Thoughts After Cueto Signing Press Conference

With the Cueto press conference introducing him (accounts by Pavlovic and Baggarly), news about the details of his contract came out.  Wow, complicated:

• 2016:  $15M
• 2017:  $21M
• 2017-2021:  $5M bonus, paid $1M annually, but apparently only one if he opts out
• 2017 Opt-out:  If he exercises it, he gets $5M buyout.  Else...
• 2018-2021:  $21M
• 2022:  Team option for $22M, and if not exercised, he gets bought out for $5M

Through all those complications, if he opts out after 2017, he will have received $46M in total:  salaries for 2016-17 of $36M, bonus of $5M, and $5M buyout.   He can be traded, but gets $500K for the first trade, $1M for the second.

According to the press conference, they did an MRI and found nothing wrong, that the flexor problem he had earlier in the year was fully healed.  And obviously he passed his physical.  And while Sabers hate the word, chemistry was also inferred.

Pavlovic:

The elbow issues limited Cueto’s market, but the Giants aren’t concerned. He missed a start while in Cincinnati last season because of a flexor tendon strain, but an MRI during the season came back clean and Evans said an MRI the Giants took on Thursday came back clean. “His elbow looks great,” Evans said. “It really looked good.” 

 Baggarly:

The Giants investigated those risks, and deemed them sufficiently minimal. Cueto underwent an MRI exam as part of Wednesday’s physical, and GM Bobby Evans said the right-hander’s elbow “looks great, really good.” 

The missed turn in May that caused him to skip a start and led to so much concern from clubs this winter? A mild flexor strain, said Evans, adding that a contrast dye injection was the only reason Cueto missed one start. The checkered performances following the late-July trade to Kansas City? An inevitable adjustment to a new team and catcher, agent Bryce Dixon said. 

Baer said the front office contacted several of Cueto’s former coaches with the Reds and Royals, and came back with a positive assessment of his personality, passion and clubhouse demeanor. 

So what, exactly, allowed them to move past those ghosts [of Zito Past]? “It’s a fair question,” Baer said. “What we really saw was, if you have five strong (in the rotation), plus (Chris) Heston … we think it just gives us the best chance to win. It changes the bullpen equation. We don’t have to overtax the bullpen, which is one thing that might have happened last year. 

“We did a really thorough war room analysis and everybody said" [Cueto was the free agent to get. (cribbed this from the televised press conference and inserted here)]

“And the other thing, as Cueto’s name was out there, a lot of calls were made and he came through as a huge plus-guy in the clubhouse. A huge plus teammate. Huge plus. That was really important, too.

Also, Haft has some info regarding Cueto's workout regiment, showing how much a competitor he is and how fitness conscious he is:

Based on the testimony of Jeff Brantley, the former Giants right-hander who scrutinized Cueto as a Reds broadcasting commentator, Cueto works ceaselessly to match the achievements of Marichal and other greats. "He's a high-end competitor," Brantley said. 

Don't be fooled by Cueto's thick frame, Brantley advised. "If you take a look behind the scenes and watch his workout regimen, it's about as professsional as you can get," Brantley said. 

"There's not too many starting pitchers out there who run 'stadiums [up and down the aisles of an entire ballpark].' He runs them until he's blue in the face."

Bochy was a noted driver for this move, and how it would work:

“Bochy said get me another 200-inning starter and I’m good,” team president and CEO Larry Baer said. “I’ll figure out left field … It’s our recipe: Pitching, defense and sprinkle in position players where we can.” 

Sounds like LF will not be a high priority either going forward, barring a free agent desperate for something.   Still:

Although the Giants doubled down on pitching this winter, Evans said he remains involved on “all levels” of a free-agent outfield market that remains slow to develop. Evans wouldn’t say how much wiggle room remained in the budget, but the Giants expect their payroll plus benefits to exceed $189 million and thus would pay into the competitive balance tax for the second consecutive year.

But there's a 30% premium now with the next bit of news, which is that Baer noted that the Giants had went pass the payroll threshold and will be paying the tax this season.  At 30% tax, any additional salaries added on would effectively cost the Giants at 130%, or, in other words, for every $10M added, $3M of tax is collected.

