Monday, November 02, 2009

Giants Sign Freddy Sanchez: 2 years, $12M

Announced late Friday, the Giants signed Freddy Sanchez to a reported (Chron's Schulman then Merc, based on what's Haft wrote), 2 years, $12M contract. Reports from, Chronicle, and Merc. As a side note, Noah Lowry (unsurprisingly), Justin Miller, and Kelvin Pichardo have been released, freeing 3 spots on the 40 man roster. Baggarly also noted that the following players are eligible for arbitration: Tim Lincecum, Brian Wilson, Jonathan Sanchez, Brandon Medders and Ryan Garko. Plus, the Giants are having conversations with all their free agents, but only about what the Giants are thinking, not that the Giants necessarily want them back.

Sanchez could have had an $8.1M contract for 2010 if he really wanted to, so in essence he is being paid $3.9M for 2011. Given that Hudson, a comparable 2B, last season only got $3M plus incentives (which eventually got him a total about $8M, if I recall right), Sanchez was trading off the risks that 1) he could be in Type A free agent hell for two years, not knowing who he would be playing for, and getting stuck with which ever team happens to be looking for a cheap 2B, and accepting whatever contract they offer, particularly considering his injury problems this season, and 2) he could be injured again, you never know considering he's entered his 30's, look at what happened to Ray Durham, healthy all his 20's then every, s-i-n-g-l-e season he's injured.

For that, he knows he's playing for a good rising team that was in the playoff hunt in 2009 and possibly the next two years plus don't have to worry about where he's going to be for the next two years nor what contract he might end up with. And there's the injury thing.

Also, for what it's worth, he felt bad that he was not able to contribute to the pennant run, as was intended by the trade, and that the Giants traded a "pretty high prospect" for him.

Giants Thoughts

Not surprised about a deal, I expected a deal to happen. But 2 years at $12M was an unexpected and nice surprise. I thought that perhaps the 3 year $20M offer that Sanchez gave Pittsburgh might be resurrected, but this is even better. Perhaps he wanted security for now but wanted to test free agency with a healthy body next time. Taking one year at lower pay when there is an $8.1M option doesn't make sense, but a 2 year at these terms does.

That's why all the hand-wringing a lot of Giants fans (i.e. the section of Sabean Naysayers out there) did, worrying about what might happen, was all for naught. They just automatically think that Sabean is going to screw it up in some way, but as I noted, it made sense for both sides to work out a deal for a reasonable amount of money. So we did end up with somebody good for Alderson, and given how poorly he was doing in AA for the Pirates, it looks like we sold high, and all the angst over Franchez was much ado over nothing.

Not surprised that Lowry was released (technically, his option was turned down and then he was outrighted, so as to avoid arbitration, and now he has the right to turn down the assignment and become a free agent, which will happen). His agent accused the Giants staff of incompetance, which is pretty silly because Lowry had problems that had never been seen in baseball before, they had to go to another sport to find such an instance. The Giants said that they are still open, but there is no way they can come back to the Giants and not look bad for the lawsuit that appears to be percolating on Lowry's end. Good luck with your career Noah, thanks for all the good pitching.

I was a little surprised by Miller being outrighted until I found out that he's up for arbitration. With so many players up for arbitration, they probably thought that they could outright him and then try to keep him as an option for next year, since he was signed to a minor contract last year and had his arm surgery. Medders, however, would have been a hot item on the free agent market. I think Miller will stick around and the Giants are talking with him.

Kelvin Pichardo's release possibly ends the Michael Tucker saga in SF. Pichardo was who we got in the trade for Tucker and for a number of years, it looked like he might make the team as a reliever, but despite good numbers in the minors, he never got the call up to the majors, even when basically every pitcher on the 40 man got called up and got at least a cup of coffee in the majors, in 2008. He's probably gone, probably will sign up with someone else since it doesn't look like it's going to happen here.

