Baltimore’s Dexter Fowler Opportunity

While nothing is officially done yet, it seems reasonable to assume the Orioles are going to sign Yovani Gallardo, with reports that a deal just needs some tweaks before it is finalized. The Orioles are reportedly giving Gallardo a three year deal, but more significantly, they’re sacrificing their first round pick (#14 overall) since he rejected the Rangers qualifying offer at the beginning of the off-season. After losing Wei-Yin Chen, the Orioles certainly had a hole in their rotation, and so after months of talking about replacing him internally, they’ve apparently decided that Gallardo’s price has come down enough to justify surrendering the draft choice in order to sign him.

Given the Orioles position as a bottom-tier AL club, in a league where all 15 teams are trying to win in 2016, giving up the 14th pick to sign an average pitcher in decline is a questionable move. Currently, our forecasts have the Orioles as a 78 win team, and while adding Gallardo will help, he realistically can’t be expected to push them much past 79 or 80 wins. This is still a team with some significant flaws, and while they’re good enough to contend if things break their way, Gallardo isn’t really a put-them-over-the-top kind of acquisition.

But signing Gallardo does present a potential opportunity. By surrendering the 14th pick to upgrade their rotation, they’ve also lowered their acquisition cost of making a second move, and Gallardo isn’t the only free agent on the market still tied to draft pick compensation. In fact, there’s one more free agent out there who makes a ton of sense for the Orioles.

Going into the winter, both the crowd and myself projected Dexter Fowler to sign for $56 million over four years; 2/$20M would be a significant discount, and like Kendrick, would mean that Fowler took a less valuable contract than the qualifying offer he turned down. Like with Kendrick and Gallardo, the draft pick is the sticking point; teams have decided they don’t really want to give up valuable draft selections in exchange for the decline years of an average player. And to some extent, it’s a rational decision.

Take the 14th pick, for instance. The asset value of a pick in that range is something like $15 to $20 million, so that lost value is essentially a tax enforced on the signing. On a long-term deal where you expect to get value from a player for years to come, a $15 million tax isn’t a huge deal, but the kinds of players who are getting crushed by the qualifying offer are the guys who teams don’t want to give long-term deals to. When you’re just talking about signing a player for two or three years, adding a $15 or $20 million tax on top of the signing price makes the deal much more expensive than if you’re paying that same tax for a guy you think might help you for five or six years.

If a team believes their first round pick is worth $15 million, then even 2/$20M for Fowler is really 2/$35M from the team’s perspective. So, what seems like a bargain on the surface ends up being something closer to market rate when the lost draft pick is applied, which is one of the reasons why I’m probably not going to love the Gallardo signing for the Orioles, especially if he gets an early opt-out as has been speculated. But now that the Orioles have already made the decision to pay that tax on Gallardo, they’ve decreased the cost they’ll have to pay to sign Fowler as well.

Their next pick is currently slotted at #29, the compensation pick they’d get for losing Chen. That’s still a valuable selection, but because draft picks lose value pretty quickly as you get further from the top tier, that pick is probably worth something closer to $10 million, and some teams put estimates on those compensation picks more in the $5 million to $8 million range. In other words, signing Gallardo means that the tax to sign Fowler is now half as large as it would have been otherwise, and he’d cost something more like 2/$30M in total value if he signed with the Orioles after they signed Gallardo.

And at that price, the Orioles should make the move. They currently have very little in the way of outfield depth, and adding Fowler would ensure that they could keep Mark Trumbo at DH rather than letting him fruitlessly chase fly balls around Camden Yards. The gain from adding Fowler to play one of the two corner OF positions and shifting Trumbo to DH — sending Nolan Reimold or Jimmy Paredes back to the bench where they belongs — is probably worth something close to two wins; it’s likely a larger upgrade than adding Gallardo to the rotation.

With Gallardo and Fowler, you could reasonably look at the Orioles as an 81-82 win team heading into the season, and from there, it’s not a huge stretch to find a few extra wins, allowing the team to sneak into contention. And at a 2/$20M signing price, the floor is actually pretty high as well; Fowler would almost certainly have positive trade value this summer if things go poorly, and the team could likely recoup prospects in trade that could nearly match (or potentially exceed) the value of the 29th pick.