Baer noted that the development of homegrown stars like Matt Duffy and Joe Panik made this offseason spending spree possible. Counting the Brandon Crawford extension, the Giants -- resigned to paying the competitive balance tax for a second straight year -- have committed $295 million to three players over the past month. Cueto’s deal is by far the biggest, and it’s a complicated one.

And a word about Lincecum:

Evans acknowledged that filling up the five-man rotation “does put us potentially in a difficult spot” to re-sign Tim Lincecum, who is looking to start again and will showcase himself in January. “But in the meantime, we’re not ready to come to any landing there right now. He’s done a lot for the franchise, he means a lot to the organization and we’ll let that play out over time.”

I interpreted that to mean that the Giants are interested in bringing back Lincecum as the long reliever if he don't sign with someone as a starting pitcher, else they would have just said "adios" like they did with Vogelsong because there are no more spots in the starting rotation.   That would put Heston into AAA to work on whatever it was that they intimated that they would have him work on when discussing the options with him.

Speaking of Vogelsong, he just signed with the Pirates, $2M contract with $3M in incentives.  Don't know details, but basically he's signed to a cheap deal where he'll probably have a role like he had with the Giants last season, and if he ends up starting a lot of games, get his incentives, I would bet.  Good luck to him, he's been a great Giant and we'll always remember everything he's done for us.

Lastly, interesting news to come out (via Pavlovic) was that apparently the team Greinke was close to selecting was the Giants, not the Dodgers as most (including me) assumed.  Apparently the Giants brass got the impression from meeting him that he was leaning towards the Giants.  Greinke impressed by asking about prospects that not everyone in attendance was aware of.  In their meeting, he blew everyone away with his knowledge of the Giants.

This could tie in with the information I read about how upset he was about Puig in the clubhouse.  This could have been akin to the Kent-Bonds situation for the Giants after 2002, where the free agent was not returning to the former team for any price because of a tense situation he has with another star on the team.  Given how Greinke is clearly a GATE student type (smart, but socially a bit awkward, and in his case, bordering on insensitive), it would not surprise me if he just wanted to get away from the LA situation, as Puig is apparently not going anywhere.  

ogc thoughts

I was pleasantly surprised by the Cueto deal.  It was a head scratcher at first, as I was mainly aware of the 2015 Cueto and his short start against us in the 2012 playoffs.  But it makes a lot of sense after the fact, and, to me, after looking over his stats, it makes a lot more sense than spending that money all on getting Greinke, as the Giants structured the contract to backload money to Cueto via the bonus and buyout.  Ironically, with this structure, the Giants end up paying $33M for both Cueto and Samardzija, whereas Greinke signed with the D-backs for $34M in 2016 (but with $10M deferred, so the value is reduced in terms of present value).

Cueto's actually been Greinke's equal or better for many years, but he had the injury shortened 2013 season and then his hiccup in 2015.  In fact, he's second only to Kershaw in ERA since 2011, as he has outperformed his peripherals, which FG focuses on, whereas ERA just looks at actual performance.  So the Giants probably were worried that he would command something closer to $30M when the free agent period started.

But after the failed D-backs bid of 6 years, $120M, only $20M AAV, it seems from the reporting, the Giants realized that they could maybe get Cueto at an affordable deal given our payroll parameters.  And per Baer's announcement above, they decided to go for it by passing the payroll threshold and paying the competitive balance tax for the second year (30% penalty tax).

This deal has a number of components. First, front loaded (given the opt-out), to recognize how good he's been but not that high to recognize the risk Giants taking on. Second, opt-out, which makes the first two years more of a "make good" contract where he rebuilds his Greinke value and leave in two years.

“Johnny, a little bit unfairly, had a lot of questions about his arm,” his agent Dixon said. “I felt we could reestablish his actual value … He knows he’s as good as (David) Price and (Zack) Greinke, but his situation was a little different.” 

Baggarly added:

Cueto’s opt-out would allow him to test the market again after the 2017 season – something he surely will do if he is able to rebuild his value in a big park while pitching alongside a strong defensive team. 

