Wednesday, January 29, 2014

Building The 25 - Brewers drastically overpay Garza

Up until a few days ago the only significant moves Milwaukee Brewers general manager Doug Melvin made to The 25 were two separate trades. Melvin traded away relief pitcher Burke Badenhop and outfielder Norichika Aoki for what amounted to a couple left-handed pitching lottery tickets in Luis Ortega and Will Myers respectively.  Towards the middle of last week I even discussed how proud I was of Melvin showing fiscal restraint instead of handing out huge free agent contracts this off-season as a peace offering for what the team put their fans through last season.

Well it was all too good to be true.  Late last week reports leaked that the Brewers signed free agent starting pitcher Matt Garza to a four-year, $52 million deal.  The Brewers initially refuted that report via Twitter, which gave me hope that Melvin was rethinking whether to break the first of the five rules I gave him for how to build The 25 for 2014.  Ultimately the Brewers and Garza agreed to a four-year, $50 million deal could end up being a five-year, $67 million deal.  The Brewers ultimately announced the signing at the team's annual fan fest, which was free this year as a peace offering for what the team put their fans through last season.

Before I breakdown the largest contract ever given to a starting pitcher in Brewers franchise history in more depth, I thought I would give a little background on the starting pitching situation for the Brewers before the Garza signing to show why they did not need to overpay yet another free agent starting pitcher.  Going into the off-season, four of the five spots in their starting rotation were set essentially set in stone: Kyle Lohse, Yovani Gallardo, Wily Peralta and Marco Estrada.  The fifth spot in the rotation looked like it was going to be a competition between guys currently in the farm system with the strongest candidates being Hiram Burgos, Mike Fiers, Johnny Hellweg, Jimmy Nelson, and Tyler Thornburg.  After the Brewers traded for Smith and signed Zach Duke to a minor league contract with an invite to spring training. the Brewers had a ton of legitimate candidates fighting for the final starting spot in the rotation and the long relief role in the bullpen.

With Garza on The 25, if healthy, the starting rotation will be Garza, Lohse, Gallardo, Peralta, and Estrada in some order.  Given that the Brewers are not really in a win-now mode, I would much rather see them go into spring training with all their young guys fighting for the final spot in the rotation.  If one of the five odds on starters gets hurt in spring training, pending some drastic change in the performance in spring training, I would give Thornburg the first chance followed by Fiers, Burgos, Smith, Nelson, Hellweg, and Duke.

The first four years of Garza's deal are fairly straightforward with him earning $12.5 million in each of those years.  The only real quirks of the first four years of the deal is that Garza deferred $2 million each year that is paid annually on December 15th starting in 2018 through 2021.  Besides that, Garza can earn an extra $500,000 each time he starts 30 games or throws 190 innings in a season over the first four years of the deal.  If Garza achieves all of that, it makes the first four years of the deal worth $54 million.  The fifth year of this deal in 2018 is where this deal gets complicated.

According to Cot's on Contracts, Garza has a $13 million vesting option in 2018 if he meets three conditions in the first four years of the deal: starts 110 games, throws at least 115 innings in 2017, and does NOT end the 2017 season on the disabled list.  If Garza does NOT satisfy all three conditions, there are two other potential outcomes.  One, if Garza spends an extended period of time on the disabled list during the first four years of the deal, which is defined as 130 days over 183 day period of time, the Brewers can retain Garza's services for just $1 million in 2018.  Two, if Garza does not spend an extended period of time on the disabled list the Brewers can exercise their team option to retain his services in 2018 for $5 million.

As I discussed when I reviewed the Aoki/Smith trade, a win on the free agent market costs $6 million.  Leaving 2018 aside for now that means Garza will have to produce at least two wins above replacement (WAR) a season to justify his contract from 2014-2017.  Garza put together impressive seasons in 2008 (3.3 WAR) and 2009 (3.5 WAR).  After that, Garza's WAR numbers didn't break two besides 2011 (2.8 WAR). Last season Garza registered 1.4 WAR thanks mostly to pitching well for the Chicago Cubs following a long stint on the disabled list to the start the season.  The Cubs traded Garza to the Texas Rangers but Garza struggled for the Ranger.  Since Garza was traded mid-season last year the one silver lining is that unlike when owner Mark Attanasio signed Lohse to a three-year, $33 million deal last year, the Brewers did not forfeit their first round pick in the 2014 MLB Draft to sign Garza.

Unless Garza finds a legal fountain of youth that can also keep him healthy, the Brewers severely overpaid him each of the first four years of the deal.  Given how injury prone Garza has been throughout his career the only good part of the Garza deal is that the Brewers made the $13 million vesting option for the fifth year contingent on Garza staying healthy throughout the entire deal, which seems highly unlikely given his long injury history.

The Brewers are now paying six players on The 25 at least $10 million in 2014: Lohse ($11 million), right fielder Ryan Braun ($11 million), Gallardo ($11.5 million), second baseman Rickie Weeks ($12 million), Garza ($12.5 million), and third basemen Aramis Ramirez ($16 million).  Luckily Weeks, Ramirez, and possibly Gallaro ($13 million club option with $600,000 buyout) come off the books in 2015 so the Brewers can clean-up their bloated 2014 payroll.

I expect things to be quiet on the personal front until pitchers and catchers report on February 15th but if the Brewers decide to grossly overpay another veteran like they did with the Garza signing, make sure to check back for full coverage in this space.

No comments:

Post a Comment