I am good with the deal for Sanchez. Forget his great season, that's ain't happening again. Still, if you average what he did in his other four seasons, that's a .326 OBP and .407 SLG for a .733 OPS. Plug that into the lineup calculator, compare batting 2nd (which is where the Giants envision him hitting, though apparently 3rd is an option too; .250/.299/.332/.632) with what we got from batting 2nd last season (guys hitting 2nd in lineup didn't do much better than the 2B too; .236/.281/.329/.611), and we add roughly 0.15 to 0.2 runs to the lineup, just with that one move. That would move us from 4.06 runs per game to at least 4.2 runs per game, maybe 4.25 runs scored per game, which, if our pitching holds up, would add two wins to our team.

We should also have improvements at 1B (Ishi-Garko platoon) and SS (Renteria healthy and back to normal offense), plus possibly 3B (Sandoval produce over full season) and RF (someone got to do better than what Winn provided, either Schierholtz or Bowker), leaving LF for a possible free agent or trade acquisition for an upgrade.

Plus, over the last two months of the 2009 season, after the acquisitions for the offense, the team averaged 4.24 runs per game. Obviously, a big chunk of that was from Uribe (who according to the press conference is looking to go free agent, not surprising), but what I wanted to show is that improvements we already have now at 2B, 1B, and SS (relative to 2009), should be at least equivalent to that uptick in offense, meaning that is not a pipe dream that the offense could be improved over last year's 4.06 runs scored without any new additions.

Still, hopefully the Giants can take a calculated risk in the free agent market and improve the team to get us to the 90+ win range. And not just by adding a power hitter but also by adding a #5 starter who can do better than what we got from our #5 starters, Randy Johnson, Ryan Sadowski, and Joe Martinez (obviously, Brad Penny did pretty well). Plus, if Sanchez can continue to improve, that would also help too. Same with Zito.

As I've been noting, I'm happy with how the Giants are set up for 2010. We have clear areas of possible improvements in both our offense and pitching that look like we have a pretty good chance of improving on the number of wins we get in 2010 over 2009. Still, enough could go wrong that we could take a step back in 2010 too.

As much as I would like to see Posey starting, I think the Giants are going to follow the Orioles/Weiters route and acquire a catcher to be the starter holding the seat warm for Posey in 2010. Given that Weiters is considered a better hitter than Posey and yet did not do that well in the majors until his last month, it might behoove the Giants to keep Posey in AAA for most of 2010, and just get him ready for the starting job in 2011. Research by Baseball Foreaster showed that it is usually better to keep the prospects in AAA for a whole year in order to have a better feel for the prospect's true abilities and have a better chance that he succeeds when he does make the majors, than to assume his good hitting over a partial season will hold up on the majors.

According to the news from the press conference announcing Sanchez's deal, Sabean "sees a late-developing free-agent market, particularly for the Giants, because he feels no desperation to sign players." That does not preclude the Giants from pursuing one of the bigger names (Holliday and Bay) as they are usually late developing too, particularly Boras clients. But it probably does mean that it will be a relatively slow off-season for Giants news, as the Giants will not be actively pursuing many (if any) free agents for a quick signing. That probably means no quick signing of a reliever, like we did last year with Affeldt and Howry, or a LF, at least initially. And that could have been predicted once the season ended, not a lot of spots open on the team, as much as people want wholesale changes on offense.

Late (meaning Jan/Feb 2010) signings for LF, RF, 1B, and 3B (and I suppose C) are possible as the Giants take a chance on somebody and giving them a chance to win a starting spot or a vet is unsigned and looking for a spot. That's also when teams have released arbitration eligible players in December and they could be available in that time frame and desperate for a shot somewhere, anywhere. I would also throw out Dallas McPherson's name out there, if he's healthy and hitting in spring, he could push Sandoval to 1B and get a semi-starting job at 3B.

Sabean also noted that he's working on stabilizing the top of the order (1-4), and the only way we can stabilize leadoff is via signing a free agent leadoff hitter. The premier free agent there would be Chone Figgins, who could play 3B or LF for us full-time, or move around as needed, though he would probably prefer to be in one spot, and as a free agent, that could become something that he is looking for in a team. If they got him, the Giants would be set at three of those spots: Figgins, Sanchez, and, of course, Sandoval, and might leave batting 3rd open for Schierholtz or Bowker to try to win.

Also, since they are looking at Franchez batting 3rd, I have to assume that could mean Renteria 2nd, Franchez 3rd, and Sandoval 4th. The news keep on focusing on getting a cleanup hitter, but Sandoval is that already, in my opinion, so they could go this route during the season. And that would work if Renteria was back to his normal self (heck, if he's back to his normal self, he would probably be better off hitting 3rd).


