The Financial Implications Of Hosmer’s Promotion

Eric Hosmer is hitting like someone who deserves to play in the Major Leagues. You don't put up a .439/.525/.582 line as a 21-year-old at Triple-A unless you're pretty talented, so the Royals are rewarding Hosmer’s ability and performance with a spot on the big league roster.

Not only does the decision make a difference for the current Royals team, it has implications for the future, since Hosmer may now go to arbitration four times, instead of the usual three.  An extra year of arbitration could cost the Royals millions, but GM Dayton Moore told's Buster Olney that "right now, he helps us put the best team on the field that we can."

Here’s a detailed breakdown of what Hosmer’s callup means for future Kansas City teams:

The current outlook:

  • Service time after 2011 – 0 years, 146 days
  • Number of arbitration years – 3 or 4
  • Additional earnings through arbitration – four years of arbitration could mean $5-15MM in additional earnings
  • Hits free agency – after 2017

What an early June callup would have meant:

  • Service time after 2011 – 0 years, 116 days
  • Number of arbitration years – 3
  • Additional earnings through arbitration – none
  • Hits free agency – after 2017

Hosmer will pick up 146 days of service time this year if he’s not optioned back to the minors. Recent history suggests that will be enough for super two status after the 2013 season, assuming he picks up full years of service time in ’12 and ’13.

However, there’s no guarantee that the Royals will be stuck paying the former third overall selection for an extra year of arbitration. Early projections for the upcoming super two cutoff place the minimum at two years and 146 days, a couple of weeks more than usual. 

Every year is different and it’s far too early to predict how much service time players will need to qualify as super twos after 2013, but it’s possible that two years and 146 days (Hosmer’s pace) won’t be enough. It’s also possible that the Royals will option Hosmer to the minor leagues, where he wouldn’t collect MLB service time. 

Though there’s now a distinct possibility that the Royals will go to arbitration four times with Hosmer and pay him millions extra in the process, too many variables – possible demotions, unknown cutoff dates, the upcoming Collective Bargaining Agreement – exist for anyone to say with certainty that Moore made a poor financial decision by calling on the top prospect when he did.

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