Dixon said he felt that Cueto warranted the same $200 million-plus contract that David Price and Zack Greinke received, but teams unfairly docked his client because they were concerned about arm issues. 

“He knows he’s as good as Greinke and Price,” Dixon said. “But when you sign a deal like this, you don’t want to think about leaving. It’s not in his mind. It’s more something I wanted because he’s as good as those guys.” 

Dixon was so confident that Cueto’s market would develop that he turned down Arizona’s $120 million offer that came with a 48-hour ultimatum. The Diamondbacks jumped into the Greinke bidding instead, snatching him away from the Giants less than 24 hours after they held a crackling, energetic meeting with them in San Francisco. 

“I didn’t worry,” Cueto said in Spanish. “I knew I was eventually going to sign with a team. That’s what I told my agent: `Take it easy, relax, don’t worry about it. I’m at home with the kids, I’m just relaxing with my family and God will take care of the rest.” 

It did not take the Giants long to alter their focus after losing Greinke, signing Samardzija the next day and then engaging with Cueto’s agent that weekend in Nashville.

Third, all reward for Cueto, as many long term contracts are, dead for the team but pay the player for prior goodness, should the other teams be right about his arm/health/performance.  However, with the buyout pushed back to the end of the contract, as part of the structure, the contract becomes relatively backloaded.
Plus the salary makes these payments relatively not as bad, plus acts as incentive (relatively) for him to opt-out if he's still good.  Overall, the buyout for the opt-out and team option does two things:  if he opts out, he gets $46M over his two years with us, but if he does so poorly that he don't opts out, the Giants get him at $41M the first two years and then pays him the $5M six years later.

Cueto Was Greinke Good, Even Better, Before 2015

Because he was really good before, 4-6 WAR over recent years, even if he declines to 3 WAR level, with inflation, that's roughly $30M value anyway, and he will opt-out, though if the Giants like him enough, I'm sure they will instead announce a new deal that extends him instead. He would have to have a drastic fall for him to fall below the roughly average pricing in the back half 4 year deal ($21M then is roughly 2 WAR). So basically the Giants are making a huge bet that his arm is not going to fall off in the next two years, or even if there are problems, he'll still be good enough to produce 2-3 WAR.

But this is baseball. Weird health stuff happens. Durham was a rock before we signed him, basically a cripple after, he never reached 150 games again, and the only reason he got to 140 was because of PH or he would start and get an AB or two before bowing out. Pence had the longest consecutive game playing streak when he went down and missed most of 2015 due to two injuries.

Deal Scenarios

Here's how I see the deal. He's relatively healthy, enough for the Giants doctors to OK him. So 2016 should be OK, and reportedly, his decline with KC was due to catcher, which should not be a problem with Posey.

There were performance issues that haunted Cueto, too, a 4.76 ERA in 13 starts after a midseason trade to Kansas City. Dixon said Cueto was slumping at the time and did not find an immediate comfort level with new catcher Sal Perez. Once Cueto settled in he gave the Royals two outstanding postseason starts, including a two-hitter in the World Series.

Even with that, he was at 4 WAR for the season, and that's $32-34M produced. At $23M per season, that's roughly 3 WAR pricing, so if he produces 2 WAR in season 2 while healthy, we got what we paid for, and he would opt out, because with us it's only 4 seasons left, and he probably can get at least 5 years (since he's healthy enough to produce 2 WAR).

More likely, since he's been relatively healthy over his career, with just the lat strain in 2013 and the elbow hiccup (reportedly healed) in 2015, he should deliver, say, 4 WAR in 2016, 3 WAR in 2017, and that would be enough for him to opt-out and expect a 5 year, $30M deal like Greinke's.

At that point, the Giants should still have Bumgarner and Samardzija, both going strong, Peavy is gone, and probably replaced by Blackburn, Cain would either be good to go and have some Hudson years or gone, and hopefully two from Heston, Beede, Bickford, Johnson, Stratton, Coonrod, Mejia, Blach, Crick would be ready to man two rotation spots.