  1. Sanchez' $8.1M option did not vest because he did not get enough plate appearances, so it wasn't up to him. The Giants could've just bought him out for $0.5M and walked away.

  2. Sanchez at 2 years, $12 million. This is rougly equivalent to the value of the option of 1 year, $8 million. It is higher than market value by about $1 million per year. This is well-negotiated, considering the leverage Sanchez had with his option.

    Now that he has been signed for greater than market value, the fact that Alderson was traded for a 2-3 month rental of Freddy Sanchez has been confirmed.

  3. Yes Boof, Sanchez did not have control over the option. I figured any Giants fan already knows that. But the Giants just traded away a top prospect (at the time) for him and thus probably feel some need to get some value from the trade.

    Sanchez could have gone hardball in his negotiations and tried to squeeze the Giants into picking up his option, particularly since Sabean said as much during his press conference, and gotten the $8.1M contract option picked up by the Giants. That is a standard negotiation ploy if the player wanted to play hardball (see any Boras client).

    It might not have worked, but given how fast a contract was negotiated and signed, it seems a reasonable assumption that he negotiated not to force the Giants hands but to do something fair for both sides.

    Dregarx, I have no idea what you are talking about regarding his market value or option. I do agree that it was well-negotiated.

    I mean, if you are using Fangraphs valuation, he is horribly underpaid as in 4 of his last 5 seasons, he has produced value of $10.9M, $17.7M, $15.6M, and $10.1M (plus his poor 2008 season of $1.8M). If you just take the worse two values, that is roughly the same as the $12M contract he signed ($11.9M), but if he can produce 2 $10M+ seasons, he provides over $20M in production for $12M, a great bargain.

    And an average player, which Sanchez is at least at 2B, counting both hitting and defense (he is about average offensive, slightly above average defensively), makes more than $6M per year, according to Fangraphs, the average player can produce around $8M per year.

    You also need to get over your infatuation with Alderson. He faltered, big time, this sesaon. He's young still, but he's at least 3-4 seasons away from making the majors, if ever. To get an above average major league starter for that is getting great value in trade.

  4. But that's the point! We didn't get an above average major league starter! We got a 2-month rental.

    That money we are using on Sanchez is free agency money. It's a new contract, a fresh slate.

    The Giants gave up something and ended up with the Sanchez contract, with an $8 million option that nobody, Pirates or Giants, was willing to pay. Sanchez knew that Sabean was not going to let him walk after investing that prospect in him, so the contract acquired actually resulted in negative leverage for the Giants and positive leverage for Sanchez.

    Also, your Fangraphs valuations are based upon market conditions that precede the recession and are therefore inflated. Not a single 2B on the free agent market this year is going to get anything close to what Sanchez got right here. And Sanchez would not have gotten anything close to that either, had he been a free agent. Why not wait a couple of months and sign him for 1 year at $5 million now? But no, Sabean had this brilliant idea to use an asset of value to get him immediately.

    Thanks to the trade, we got 25 games from Sanchez and also the option/buyout combination attached to him. My entire argument stems from this situation. I would not have traded anything of serious value to acquire that. Look, when you respond to me on topic, you bring up good points, but much of the time you aren't content to do so, instead intimating that I am infatuated with Alderson. Either you haven't realized by now that I'm not talking about Alderson, or you are intentionally distracting from the true subject matter.

  5. This comes to our disagreement over how much the market values free agent 2B this year. Nobody knows for sure exactly, but by the end of the offseason, when all is said and done, we’ll know what the market value is, and then we can make a judgment.

    Do you want to set terms on the outcomes of the 2B free agent signings? By that, I mean we will determine a threshold where, if any 2B is signed at above the threshold, one of us is right, and if every 2B is signed below the threshold, the other is right.

    Here’s some background information to start with. The value per year that the market places on a hitter is most closely approximated by the salary of a one-year contract. As the number of years in a contract increases, the salary paid per year must decrease for the value of the contract to remain the same- yearly salary varies inversely with number of years when the value of the contract remains constant.

