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Arbitration-eligible players who were tendered contracts are third baseman Mike Moustakas, left-hander Danny Duffy, right-hander Louis Coleman, catcher Drew Butera, and outfielders Lorenzo Cain and Jarrod Dyson.
Holland, 30, made a base salary of $8.25 million in 2015, and though he produced a subpar season by his standards, he fought through pain and recorded 32 saves with a 3-2 record and 3.83 ERA. He would have been in line for a raise through arbitration but instead becomes a free agent.
General manager Dayton Moore indicated on Tuesday that the Royals would be "open-minded" about constructing a deal with Holland. It is possible that Kansas City could offer a two-year deal with a relatively low base salary for 2016 as he rehabs, then backload the second year with a higher salary and incentives.
Holland was one of the best closers in baseball from 2012-14, when he compiled 109 saves and a 1.88 ERA. But he began experiencing tightness in his elbow late in the 2014 season, and that carried over into 2015, though he continued to perform at a high level for most of the season.
But Holland's velocity, which normally had been around 96 mph to 97 mph, began to dip into the upper 80s as the season wore on.
An MRI in late August showed a significant tear in Holland's ulnar collateral ligament in his right elbow. He again tried to pitch through the pain, but the Royals shut him down after a blown save in Detroit on Sept. 18.
Jeffrey Flanagan is a reporter for MLB.com. Follow him on Twitter at @FlannyMLB. This story was not subject to the approval of Major League Baseball or its clubs.