He finally signed. Kyle Lohse finally signed with someone, and I hope we all learned something in the process. No, not that his last name is not spelled L-O-S-H-E. There has to be a bigger moral to all of this, right? At the end of every long saga, there's a scene where the characters sit down together and rehash all that has happened, take stock of it, and generate some pithy phrase that encapsulates the whole story.

Sit with me.

The Kyle Lohse story is fascinating in a way, because it illuminates a couple of interesting and perhaps evolving truths about the game of baseball, particularly about pitching. Kyle Lohse is not an ace, although he's also the sort of arm that would be welcome in any major-league rotation. "Throws 200 innings with a FIP around 3.60 over the past two years" is a nice way to start a conversation, even if a BABIP in the .260s suggests that there might be some regression on the way. Then again, average together the last two years, and even FRA has him at a tad over 4.00, which is, y'know, kinda nice.

Lohse is the kind of pitcher over whom a great many hands have been wrung, going back to the Gil Meche contract and probably before. Why do these guys make eight-figure annual salaries when they're not that good? Even Lohse, with the draft pick anchor tied around his waist, got $11 million per year. Going on the old standby that a win is worth around $5 million a year, the contract values Lohse as roughly a two-win player, which he was last year—for the first time since 2003. If you factor in the opportunity cost of losing the draft pick, the contract values Lohse even more highly.

Maybe we're just having a hard time valuing pitching, especially within a replacement level framework. The idea of replacement level was meant to answer the question, “If Player X vanished into thin air, and we had to replace his playing time with an average scrub, how much worse would the team be?” And for position players, that makes sense. If Dustin Pedroia vanished into thin air, most of his playing time would go to someone else, that someone else would take a turn in the batting order, and that would be the end of the matter. But when it comes to replacing value, starting pitching is a different animal.

Consider that in 2012, Kyle Lohse averaged 19 outs (6 1/3 innings) per start, good for 23rd place in the league among those who started 20 or more games. Had Lohse disappeared from the Cardinals, some sixth starter/long man/waiver-wire guy would have taken his starts. But we can't just assume that Lohse's replacement would have averaged 6 1/3 innings each start, and in fact, he probably wouldn't have. If you're talking about a replacement who averages five innings per game, the manager has to coax another inning and a third out of his bullpen, on average. And relievers who aren't as good get to pitch. It isn't just about what Lohse did when he pitched that extra inning, it's what didn't happen as a result. Even more, the effect isn't confined to just this game. The next day, relievers are more likely to be tired or unavailable, and lesser relievers will have to be summoned. You have to shuffle the roster a bit more and bring up a guy from Triple-A for coverage whom you'd rather not have up. There are compounding effects.

Another hidden value that Lohse has is that if you look at the standard deviation of outs recorded per start in 2012, the lowest number among qualifiers belongs to Kyle Lohse. Lohse was steady, giving the Cardinals and Mike Matheny six or seven innings with unparalleled regularity. (And not once did he go fewer than five.) Lohse’s low variability allows his manager to cover a bit better for that high-risk, high-reward starter who has a habit of throwing either a two-inning train wreck or an eight-inning gem with no in-between. The manager can put Lohse in the next spot and know that at least he won't need a long man two days in a row.

A few days ago, I suggested a plan for getting rid of starting pitchers in general. I surprised myself by spending so much of the column looking into whether my plan could simply cover the bulk innings that starters, as a group, provide now. While I made the case that it could, for the most part, I ended up using one extra roster spot, which threw a lot of other things off. I think we'd all love to believe that we should specifically reward the value produced while a pitcher is on the mound. What I think we're not fully appreciating is how insanely valuable it is to have one human being, in one roster spot, who can cover 200 innings and do so in a way that isn't embarrassing. It prevents a lot of things from happening, and the value of prevention is really hard for people to understand. Take it from someone who works in public health. It's really, really hard to find those 200-inning-eating guys, and if you don't have them, it takes a lot of resources to cover for that fact. Sure, we wish that all of those innings could be Justin Verlander quality, but maybe the point is that sometimes just having someone decent and steady out there is worth more than we might think.

There has been some discussion that maybe Scott Boras and Lohse himself thought too highly of his own worth, and that the impediment to signing him wasn't purely the draft pick compensation. Maybe Lohse just set his price too high. I'd argue that Lohse probably deserves more than he got, given some of the extra value he provides. Even if you'd argue that Lohse didn't deserve that much, the opportunity cost that the Brewers paid had to be factored into the final contract. The Brewers, assuming that we believe them to be rational, value Lohse around $11 million a year, plus whatever value they assign to the pick amortized over three years (value which likely would have gone to Kyle Lohse otherwise).

Lohse did not ask to have the qualifying offer made to him, but once it was, he bore the scarlet letter of having a draft pick attached to him. That lowered the value that he was going to get on the market. Maybe he should have just faced facts and realized that he was taking the haircut; he could have signed for less earlier in the offseason and been done with it. If there's one loser in the draft pick compensation system, it's Kyle Lohse.

