Emerging Contracts: Revisiting Gallardo’s Value | Disciples of Uecker

Disciples of Uecker

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While DoU is forging ahead with a few new changes, the last few weeks of right-handed pitching contracts have catapulted me back into the past. Last year, I fumbled through a couple of posts about the RHP-contract explosion in order to argue in favor of extending Yovani Gallardo. I still feel that it is a good idea for the Brewers to extend Gallardo, even after his 2013 campaign, but I also feel there is new uncertainty about his place among durable, dependable right-handed starters. Gallardo is our franchise starter, and in a way, it would be great to see GM Doug Melvin‘s greatest pitching success stay in Milwaukee. Given the number of young or up-and-coming starters that the Brewers have — and, subsequently, the number of question marks — keeping an anchor such as Gallardo could be key for the Brewers.

Right-Handed Contracts
After Justin Verlander and Felix Hernandez destroyed Zack Greinke‘s top RHP contract last year, it appeared that Gallardo’s contractual value solidified. While Anibal Sanchez and Edwin Jackson signed deals that helped to pull Gallardo’s price away from the top tier of contracts, Adam Wainwright‘s deal provided yet another example that clubs’ sudden energy to use forthcoming TV raises on righties would not subside. Now, a couple of free agents, including Matt Garza, promise to further outline Gallardo’s value and price for Milwaukee.

While it appears that there is a solid, moderate contract range emerging for starters such as Sanchez, Jackson, or Gallardo (and, I suppose it is ridiculous to call $80 million a moderate contract range, but those are our times), recent signings on the free agent market are raising the floor for RHP. After playing two worse-than-replacement seasons for more than $40 million in San Francisco, former ace Tim Lincecum signed a $35 million deal. Josh Johnson and Dan Haren signed short, no-risk contracts with San Diego and the Dodgers after fighting injuries and ineffectiveness. Tim Hudson followed his previous $37 million deal with a two-year, $23 million contract to improve the Giants’ rotation. After pitching three consecutive below average years, Jason Vargas landed a four-year, $32 million contract with Kansas City. The Twins decided that enough-was-enough with their rotation and invested $73 million in Ricky Nolasco and Phil Hughes.

This series of contracts outlined a notably below average group (save for Hudson) landing contracts not far from the Edwin Jackson rate. From 2011-2013, these pitchers were an aggregate 134 runs below average, and their 17-years and $187 million of contracts allocate $11 million a year for an average of six-runs below average (per season).

Pitcher 2011-2013 Runs Prevented Last Above Avg Yr New Contract Old Contract
T. Hudson +24 2013 2/$23M 4/$37M
D. Haren -12 2011 1/$10-$13M+opt 1/$13
J. Vargas -21 2010 4/$32M 1/$8.5M avoid arby
J. Johnson -24 2011 1/$8M 4/$39M
R. Nolasco -30 2008 4/$49M+opt 1/$3.8 avoid arby
P. Hughes -35 2010 3/$24-27M $1/7.15 avoid arby
T. Lincecum -36 2011 2/$35M 2/$40.5

Frankly, some of these contracts are inexplicable. I understand that Lincecum earned a certain contractual range with his series of escalating arbitration buyouts and extensions, but he is several years removed from his years as a rotation-leader. Certainly, Lincecum pitched a bunch of innings over the last two years, but $35 million is a lot to pay for two years that were 56 runs below league/park average. By contrast, the much maligned Vargas deal doesn’t look bad at all; it might be long, and it might not be prudent, but it leaves the Royals with more payroll room to spend. Nolasco is the definition of a dependable starter, but he hasn’t worked at a truly above average level in five years; $49 million appears to be a true innings-eating standard for this season, following close behind the Cubs’ offer to Jackson.

Gallardo’s contract value is difficult to determine compared to these pitchers, given the different club payroll situations (San Francisco), injury-history issues (Johnson, Hughes, Haren) and age/serve time considerations (Hudson). Yet, these contracts also solidify the idea that Gallardo is a valuable starter, even if he produces a below average season (as in 2013). That there is a market for below average pitchers — nearing even four-year and $50 million thresholds — gives the Brewers incentive to consider locking up Gallardo before he hits the market.

What is Elite Money?
I was watching MLB Network recently, and someone tossed out the idea of Max Scherzer receiving Verlander money. Justin Verlander’s initial five-year extension provided a solid contractual value for elite right-handed pitchers for several years, until Matt Cain opened the door for the right-handed contractual explosion. After a series of escalating deals, the Tigers once again used their organizational arm as the top standard for righty pitching contracts. Scherzer had a strong year with the Tigers, one in a step of improving seasons with the Tigers. Yet, it seems unbelievable that he might receive Verlander money; certainly, the comment may have been nothing more than speculation, but it lead me to ask, “if Scherzer is an elite righty, where does Gallard’s potential contract stand?” Over the last three years, compared to a few select top-pitching contracts and current free agents (as well as Gallardo), Scherzer has done quite well:

2011-2013 IP Runs Prevented
Justin Verlander 707.7 108
Max Scherzer 597 44
Anibal Sanchez 574 43
Yovani Gallardo 592 15
Matt Garza 457 7
Adam Wainwright 440.3 18

By judging runs allowed, we can see that Scherzer has surpassed Gallardo with his 2013 campaign, and the same might be said about Sanchez. However, it is interesting to consider Gallardo a close comparison to Cardinals’ ace Wainwright and (arguably) this year’s top RHP free agent, Garza. In this regard, one has to come to the difficult conclusion that Gallardo might not quite be worth Sanchez or Verlander money ($80 million to $180 million), but that he is worth what Garza earns this year, or what Wainwright earns ($98 million). Obviously, this defines two contradictory ends: Gallardo both is, and is not, worth a large right-hander contract, depending on service, age, and performance comparisons. (As an aside, obviously Sanchez’s 2013 campaign occurred after he signed the contract, so his strong three-year window serves more as justification in hindsight, rather than justification prior to his contract was signed. Still, this arguably impacts Gallardo’s contractual value).