    There are three 2B free agents who were worth more fangraph dollars than Sanchez last year: Felipe Lopez ($20.5), Juan Uribe ($13.0), and Orlando Hudson ($12.9). Freddy Sanchez has had a better overall career, so he is certainly not worse than any member of this trio. We should not assume, however, that Sanchez’s value is considerably higher than the best one because of concerns over his fragility and the upcoming surgery.

    Sanchez’s current extension at 2 years and $12 million has a yearly salary of $6 million, but that contract is more valuable than a contract of 1 year and $6 million, because of the relationship described above. We need a valuation scale to equate 2-year contracts with 1-year contracts, because most free agent second basemen will sign one-year deals. May I suggest a reduction of $2 million in yearly salary for each additional year? It makes logical sense, because the $12 million dollar ($6 million per) is then equivalent to the original club option ($8 million per). The option was the baseline for the negotiations- it must be a solid approximation of the ensuing restructured contract. Sanchez never would have accepted the new contract if it were less valuable than the $8 million option, because he knew that Sabean was not going to buy out the contract.

  6. I believe that on the open market, Felipe Lopez, Orlando Hudson, and Juan Uribe end up with contracts less valuable than the threshold contract level. Therefore, I believe that all 2B free agents will sign contracts less valuable than our agreed upon threshold contract level.

    The deal that Sanchez has just signed is too high to be the threshold. If the Giants hadn’t made the trade, and tried to sign Sanchez, it’s not certain that they could snag him for market price. The Giants would have to pay above market value to ensure that Sanchez is acquired. That extra money offered in free agency would play the same role that having club control over Sanchez does in the event of a trade. That extra money will be the difference between the threshold and the current Sanchez contract of 2 years, $12 million.

    If any second baseman receives a contract greater than the threshold contract (base salary), then if Freddy Sanchez were a free agent along with them, he would command at least the same amount. The contract the Giants have now would be appreciably better than that which they could have signed Sanchez to if they hadn’t traded for him, and the trade benefits the Giants by substantially reducing Sanchez’s price. In short, you win, because I underestimated the value of 2B in the current market.

    If no second baseman receives a contract greater than the threshold contract, then if Freddy Sanchez were a free agent along with them, he would command no more than the threshold contract on the market. The Giants would have been able to bring him in, perhaps needing to pay him the extra money to ensure his acquisition, and the trade nets the Giants no benefit. If the Hudson, Lopez, and Uribe all receive contracts considerably below the threshold, that would indicate that the trade actually increased Sanchez’s price for the Giants. In short, I win, because you overestimated the value of 2B in the current market.

    Note that by this evaluation it does not matter who was traded away- we’ll just assume that, whoever got traded has negligible value, because if the threshold is not reached, the conclusion is that the trade gained the Giants nothing other than those 25 games in 2009.

  7. ¬Do you agree with everything I’ve said in the last two posts? Here’s what I propose. We each put forth our own thresholds, and take the average of the two to get the final threshold.

    Here then, is my proposed threshold: a 1-year contract at $6 million or a 2-year contract at $8 million. These deals would be equivalent to each other as the valuation scale would reduce the $6 million per to $4 million per in the two-year deal.

    So it’s a threshold for the rest of the 2B signings set at {1 yr $6 mil/2 yr $8 mil}.

    If you think this is a good plan, post what you think the threshold should be based on the information I’ve written above. Then I’ll confirm the average, and when the offseason is over, we’ll know which one of us was right about the Freddy Sanchez trade!

  8. I'd like to clarify one thing. This predictive threshold is my idea to determine if the Giants could have signed Freddy Sanchez this offseason without having made the trade. If the threshold indicates my prediction of the 2B market was correct, then the Giants could have gotten Sanchez without trading for him at all. If the threshold indicates that your prediction for the 2B market is more accurate, then that confirms that yes, the Giants needed to trade for Sanchez to reach the deal they got now.

    I agree that between the time of the trade and now, the Giant's big-league roster has improved. No fan with a modicum of baseball knowledge would dispute that. I simply believe that they could have gotten from where they were to where they are now without trading away anything, let alone our 3rd-best prospect.

    The predictive threshold is a way to determine if my assertion is correct or incorrect.



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