Is there a way that we can make the system a little more fair to the players who inevitably seem to get caught in the middle? A few ideas worth floating:

  • Instead of a team losing its pick for signing a free agent, the team that loses the player gets an extra sandwich pick with an additional allotment of "you got screwed" bonus pool money. Perhaps the signing team also loses some bonus pool money. This way, you don't lose the pick, but you do feel the burn a little bit.
  • Alternately, the team that loses out gets an additional first-round pick right in front of the signing team. This would, however, surely anger the teams behind, who would be bumped back in order over a matter in which they had no involvement.
  • Instead of a one-year qualifying offer to a free agent, teams must make a three-year offer. For players who are truly franchise-level, this wouldn't be an issue. But for players who are banking on extracting a multi-year deal as a cost of doing business for a team that is trying to win this year, their potentially former teams might not want to extend that offer. Lohse might be worth a one-year deal at $13 million, but a three-year deal has much more risk attached to it.
  • Make the draft pick compensation lower as the offseason progresses. If you want to sign Lohse in December, it'll cost you a first-round pick. In January, the price is a second-round pick. In February, it's a third-round pick. If he makes it to March, no pick is exchanged. This means that teams essentially can figure out what value they attach to their picks and factor that into the decision. And they can play chicken against one another as the calendar goes along.

Or we could leave it alone. One thing that I didn't mention is that while the Lohse did not control the Cardinals making him the offer, he chose to pursue the two birds in the bush and turned down the sure $13 million. He doesn't escape blame for all this. Then again, it's an unfair position to put him into, since on an unfettered open market, he probably would have gotten more than he did. But maybe the biggest lesson of Lohse is that there are always unintended consequences when you try to set up a system to make things more fair. If only next time, we could skip the months-long journey to reach that realization.

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You could make this argument about any system which compensates clubs for losing free agents at the expense of the new club - the cost of acquring the player (in picks or whatever) are effectively coming out of the player's compensation. It's just more acute for the players who only just reach the level for being part of the system like Lohse. To me, it's simply a matter of whether the benefits of the system outweigh the drawbacks. Personally, I'd adopt a system that only rewarded a team when they developed a player who left through free agency, and I'd probably move away from punishing the signing team.

I also think that the importance of the pick in all of this has been overplayed. It's a pretty simple matter to get a ballpark valuation for a pick, and I'd imagine that, depending on exactly which pick we're talking about, you'd be talking around $1-5 million. Obviously that impacts on what Lohse gets, but I suspect that it isn't the reason that this took so long. I'd guess a tepid market and Lohse/Boras wanting top dollar were much more significant.
I am disappointed that you do not talk at all about the system that was in place before the current one as this is the first year of the new system. I do not disagree that Lohse (and possibly you could argue Bourn) were affected by the new system versus all other players. But this number is lower than the previous year's A, B and C free agent classifications and the mess that brings. The new rule also eliminated the large market inefficiencies of giving middle relievers the same compensation status as stars (something the Rays exploited, among others).

The real problem in all of your analysis is that you fail to mention the enormous changes in the draft and the idea that you lose money if you lose a pick. Teams are still trying to figure out what to do with their draft pools...adding even more uncertainty is not something teams do lightly.

Is this system perfect? I don't think so.

Is this system a huge improvement over what went on in the previous decade, especially for players? Absolutely.
Mr. Carleton makes a good case for Mr. Lohse being an attractive pitching prospect. 30 general managers had the chance to sign Lohse knowing it would cost them Lohse's salary plus a draft pick. No one could rationalize it until the Brewers signed him for a reduced asking price. If the value of a win is $5m and Lohse is a 2 win player who is being paid $11m, it is hard for me to see a problem. Lohse's PECOTA projection is 1.1. His 5 year average is 1.3. I don't get why there is an issue. Mr. Lohse over-priced himself in the hopes the market would rise to meet his asking price. The market didn't. You could argue the Brewers overpaid him independent of the draft pick.
Lohse is a career average pitcher that is very dependent on his defense for success. He's also going to be 34 this year. His problem wasn't the loss of a draft pick but that teams are getting smarter about spending their money on pitchers his age who don't miss bats.

I should also note that Lohse is a member of one of the two groups that negotiated this CBA. In a fairly negotiated contract you don't get to cherry pick the provisions you want to apply to yourself.

Maybe, Lohse came out on the short end of the stick here but $33M is a nice consolation gift.
Does the fact that much of Lohse's money in this deal is deferred and his actual 2013 salary being quite small ($4M) factor in to any of this analysis?
Meche was a pretty good signing until Trey Hillman slagged him arm. He also walked away from the last year of his deal, which I still find amazing.
So nobody wants to mention that he could have been in Spring Training over a month ago slated to make $13.3M guaranteed this year? The system is working just fine. Don't let an agent that failed his client fool everyone into thinking drastic overhaul is the course du jour.
Except most players would prefer 3/33 to 1/13 so it's hard to even say Boras failed Lohse.
So you really think that Lohse would have been better off leaving $20 million on the table?

I've got a bridge over in Brooklyn I would like you to take a look at, my friend!