By my count, here are the remaining years on the top right-handed contracts, and the performance of those pitchers from 2009-2013. I understand that some of these contracts were signed years ago, so this level of performance is not necessarily the type of performance one needs to land a big deal (Greinke, for instance, improved notably in 2013, which was easily his best season since his Cy Young campaign in 2009). However, it’s still worth addressing these performances to create different performance levels among RHP. Ironically, Verlander’s 2013 was not nearly as good as his previous two years, and yet he’s obviously the cream of the crop for RHP (although King Felix’s age might make him even better than Verlander):

Pitcher Remaining Contract 2009-2013 IP 2009-2013 ERA+
J. Verlander 6/$160M 1172 140
F. Hernandez 6/$156M 1158.3 137
Z. Greinke 5/$130M 1011 125
A. Wainwright 5/$97.5M 903.7 130
M. Cain 4/$92M 1066.3 119
A. Sanchez 5/$72M 855 119
J. Weaver 3/$55M 1014 130
E. Jackson 3/$33M 988 100
Y. Gallardo 2/$24.25M 962.7 107

It’s interesting to see how much pitching judgments can change depending on the length and criteria of a survey. It is worth noting that Wainwright signed his extension after his year-long injury sabbatical, but his previous track record as an ace in 2009 and 2010 seems to have immensely helped his case for an extension. In this regard, one might note that although Gallardo’s recent performance is similar to that of Wainwright, that doesn’t necessarily mean Gallardo deserves a $98 million contract. One might counter, although Sanchez improved in his first full season in Detroit, that doesn’t necessarily take him out of Gallardo’s league for the sake of comparing performances prior to new contracts. With the added context of the Nolasco deal, the question becomes more about Gallardo’s top salary potential than his floor.

Conclusion
Last year, I wrote the following contract proposal for Gallardo:

Yet, one wonders how an Anibal Sanchez-type deal would suit the righty. First, the Brewers could exercise his 2015 option now, and add a $3 million bonus to that year. Secondly, the Brewers could offer a 4-year, $72 million extension beyond the 2015 season. This extension would cover Gallardo’s age 30 through 33 seasons, and keep the reliable righty in Brewers blue for at least 13 total seasons from the start of his career. While the total value of a $75 million contract would likely be shy of what Gallardo could earn on the free agency market, the guaranteed contract in 2015 (plus a raise) and guaranteed money through his age 33 season would lend Gallardo seven total seasons of security. That type of deal would hopefully ensure that the Brewers have dependable starting pitching while they continue to build up the arms in their farm system and develop those arms into serviceable MLB arms.

Given that 2014 is the last guaranteed year for Gallardo’s contract, the question of an extension becomes more pressing than prior to last year, and also more realistic. Most notably, Verlander’s big deal was signed with two years to go on his previous deal with the Tigers, and the extension talks are already swirling for Scherzer. In this regard, Gallardo’s 2013 campaign adds new layers of questions about his value to the franchise. Perhaps his value is not as close to Sanchez’s as it was before the 2013 season; in this case, the old Verlander, Hernandez, and Jered Weaver level of contract extension could be a good middle ground for the righty. At the very least, the market will likely hold a four-year, $50 million deal for Gallardo, even if his next two years follow the 2013 performance.

RESOURCES:
Baseball-Reference. Sports Reference, LLC., 2000-2013.
“Cot’s Baseball Contracts.” BaseballProspectus. Prospectus Entertainment Ventures, LLC., 1996-2013.

IMAGE: AP (Jeff Roberson) from April 2013

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Comments

Tell us what do you think.

  1. SecondHandStore says: December 4, 2013

    I think the Brewers are in the financial position going forward that they’ll have two options: 1. Extend Gallardo between now and sometime in 2015, or 2. Let Gallardo walk (or trade him) and get a free agent starter. I suppose a third option would be to let Gallardo go and fill from with-in. I don’t see that happening though.

    In my estimate, while they may be fringe contenders this year, their real window to compete is further down the line in 2017 and beyond. Therefore I would not want to dabble in free agency unless it was a necessary thing, or a good deal presents itself, or to get pieces to trade at a later date.

    I would be open to extending Gallardo, but I’d want to void his option year so the extension begins in 2015. I would offer him a 4/52 contract. I think Gallardo is at best a mid-rotation starter and that’s paying him to be such. I think at worst he’s a 4, maybe a 4/5. That’s a bit of an overpay for a #4, but not so much that it looks awful. It would also keep his contract tradeable.

    Really though, I wish they’d just start trading guys away, with-in reason of course. I’m not giving stuff up for nothing.

    • SecondHandStore says: December 4, 2013

      Just to be more clear, when I say “let Gallardo walk and sign a FA SP,” I’m talking about a higher quality SP. They could, under certain circumstances, extend Gallardo and get a back-end guy but that would make me sad.

      If they were going to compete around 2015/2016 I’d be in favor of letting Gallardo go and splurging a bit on a better starter, assuming one is available. I’m not confident in Gallardo’s ability over the next 4 years.

  2. joe abraham says: December 6, 2013

    I’d like to see DM pursue a trade with the White Sox for Gallardo. They will have 4 or 5 lefties starting in 2014 and desperately need a RH starter. Gallardo and Hellweg for Quintana and Castro or Johnson. The Sox get the righty they need and the Brewers get a decent lefty plus save around $10M they can use elsewhere.

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