And if Cueto is healthy, good in the clubhouse, and produces to prior levels (near 5 WAR; these are all fWAR, he has actually out performed his peripherals in past, so you could tack on 1-2 WAR in terms of actual production), maybe they decide to keep him (but given Baer's comments about deals over 5 years not being good, I doubt it; as noted, the odds favor this deal being only a two year bargain deal for the Giants if Cueto is healthy, and if healthy, produces like before).

The main negative I see is his poor history in the playoffs.  Not as bad as Peavy (6 DIS starts out of 9 starts, ow!), but out of six starts (not including his injury shortened one against the Giants), he has 2 DIS starts and only 1 DOM start.  But with 3 MID starts, he at least kept the team in there.  This is probably where his history of outperforming his peripherals come in.  So four out of six starts he did good for the team.

Now the downside.  If there really are arm problems and this elbow hiccup was just a precursor, we are stuck for $130M.   But given the stamp of health on him, and his recent history and recovery by the time of the playoffs, with 3 good enough starts out of 4, helping KC win 3 of 4 starts, pretty good, I feel pretty good that he'll produce at least 4 WAR production in 2016.  Then the arm problems kick in for 2017, that's five seasons of $22M (salary and bonus).

Looking at Lincecum's down years, per FG, he still produced 3.2 WAR (he produced 4.0 WAR his last good year).  And that's with him not being a pitcher, which Cueto clearly is.  And with him not being placed on the DL and replaced by a young pitcher ready, because we didn't have anyone, whereas with Cueto, starting in 2017, should have Blackburn, Stratton, Blach, Beede, Mejia ready for their audition, with Bickford, Coonrod, Jordan Johnson possibly also pushing for an opportunity.   Had Lincecum been shut down earlier, his WAR would have been much better the past two seasons.  Lets call it 1 WAR per season.

That'll be $130M, roughly 15 WAR being paid for (above average 2.5 WAR annual production priced in, roughly), and we get 4 WAR then 5 WAR, or 9 WAR.

Now what if it was more of a gentle decline in production, without healthy problems, like with Zito, for the most part.  He actually produced 6.8 WAR in his first four seasons, roughly 1.7 WAR or average production (unfortunately, he wasn't being paid for average production, though perhaps the Giants were pricing for it, but salary inflation stopped growing at 10% and slowed to 5%).  I'm forgiving 2011 because that car accident happened and the Giants really should not have started him and then when he came back, he was really in spring training mode.  He should have been in-between the 1.8 WAR the year before, and the 0.9 WAR the next.  Using the average, that puts us at 9 WAR for the 6 years, or roughly what Cueto would under the scenario above.

But if Cueto has a decline like Zito, that's 4 WAR followed by roughly 8 WAR production, which adds up to 12 WAR.   And Zito's decline, if you look at his FG profile, he declined from 4's to 3's to 2's, and Cueto hasn't even done his 3's.   Add in a couple of 3's after the 4 in 2016, that gets us up to 14 WAR, or basically the WAR that $130M is priced for.

So there is some risk in this contract, should there be a catastrophic injury situation that stops or sharply reduces production.  But if he declines like a regular pitcher does - and remember, he's been an extraordinary starter to age 29, Zito was declining once he was 26 (and really, since his great second season) - we should be OK in terms of production.  And if he continues to do well, he'll opt-out and have a different conversation.

I feel good about these risks, pitchers per Baseball Forecaster research, are at their most reliable between 29-34, and this contract covers Cueto's 30 to 35 YO years, or mostly his most reliable years.  Of course, there are risks that he suffers from early 30's health issues.  But if he stays relatively healthy (and he's been mostly healthy during his career, with the only arm/shoulder-related issue being the elbow this season), a Zito type of decline looks like the floor (and remember, we caught Zito at the very end of his decline, whereas Cueto hasn't started yet, at least not clearly) and if he's any better, he'll opt out.