Signing Gallardo in isolation doesn’t strike me as a great deal, as he’s probably not good enough to justify giving up the 14th pick by himself. But if the Orioles can turn this into a package deal, turning the 14th and 29th picks into Gallardo and Fowler, then they might be able to defray some of the cost of the first signing. The qualifying offer system incentivizes stacking your free agent signings together in the same winter, and if the Orioles really are going to give up their first rounder for Gallardo, they should make a play for Dexter Fowler too.



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Dave is the Managing Editor of FanGraphs.


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output gap
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Member
output gap
3 months 21 days ago

Why the White Sox haven’t already signed Fowler continues to befuddle me. The difference between Fowler and Avisail Garcia is ~3 wins. Considering the Sox are in a better position than the Orioles both on the win curve and compared to division opponents, while retaining a protected pick, suggests that those 3 wins would be enormously beneficial.

Dustin
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Dustin
3 months 21 days ago

This makes even more sense when you consider that two years ago the Orioles did essentially the same thing with Nelson Cruz and Ubaldo Jiminez. Forfeiting a top-flight draft pick is not so great, but once you break that seal it definitely is less of a deal to go after other guys with a draft-pick attached.

Dooduh
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Dooduh
3 months 21 days ago

I don’t agree with the premise. Sure, the 29th pick in the draft is worth less than the 14th pick (and here is another example of the absurdity of the entire draft compensation system), but people are basically just saying the once the O’s already sacrificed, they should sacrifice even more. iow, if you have an unfavorable view of giving up draft picks then this is justification for them to compound the mistake…? That doesn’t make any sense.

I think it’s justifiable to sacrifice the 14th pick given that the O’s are in their window to win now (projections aside), though they’d have been better off trying to sign a SPer a little higher up the chain. This late in the winter, Gallardo should come at a team friendly price, tho that remains to be seen. More importantly, that they have 6 of the first 91 picks in the next draft so giving one up is ok but I wouldn’t want to give two up considering that their farm system is really not in great shape.

Anyway, I’m not sure the difference between Fowler and AJax is all that much. AJax must be holding out for a lot of scratch to be unsigned just days from P&C.

The Real McNulty
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The Real McNulty
3 months 21 days ago

ok Mr. Stewart. Dave’s point is that giving up #29 is less of a tax than #14. Their decision on Fowler is now sign him and give up #29 ($10M according to Dave), rather than giving up #13 ($15M).

gelezinis vilkas
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gelezinis vilkas
3 months 21 days ago

Of course the best move is not to sign Gallardo at all (I’m hoping he’ll somehow fail the rigorous physical exams the O’s have put other players through—remember Balfour?).

But I understand Cameron’s argument, though I’d be more inclined to buy that argument if the Orioles had a deeper farm system. But we don’t, hence I agree that Austin Jackson isn’t that much of a downgrade from Fowler and we should keep that pick.

I have to wonder how Showalter feels about this, having been involved in rebuilding three franchises before he came to the Orioles. Buck has denied rumors in the past that there is some tension between him and DD. He also talked about the importance of keeping your draft picks during the winter meetings (before Davis re-signed with the team).

My guess is that old man Angelos has decided that the Orioles have one more chance to make the playoffs and has instructed Duquette to make all necessary moves to improve the odds of that happening. If that is indeed the case, then DD may very well do what Cameron proposes.

jianadaren
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jianadaren
3 months 21 days ago

“Sure, the 29th pick in the draft is worth less than the 14th pick (and here is another example of the absurdity of the entire draft compensation system), but people are basically just saying the once the O’s already sacrificed, they should sacrifice even more.”

Yes, because the price drops. If it makes sense to give up a $15M pick to sign a 2-win player then it makes even more sense to give up an $8M pick to sign another 2-win player. The picks don’t get more dear when you give them away, they just get less valuable (because they’re in decreasingly lower rounds).

To stop after the first signing is just insanity. It’d be doing a good deal while refusing to do a better deal. There is not earthly reason to value your 29th pick as dearly as (or more dearly than!) your 14th.

jdbolick
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Member
3 months 21 days ago

Dooduh is making the point that they shouldn’t sign someone just to sign them. The value gained must be sufficient to justify forfeiting the 29th pick, just as the value of signing the first free agent should be enough to justify forfeiting the 14th pick (which Gallardo isn’t *sigh*).

