Kyle Lohse and Draft Picks | Disciples of Uecker

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Kyle Lohse and Draft Picks

By on February 25, 2013

I’ve been avoiding the topic for a while, but it’s time we talked about Kyle Lohse.

The right-hander remains unemployed as we head into the meat of spring training. Most of this revolves around the first-round draft pick most teams, including the Brewers, would be forced to sacrifice if they opt to sign him. Teams now treat draft picks as valuable commodities and have become increasingly reluctant to part with them via free agency.

It’s been well-documented this winter that Milwaukee needs another number-two starter in their rotation, which is why the media continues to connect him with the Brewers. Lohse has been worth +6.1 wins over the last two seasons. Normally, the price tag placed on that level of production via the free agent market would keep the Brewers from entering the picture. The reticence of the league to part with draft picks, however, has flipped that paradigm. Lohse’s price tag continues to fall, and some believe he could be had on a two- or three-year deal.

At what price, if any, does it make sense for the Brewers to seriously consider surrendering their first-round draft pick in the upcoming draft to sign Kyle Lohse?

Milwaukee owns the 17th selection of the 2013 Draft. It’s difficult to quantify the value of a draft pick, but there has been some work in the past on the subject. Victor Wang wrote an article for The Hardball Times back in 2009 that estimated a draft pick in the 16-30 range was on average worth $5.23M in surplus value. Thus, for any potential signing of Kyle Lohse to make sense for the organization, it must provide more surplus value than their draft pick.

(Side note: Victor Wang is now working for the Cleveland Indians’ organization as their Assistant Director of Professional Scouting.)

We must first deal with the fact that we’re working with values from 2009. A win roughly cost $4.5M on the open market at that time, so the 17th draft pick in 2009 would have roughly correlated to +1.15 wins, according to Wang’s methodology. Thinking of the surplus value in wins rather than monetary value makes the concept much more simple.

Assuming the Brewers believe Lohse to be a three-win pitcher, they would essentially have to sign the right-hander for less than the equivalent of +1.75 wins (rounding for ease) per year to gain more surplus value than what they would otherwise obtain with their draft pick. Using Dave Cameron’s assumption that teams are paying $5.5M per win in 2013, the Brewers would have to sign Lohse for less than $9.63M per year.

So, let’s say Lohse calls general manager Doug Melvin and says he’ll sign a one-year deal worth $9M to pitch for Milwaukee with the agreement that the Brewers cannot offer a qualifying offer after the season, allowing him to re-enter free agency without the draft pick compensation hanging over his head. The Brewers should do that, right?

It’s not quite that simple for two very different reasons.

First, the draft has changed. Not only would the Brewers surrender their 17th pick, but they would also forfeit the money associated with that pick within their draft budget. That means the Brewers would not be able to spend overslot later in the draft to still acquire impact talent. Instead, the Brewers would enter the draft with a lesser budget and a lesser ability to draft and sign better players, and the Brewers’ farm system needs that impact talent. It has accumulated and developed depth throughout the system, especially on the mound, but the impact talent remains absent. Stripping the organization of the ability to acquire that talent would obviously be a large negative.

Secondly, the addition of Kyle Lohse to the 2013 Brewers may not improve the team enough to propel them to a postseason berth. As I mentioned last week, I currently believe the Brewers are roughly a .500 ballclub. Adding a three-win pitcher such as Lohse would perhaps push them to a projected 85-86 wins, and though that may push them to the cusp of contention, a projected 85-86 wins may not be enough to reach the postseason — as the Dodgers won 86 games and didn’t make the playoffs last year.

Milwaukee projects to be better primed for a postseason run in 2014. The pitching prospects will have another year to mature, and the core of the offense will remain intact. Thus, if the Brewers were to sign Kyle Lohse, it would make more sense to secure him on a two-year deal to best maximize the organization’s chances the next couple years. The organization has refused to offer three years to anyone on the free agent market — likely aside from Zack Greinke — so the idea of offering a three-year deal to Lohse doesn’t make sense. Not to mention this will be his age-34 season. A two-year deal appears to be the sweet spot.

Now, let’s amend the hypothetical scenario and say Lohse is willing to sign for two-years, $18M. The Brewers would be looking at netting roughly $10-15M in surplus value over the two years, compared to the $5.23M in surplus value from this year’s first-round draft pick. This would be a hypothetical situation in which it could make sense for the organization to sacrifice a first-round pick to sign a free agent pitcher.

With that said, I’m not certain the Brewers should pull the trigger in that scenario. Lohse is a nice piece who would upgrade the rotation, but the Brewers continue to be a small-market franchise operating in a world of increasing television revenues and inflated free-agent contracts. Remaining competitive in such a market will be a delicate dance for Doug Melvin and Mark Attanasio, and success will always begin with acquiring and developing impact homegrown talent. A first-round draft pick means more to a small-market organization like the Brewers than it does to the majority of the league. Add in the fact that sacrificing the first-round pick would also mean sacrificing the draft pick’s budget allotment, and I’m not sure I can justify the Brewers making such a move — especially with a down farm system.

Kyle Lohse has value, though, and it’s completely understandable that a team would sacrifice a first-round pick to acquire the right-hander. The money and contract length just have to be right. The team must acquire more projected surplus value from Lohse than they otherwise expect to gain from their first-round pick. If the Brewers can eventually sign Lohse on the hypothetical two-year contract discussed above, I would completely understand the move, and if the organization made the playoffs in either (or both) of the next two seasons, such a decision would probably be justified. The farm system is just so important to a franchise like the Brewers that I would likely err on the side of caution and of acquiring potential impact talent in the minors.

