not because general manager Dayton Moore cannot recognize talent or build a roster (the answer is "he can" to both).

The problem is that they refuse to take big risks. Taking a risk is what small market franchises have to do to put themselves in a position to win championships.

The Milwaukee Brewers traded for Zack Greinke; the Oakland Athletics traded their two best starting pitchers before their contracts were up; the Pittsburgh Pirates traded for A.J. Burnett when no one wanted him; the Minnesota Twins use 40-percent of their payroll on Joe Mauer and Justin Morneau.

Some risks work out, some don't. But if the Royals are ever going to win a championship, let alone be competitive, they will have to make a bold and risky choice to propel them to that level.

Any risk the Royals are going to take will have to go through David Glass, and the boldest, most risky thing he can say to whomever he employs as the general manager is this: Go for it.

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Money does not win baseball games.

Sure, it may make things easier when it comes to sustaining success and overcoming mistakes. The Yankees have been in the playoffs 17 of the last 18 years because of their ability to spend more than anyone else in the game.

But they also spend their money well unlike the other franchise in New York. The Yankees developed Derek Jeter, Robinson Cano and Mariano Rivera, traded for Alex Rodriguez and Curtis Granderson, and signed CC Sabathia and Mark Teixeira. The Yankees don't pay for their wins, they earn them by evaluating talent that will work within their franchise and using their mass amounts of cash to assure they keep that talent.

Besides, if money wins games then why are the Oakland Athletics in the hunt in the AL West and own a wild card position? How can the Tampa Bay Rays lose Carl Crawford to free agency last season and lose Evan Longoria to injury for much of this season and still be in the hunt in the AL East and a game out of a wild card spot? How do the Pittsburgh Pirates have the fourth-best record in the National League and be 3.5 games in front of the St. Louis Cardinals for the final playoff spot?

Winning baseball franchises have winning baseball leadership. A’s general manager and part owner Billy Beane creates opportunities to improve his baseball team by looking at every angle possible, conventional or not, to extract as much value as he can from the players he can afford. The Pirates have rebuilt their farm system while making trades for major league talent like Burnett to supplement their young talent. Tampa Bay has perfected the cheap long-term contract for rookies (i.e. Evan Longoria), scout their own players better than almost anyone else and made trades for key players like Matt Garza and Jason Bartlett before they were viewed as key players.

The owners of these teams allow their general managers to make the best baseball decision possible even if it seemed unconventional. Ownership of winning franchises know how to balance ledgers and still put their baseball executives in a position to make decisions that will better the franchise on the field.

This are how winning owners operate: by using whatever resources they have to invest into their franchise to improve on-field performance and take the risks necessary to put their franchise over the top.

Not all risk is equal, certainly. The New York Yankees handing Alex Rodriguez a nearly $300 million contract may be less risky than if the Tampa Bay Rays signed Zack Greinke to a $100 million contract. But risk is still at play in both cases and on a large scale.

Where are the large scale risks the Royals are taking?

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Cheap is not the right word to describe David Glass.

Since he hired Moore in 2006, the Royals’ budget for signing draft picks and international players has grown exponentially. Gone are the days of signability, replaced by the era of Scott Boras clients and minor-league investment. A new minor league team was started, a Dominican academy was built and there was a sudden shift of young prospects who started to answer their door when KC scouts knocked. Glass gave Moore the go-ahead to create positions in the front office in order to add talented baseball minds. Within a few years, the Royals farm system was heralded by almost all who followed the minor leagues as one of the top system in baseball and is still thought to be one of the best today.

It has taken time, but fruits of that investment seem to be arriving and Glass has spent money to keep homegrown and young talent in Kansas City. In the last 18 months ownership committed $86 million in guaranteed money and another $48 million in option years - a grand total $134 million that could go higher if performance escalators kick in - to Billy Butler, Alex Gordon, Alcides Escobar and Salvador Perez.

There is also the $28 million committed to Jeff Francoeur and Bruce Chen, for better or worse, to keep them in Kansas City and to sign Jonathan Broxton and Yuniesky Betancourt. In total, Glass committed $93 million to free agent and current players last offseason. When was the last time – if ever – the Royals spent that much money in an offseason?

And the idea that Glass pockets revenue sharing is a little bit unfair.

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Still, as the Royals struggle this season, many fans point out the lack of dollars that were spent on acquiring starting pitching. Chen was considered one of the cheaper options compared with other free agent pitchers and the Jonathan Sanchez for Melky Cabrera trade was considered something of a wash at the time of the trade (though not so much anymore). Kansas City managed to spend almost $100 million last winter while not improving the team’s biggest weakness.

Glass didn’t spend money on pitchers not because he is cheap but because spending large quantities of money on starting pitching is risky. Accounting offices are not friends of risk. Glass could have offered big money to free agent pitchers Edwin Jackson, Roy Oswalt and Mark Buehrle or invested in lower tier pitchers Kevin Millwood and Bartolo Colon. He could have traded for Gio Gonzalez, Matt Garza, Mat Latos or one of the several other pitchers who were traded last offseason.

What about that roughly $80 million in revenue sharing the Royals receive at the beginning of most every season? The Royals wouldn't get the full $80 million if they won, say, 79 games.

MLB's revenue sharing system is not an equal division of money to a handful of team but instead weights the percentage of money distributed by giving the five neediest teams a higher percentage than the other qualifying franchises. Those "neediest" teams are determined in part by how much revenue the franchise earned in the previous season. Economist J.C. Bradbury wrote in the New York Times in 2010 that a team improving its victories from mid-60s to mid-70s ends up costing money, because the few extra million earned in revenue from the bump in tickets and concession sales costs them millions in revenue sharing later.

Bradbury argued that a franchise doesn't begin to see strong financial gains until it becomes a mid-80s-win team.The Royals lose because it is their best and safest business model, and the risk and resources needed to push them into of a winning baseball franchise appears to be too great for Glass. If Glass wants to maintain a yearly profit and also put together a winning team, he would have to find a way to jump from 65 wins to 89 wins in one offseason. That, as you may suspect, is almost impossible.

So any general manager hired by Glass will be left with this problem: How do you gain 25 wins in an offseason and then sustain that success for years to come without blowing out the budget or destroying the farm system?

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Glass is masterfully finding ways to financially improve one of his best financial assets, the Royals, but he is doing so to the detriment of on-field performance. Until his multi-million dollar asset begins to shrink, there is no need for him to take the risks necessary to build a winning team. Major League Baseball is structured in such a way that he could lose forever if he wanted and still make millions of dollars.

The biggest risk Glass could take is if he told Dayton Moore or any general manager he chooses to employ to "go for it."David Glass could make the Royals a contending team this offseason if he wanted. He could green-light cash to be spent on one or two top-end pitchers that are acquired either in a trade or free agency. He could eat what remains of the Francoeur contract and promote Wil Myers to the big leagues. He could sell the naming right of Kauffman Stadium and use the money to make a strong bid for Zack Greinke.

However, "going for it" is an adverse risk to his highly valuable asset and could possibly result in the loss of millions of dollars. Given the last 12 years of Glass' ownership, I think we know the likelihood of Glass ever uttering: "Go for it."

| Ben Nielsen, bnielsen@kcstar.com

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