Dooduh
Member
Dooduh
3 months 20 days ago

Add to that, the leak that the Gallardo deal is $40M+ for 3 yrs and may even have an opt out! Good freakin lord! The only reason to sign Gallardo now would be if it were a really good deal. That doesn’t sound remotely close to being a good deal.

Go sign Mark Buehrle instead.

some guy
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Member
some guy
3 months 21 days ago

It’s essentially the same as the International Pool – if you’re going to go that route for talent acquisition, it pays to go all in and sign multiple players who’s asking prices have dropped due to the player’s limited options of interested teams. If Ian Kennedy were still around, it would have made sense (from a certain point of view) to sign all 3 to moderate (2-3 yrs, $8-13M/yr) contracts.

Paul22
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Paul22
3 months 21 days ago

People forget this team is just 1 yr removed from 97 wins. Bounce back years from Jones, Hardy, Weiters, Gausmann, Tillman and Gonzalez and upgrades at DH (Trumbo) and at the corners (keep on eye on this korean kid Kim) and watch out. Adding Gallardo and Fowler would be huge since their SP depth and OF depth is a real issue and nobody can avoid injuries completely and of course, you can’t expect everyone to bounce back, or that Machado and Davis won’t regress a bit or get injured.

MSpitz
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MSpitz
3 months 21 days ago

Yup, that’s a good point. If the whole team exceeds their expectations, they could contend!

/sarcasm

gelezinis vilkas
Member
gelezinis vilkas
3 months 21 days ago

Sarcasm indeed.
Gallardo’s numbers are trending downwards, Fowler—with the exception of 2015—has a problem staying off the DL, and Hardy’s best days are behind him. We don’t even know if he can make it through this season since he declined to have surgery on his ailing shoulder. The shoulder is just another malady that has plagued Hardy’s career.

Even betting on Wieters having a bounce back year is peculiar: bounce back to what? He had three decent but hardly exceptional seasons (with declining batting averages primarily because of his inability to beat the shift) from 2011-13. When you play half of your games in Camden Yards and quite a few at other good hitter’s parks in the A.L. East, I don’t see those numbers as being all that remarkable. And he’s a lousy pitch framer to boot, though how many wins that adds to a team is a matter of controversy.

In any event, Wieters will be a free agent again after the 2016 season, as will Trumbo. Do we really want to mortgage the future by giving away draft picks when the future composition of this team is so uncertain? We have a great opportunity to start restocking the farm system now.

But the Orioles are Angelos’ toy, not mine.

DCE
Member
DCE
3 months 21 days ago

It would be a poor management decision for a team that appears to have the weakest roster in the division, and the 27th best farm in baseball (according to Keith Law), to surrender their two best draft picks for average players entering the decline phase. And with Fowler being 3 years younger than Kendrick, I find it hard to believe that 2/20M would be the best offer he could find. The Orioles shouldn’t pursue this.

RJSSURFER
Member
RJSSURFER
3 months 21 days ago

Why stop there? Bring in Fowler for 2 years 20 mil, then bring in Desmond for a similar contract and give up your Third Round pick. Desmond would be a big upgrade over Hardy in my opinion.

couthcommander
Member
couthcommander
3 months 20 days ago

A two-year old article from the Hardball Times points to draft picks producing about 1.8 career WAR when taking between picks 25-50. This fits well with Dave’s estimated value of the pick worth $10 million. A discounted Fowler seems like a good low-risk investment, especially given his potential trade value this summer or next if/when Baltimore collapses. I’d rather a sure thing than a gamble, even in a rebuild.

http://www.hardballtimes.com/how-much-is-a-draft-pick-worth-in-2014/

Dooduh
Member
Dooduh
3 months 20 days ago

Steamer has Fowler at 1.6 war and Austin Jax at 1.2…. is that worth giving up a draft pick?

Why is AJax still unsigned?

JeffStower
Member
JeffStower
3 months 19 days ago

The most irrelevant part of this article is the prediction of how many games 81 to 82 the Orioles would win if they sign Gallardo and Fowler. Last 3 out a 4 years the Orioles have out performed that type of projection and by a lot. That adD is useless.

rickyt
Member
rickyt
3 months 19 days ago

The defending champion Royals have, again this year, been projected to win the same 78 games. Just like the previous two seasons. How’d that work out? So I wouldn’t place too much faith in this wins projection system. The Orioles will contend for the AL EAST title if they add Gallardo and Fowler.

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