But I don’t think the decision would be as easy for Doug Melvin as many are making it out to be.

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Tell us what do you think.

  1. Benn says: February 25, 2013

    Not to restate what you are essentially saying here, but I just don’t see Lohse as worth it. They aren’t exactly at the tipping point that signing him would be enough to push them into pennant contention. Locking him up would seem to just keep the Crew in the middle of the standings for the next couple years. I’d rather they continue to build from within and be poised to make another push in the (hopefully) near future — which I think is a point that Mr. Topp has essentially been making for a while now.

    That being said, Lohse still being available as spring training has started points to a huge flaw in this new FA system. Not that I have a better solution in mind, but his availability has to be an eyesore for the MLB.

  2. vBar says: February 25, 2013

    What of the impact of signing Lohse on 2013 revenue and trade value?


    - The Brewers came under their goal of 3M attendees last year, partially due to the long sub-0.500 run.
    - They have one of the easiest early NL schedules ( ). Lohse could give them an early 3-4 games over 0.500 start.
    - Signing Lohse would keep the Brewers within striking distance of the 2nd Wildcard spot (1-2 games back rather than 3-4 games back) throughout the season thus keeping up fan interest, ticket sales and TV revenue that could bring in $1-2 M in the season (I’m estimating based on ticket sales etc.; please tell me if I’m way off).
    - If things don’t go according to plan, Lohse can be traded at the deadline (2013 or 2014) for a prospect that’d be more ready than the one picked in the 1st round this June.

    I still don’t think that Lohse will sign for cheap. He’s certainly not worth it for anything over 20 million 2 year package. But I think the draft pick sacrifice is overrated.

    • Benn says: February 25, 2013

      I’d buy the option of trading him if things don’t pan out. Just have to hope that *IF* they sign him, his contract has a very limited no-trade clause, hopefully none at all.

  3. Dan V says: February 25, 2013

    I can’t really see this as a great option for the crew. The best way to accumulate impact talent is through the first rounds of the draft. Even if we picked up Lohse and flipped him, he would most likely return less than Greinke, and those prospects, while promising, are still TBD. The last couple of drafts seem savvy for the crew and we should keep adding to that pool this June with the 17th pick.

  4. Beep says: February 26, 2013

    Please forgive my ignorance, but how long does this 1st Rd pick stay with him? If the season starts and he’s still unsigned until a major injury takes out an ace, do the Cards still get compensation?

    • Ross B says: February 26, 2013

      I know if he signs after the draft, which is like June 7th, the Brewers do not give up the first round pick anymore. That doesn’t mean the Cards don’t get comp still, since teams are no longer given the forfeited pick, but rather just a sandwich pick in the supplemental round. I was not able to find anything about whether or not they still get that pick though. Someone else will have to fill in that detail.

    • Nicholas Zettel says: February 26, 2013

      The Cardinals only receive compensation if Lohse is signed prior to the draft.

      From 2012-2016 CBA, XX.B.4:
      (a) A Qualified Free Agent shall be subject to compensation only
      if: (i) his former Club tenders him a Qualifying Offer pursuant to
      paragraph (3) of this Section B; (ii) the Player declines the Qualify-
      ing Offer or signs a contract with another Major League Club prior
      to the expiration of the Acceptance Period; and (iii) the Player signs
      a Major League contract with another Major League Club that is
      confirmed by the Players Association and the LRD before the next
      succeeding Major League Rule 4 Draft (“Rule 4 Draft”).

  5. Brewski says: February 26, 2013

    Numbers aside, I think we learned our lesson with older starters with Suppan and Wolf. I’m hoping the organization saves the draft pick, and if need be, trade whoever they draft for younger talent, like they did with Greinke and Marcum.

  6. Dennis says: February 26, 2013

    Can’t see the Brewers throwing money at a 34 year-old pitcher w/ below-average peripherals. A 5.3 and 6.1 K/9 over the last two seasons (respectively) just ain’t worth the kind of money he wants. His xFIP for those two years are 3.96 and 4.01, so he’s probably due for a regression — especially in a hitter’s park like Milwaukee. His LOB% and BABIP for his stellar 2012 season was much more favorable than his career rate, which is likely an anomaly.

  7. Jeff Fletcher says: February 26, 2013

    The article only states the value of acquiring Lohse vs. the 17th pick. It does not take into account the Brewers payroll. They are trying to keep it down this year. So even if it would marginally improve the Brewers, they are giving up another $9 million to add to the payroll. If we really feel like we need another starter let’s do that during the year. We’ve got plenty of bp and if depth that we could find someone but the young guys showed enough last year that taking the gamble on Lohse for marginal improvement wouldn’t be that helpful

  8. Bob says: February 26, 2013

    Also, keep in mid that Lohse would be replacing someone the Brewers all ready have on the roster. If Lohse is a 3 war player (projections range from 2 to 3.5) and he is replacing Peralta (1 to 2 war), his net value to the Brewers is really only a bit over 1 war. And that assumes he continues this late-career surge, rather than regressing to his career norms.

    Lohse also turned down the qualifying offer ($13 million for 1 year?), so I think it is safe to assume he sees his value as more than that.

    I just don’t see it making sense for the Brewers to spend the cash on him.

  9. chas says: March 3, 2013

    I don’t know ,to me a rotation of 1,gallardo 2lohse 3 estrada 4fires 5 peralta ,rodgers N AND FORMIDABLE TOO MEaverson in the pen along with are new pen guys and axford cloaing looks pretty tough`hello top of division


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