I think the odds of him opting out is very high, a natural decline would still leave him a very good pitcher in two years and capable of a larger and longer contract, and the sky's the limit if he continues to dominate.  It would take a big injury to knock him out.  There is some risk, but also the possibility for two parades the next two seasons.  This is the window, with our core of Bumgarner and Posey approaching 30 now, and the cheap infield (relatively), and the Giants are going for it, and I'm glad to take on this risk.

Ebony and Ivory Harmony

Additionally, it sounds like Cueto will fit right in with the Giants, just like Samardzija too, both are fun-loving and loose personalities who will fit into the clubhouse easily:

Romo said Cueto has a fun-loving, loose personality that’s going to fit right in. When the Giants checked with past Reds teammates and coaches, the reports were that Cueto is a “plus guy and a plus teammate, a huge plus,” Baer said. 

Also:

With his flowing dreadlocks, easy smile and improvisational, back-twisting delivery (not to mention a hilarious Instagram account that includes selfies in bed and on horseback), Cueto is a plus character, too. 

“He’s a very energy based guy when he plays and pitches, and I know behind the scenes he’s a jokester,” said Giants right-hander Sergio Romo, as he stopped at the ballpark for an offseason workout. “He’s another personality that will fit. I know the English/Spanish barrier is kind of there with him, but there’s a way around that. So it’ll be fun.” 

Said Cueto, through translator Erwin Higueros: “I always try to have fun on the mound, with Twitter, Instagram. I’m just a guy who likes to fool around.”

And it's not fans who are loving these moves:

Romo and the rest of the Giants can’t wait to get going with their revamped rotation. “Think of the potential,” he said. “It’s pretty awesome.”

Versus Greinke Scenario

I'm happy with Cueto/Samardzija over Greinke and whomever we would have paired with him (they might still have gone with a cheaper horse-type pitcher than go with Heston).   There are a lot to like.

One aspect that I've not seen mentioned anywhere is the contrast between Greinke and Cueto/Samardzija in terms of personality.  Greinke is kind of off in his own world, whereas both Cueto and Samardzija look like fun-loving and loose personalities.  Both would fit right in with the Giants clubhouse immediately, as the Giants have a lot of those personalities in there right now.

And Greinke would have been fine on the Giants, but he would have took longer to fit in, if ever.  Not that Greinke can't fit in, but I've read about some encounters he has had with teammates that, at best, make him an oddball, worse, a Sheldon Cooper from Big Bang Theory.  Not that he'll be a negative, but more that Cueto and Samardzija should be able to slide in quickly and make themselves at home.   Just more touchy-feely stuff.

Plus, now we have a little long-term with Samardzija, a little short-term with Cueto.  The contrast is there in the contracts:  Samardzija has a limited (8 teams OK list) no-trade clause, Cueto has a money clause if he gets traded.  This shows that the Cueto deal is a deal of convenience, where the Giants can trade him at any time it makes baseball sense.  They could wait for the opt-out in 2017, whereupon they could QO him and get a pick, or if another injury plagued season happens in 2017, they could trade him (assuming he's good like he's been) mid-season and get a good prospect or two.  Or if decline but still OK, trade him to get salary relief at some point (like Texas did with A-Rod).  Whereas Samardzija most probably will be kept, but just in case, at least he can go to a team he wants to go to (basically playoff caliber teams).

Finally, Cueto has a history of being a very good starter and Samardzija had his great 2014 and that was masked in 2015 by his hiccups.  The key, as I've been saying in my business plan, is to have two aces atop the rotation.  Cueto will presumably cover the next two seasons with Bumgarner, then hopefully the Giants can get Samardzija up to those levels, with the fixes that they see, and continue having two aces with Bumgarner and Samardzija in the following season.

So we should end up with two aces, as we would have with Greinke, as I think the odds are good that one of Cueto/Samardzija will figure things out and perform well.   And if luck be with us, have three aces the next two seasons if both of them join Bumgarner as co-aces.  And if we hit 00 on the roulette wheel, Cain will return to prior goodness, now with full health (and no more recovery period) plus loose and free throwing, and give us four aces.  Then we could have a monster of a season!   Exciting times to be a Giants fan, and I say that in recognition that we won 3 in 5.

Go Giants!