Royals lose Eric Hosmer to the Padres. Here’s why and how the contract offers differed

The reality began to sink in late last week. The feeling inside Dayton Moore’s gut began to turn. All winter long, Moore had pursued Eric Hosmer, the free-agent first baseman and charismatic face of the Royals. All winter long, Moore, the general manager, had navigated the discussions and negotiations and silences of a high-stakes free agency.

The Royals believed that Hosmer, 28, was worth the largest free-agent offer in club history, a long-term contract that would torpedo the team’s previous expenditures. They believed in his talent, his intangibles, his work ethic and his connection to a city’s baseball revival. Yet they also recognized the inconsistency of their stance: In the infancy of a franchise rebuild, in the midst of a sluggish free-agent market, the Royals were pondering a nine-figure purchase.

Moore would call the Hosmer free agency “a great debate.” In the end, it was an argument that never had to happen. On Saturday evening, Hosmer agreed to an eight-year, $144 million deal with the San Diego Padres, electing to leave Kansas City and the organization in which he became a champion. One day later, Moore boarded a morning flight from Kansas City to Phoenix and prepared for a future without Hosmer at first base.

“I had a pretty good sense about four days ago,” Moore said Sunday. “It probably wasn’t going to work here. You still hold out hope. But we began to develop a mind-set that we’re probably going in a different direction.”

The Royals, in Moore’s words, offered Hosmer “certainly the highest offer we’ve ever made.” It was, at one point, believed to be in the neighborhood of $140 million — though club officials declined to divulge the final number. It was competitive, depending on your definition of the word, though Moore acknowledged that the Padres’ final package was better.

“It’s better for what he wanted and what they felt was important,” Moore said.

The story of how the Royals lost Hosmer, one of the most popular players in franchise history, must include phrases like “opt-out clause” and “front-loaded money.” Yet it also dates back two offseasons, to decisions made in the afterglow of the 2015 World Series. Moore referenced that winter at least twice on Sunday afternoon, sitting inside a makeshift news conference in a cafeteria at the club’s spring training facility.

That was the winter club officials opted to re-sign Alex Gordon for $72 million and invest $95 million in Ian Kennedy and Joakim Soria. That was the winter Moore decided that selling off pieces after a World Series win was a nonstarter. The Royals had two more seasons to contend with a core group of players, including Hosmer, Mike Moustakas and Lorenzo Cain.

“I ultimately pressed the leadership button and said: ‘This is what we’re going to do,’ ” Moore said. “That put us in a financial situation that we knew was going to be challenging after the 2017 season. But we made a commitment to go forward. I wouldn’t change it for a second.”

The check came due this offseason as Hosmer, Moustakas and Cain hit free agency. The Royals believed they could pare down salary and make room for Hosmer on a back-loaded contract. Moore was unsure if the team could compete in a market that included some big-market suitors. Royals manger Ned Yost thought “there were just going to be teams that blow us away.”

That did not happen, and the Royals found themselves in a two-team race against the Padres, another team in the midst of a rebuilding project. The Padres offered $144 million across eight years, guaranteeing more money. Yet they also included two crucial elements. First, San Diego offered an opt-out after five seasons, allowing Hosmer to potentially become a free agent again at age 33. In addition, they heavily front-loaded the deal, guaranteeing Hosmer a reported $105 million in those first five seasons.

Hosmer will be paid $20 million per season in those years, according to Scott Miller of Bleacher Report. He will also earn a $5 million signing bonus, a sweetener in the deal that drives up the average annual value during the first part of the contract.

In the final three years of the contract, Hosmer will make $13 million per season, a nice security net if his production declines. But he may never reach that part of the deal if he elects to go to free agency again in five years.

The Royals did not wish to include an opt-out. The mechanism, while more and more common in contracts, increases the risk for a team while giving players the freedom to walk away and make more money on another big deal.

Instead, the Royals wished to back-load their spending. Any Hosmer contract in Kansas City would have likely included smaller yearly salaries in 2018 and 2019 before a new local television contract kicks in. The club is also on the hook for large salary commitments to Gordon and Kennedy across the next three seasons. As a result, it seems highly unlikely the Royals could have matched $105 million to Hosmer across the first five seasons.

“Complete transparency,” Moore said. “If we’re today announcing a press conference and the signing of Eric Hosmer, which we were all hopeful to do, then the next part of that is we have to explore how we’re going to manage our payroll. And so we (would) have to look at players that are making a certain amount of money.”

The Royals’ payroll in 2018 projects to be in the $110 million range. They dumped the salaries of Brandon Moss and Soria in hopes of freeing up space for Hosmer. They still might have needed to shed more, Moore said.

“I’m responsible for where we are economically as an organization,” Moore said. “I made a decision after the 2015 season, knowing full well that our players were going to become free agents and it would put us in a tough spot to be able to re-sign them.”

Hosmer has not yet spoken about the factors that led to his decision. Moore said he spoke to him this offseason and the two discussed family and life. Moore was transparent about the club’s rebuilding plans. He believed Hosmer was interested in a return.

Yost, meanwhile, reached out via text on multiple occasions. He did not hear back.

“I’m not sure whose orders that was,” joked Yost, who was rehabbing from his fall on his property when he reached out. “I didn’t hear from him, even when I was on my deathbed.”

Because Hosmer declined a qualifying offer at the beginning of the offseason, the Royals will receive a compensation draft pick after the first round. For now, they will have four picks in the top 40, including a competitive-balance-round selection and comp picks for Hosmer and Cain.

For Hosmer, money may not have been the only reason. Both the Royals and Padres are rebuilding, though San Diego appears to be further along in the process. Still, the Padres’ offer is structured in a way to make Hosmer more money in the long term.

Viewed through another lens, Hosmer essentially signed a five-year, $105 million deal with a $39 million insurance policy on the back end. If salaries continues to rise, as they generally have, and if Hosmer continues to perform, he could be worth more than three years and $39 million at age 33.

The Royals, meanwhile, must move on. The club will focus on its farm system and seek financial flexibility. The rebuilding process will take place without Hosmer. For most of the last seven years, he manned first base in Kansas City, leading a collective of talent that claimed a championship. Now the era is over.

“We’re proud of that era,” Moore said. “To win a world championship in this modern era of baseball, with the challenges that we have from an economic standpoint, I think we’re the first small market to do it, let alone go to back-to-back World Series. Eric Hosmer was a huge part of that. We’re forever grateful for his leadership.”