The risk and reward of the Cole Ragans deal

The Royals get a discount while Ragans gets a guarantee.

There is a social media account called “Freezing Cold Takes” that exposes sports takes that age incredibly poorly. To my knowledge, I have avoided being highlighted by the account, but I certainly gave them fodder back in 2023 when the Royals traded Aroldis Chapman to the Rangers. In return, the Royals acquired a 25-year-old left-hander name Cole Ragans who had a history of injury and unimpressive numbers. That led me to write that the return was “a bit a underwhelming” and that prioritizing a low-ceiling MLB-ready pitcher like Ragans “will only keep them from getting back to contention.”

Oops.

Ragans set out to make me look foolish nearly immediately, tossing six shutout innings in just his second start with the Royals, then striking out 11 his next time out. He finished with a 2.64 ERA in 12 starts, then showed it was no fluke by posting a 4.9 fWAR in his first full season with the Royals, good for second-best in the American League. He finished second in the league in strikeouts, finished fourth in Cy Young voting, and was a bulldog in the post-season.

I have never enjoyed being wrong so much.

Ragans was rewarded for ascending to the top tier of starting pitchers in baseball with a three-year, $13.25 million contract this week. Ragans was already under club control through the 2028 season, so this won’t buy out any free agent years. But it covers this year and his first two years under arbitration. Reporter Jon Heyman has a breakdown of the contract.

If the contract doesn’t affect Ragans’ free agency, why do a deal now? Well, it gives Ragans money up front – he doesn’t have to wait until next off-season to get a million-dollar salary, and he gets a guarantee in case his arm falls off next week. The Royals get a bit of a discount on what it would cost if he continues on this trajectory and some cost certainty.

Ragans explained the trade-offs in the deal pretty well.

“It gives me a little security and … they kind of know what’s on the books,” Ragans said. “You know, (they can) get some other guys if that’s what they want to do and try to put the best team on the field to win. That’s our end goal — to win a championship.”

How much of a discount are the Royals getting by committing to Ragans now? I took a look at some of the league’s best pre-free agency pitchers to see what kind of salaries they received in the arbitration process.

You can compare how these pitchers were paid below. The age listed is the age-season they were in for their last pre-arbitration year, like Ragans is in now. I listed their salary under their last year of pre-arbitration, when players have little leverage and are paid a bit more than the league minimum. I also listed their salary in their first two years of arbitration. Then for the pitchers that have enjoyed a third year of arbitration, I listed that salary as well. Take note, some of these pitchers ended up signing multi-year deals that avoided the arbitration process – I tried to denote that with an asterisk.

*-salary via a long-term contract, not the arbitration process

Compared to these other pitchers, it seems that Ragans is leaving some money on the table in exchange for having that guarantee. It’s a bit similar to the first two years of the six-year, $90 million deal signed by Logan Webb before the 2023 season. But Ragans’ deal doesn’t cover his last year of arbitration (or any free agent years) where, if he continues at this trajectory, he can expect a salary of $13-15 million.

It’s interesting the deal doesn’t cover that year as well, but the Royals may be hedging a bit in case Ragans gets hurt. Ragans had Tommy John surgery in 2018, then needed another surgery a year later. If he injured his UCL again, that could be pretty devastating to his career. So you can understand if the Royals do not want to commit until Ragans can establish a longer track record of health. Picollo indicated the team was open to another longer-term deal down the road.

But as currently structured, the Royals have very little exposure. Even if Ragans doesn’t throw another pitch, the most the Royals will have $7.5 million in dead money in 2027, the amount they’re paying Hunter Renfroe this year. It’s not ideal, but it’s a situation the Royals could still navigate around without much issue.

I am generally more skeptical of long-term deals for players than other fans – perhaps I am still scarred from the Hunter Dozier deal. Small market teams need to maintain payroll flexibility and avoid long-term commitments that become a millstone. But this is a deal for a young player with unlimited upside that has very little financial risk to the team.

The Royals as an organization seem to be building a foundation with a new culture. It’s great to see the team financially commit to their players, and for players to want to be here.

“It’s an unbelievable group of people,” Ragans said about Kansas City. “The front office, to the fans, to my teammates. It’s a great group of guys. My wife loves it, all the wives are unbelievable.

“It felt like home really quickly, and I feel like that’s not the case everywhere.”