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Orioles agree to terms with Yovani Gallardo on restructured two-year deal for guaranteed $22 million

It took just one day for the Orioles to salvage their agreement with right-hander Yovani Gallardo as the sides came to terms Wednesday evening on a restructured two-year deal that will pay Gallardo a guaranteed $22 million, according to an industry source.

The Orioles agreed in principle to a three-year, $35 million deal with Gallardo on Saturday, but the deal hit a snag when team doctors requested additional tests on the veteran pitcher's right shoulder.

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Still, the sides were quickly able to renegotiate a deal that will give the Orioles the established starting pitcher they've been seeking all offseason. Meanwhile, Gallardo will receive the same salary he originally agreed to over the first two years of the deal and has the ability to earn as much as $33 million over the course of the deal if the Orioles exercise a third-year club option.

Gallardo will make $9 million this season and $11 million in 2017. The deal also includes a $13 million club option for 2018 or a $2 million buyout if the Orioles decline the option.

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When questions arose about Gallardo's shoulder and the risk of him remaining healthy over the course of the previously agreed-upon deal, the Orioles were hesitant to offer a guaranteed third year.

It marked the latest case in which the Orioles' meticulous physical exams nearly killed a free-agent signing. But unlike previous deals with Grant Balfour, Tyler Colvin, Jeromy Burnitz, Xavier Hernandez and Aaron Sele, the sides were able to regather and consummate a deal that worked for both the team and the player.

Still, the hiccup in Gallardo's physical was peculiar because he had no history of arm problems over the course of his nine-year major league career. Over the past seven seasons, he showed remarkable durability, averaging 32 starts and 191 innings and a pitcher with his track record would undoubtedly show some wear and tear on his shoulder.

Ultimately, Gallardo wanted to pitch in Baltimore and wanted to get into a camp as soon as possible to begin getting accustomed to a new team. And the Orioles needed a veteran arm like Gallardo.

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Starting pitching struggles were a major reason why the Orioles regressed from winning the American League East to finishing 81-81 in 2015. The Orioles rotation's 4.53 ERA was the second-worst in the AL, better than only the 4.78 ERA posted by the Detroit Tigers starters.

The deal with Gallardo is expected to be officially completed Thursday morning. Gallardo is expected to report to the Ed Smith Stadium complex Thursday and could participate in his first team workout as an Oriole that day.

The pending additions of Gallardo and outfielder Dexter Fowler, whose three-year, $33 million deal is pending a physical, raise the Orioles' offseason spending on free agents to about $270 million, making the Orioles the second-highest spending club this offseason.

Both Gallardo and Fowler are tied to draft-pick compensation, so the Orioles will forfeit their first two picks in this year's draft -- the 14th and 28th –- in order to sign them.

Gallardo is coming off a solid season with the Rangers, having gone 13-11 with a 3.42 ERA in 33 starts in 2015. He struck out 121 and walked 68 in 184 1/3 innings. Gallardo's ERA and innings would've ranked second among Orioles starters last season, behind only left-hander Wei-Yin Chen, who signed with the Miami Marlins this offseason.

Gallardo's strikeout total has slowly declined from 9.9 per nine innings in 2009 to 5.9 in 2015. But he has still found a way to remain effective, finishing with an ERA above 3.66 only once in the past five seasons, when he had a 4.18 ERA in 2013 with the Milwaukee Brewers.

The 2010 All-Star has pitched at least 180 innings in each of the past seven seasons.

Gallardo was initially seeking a deal in the four-year, $50 million range, but interest in the pitcher was unsteady because clubs were uneasy about forfeiting a first-round pick for his services. Even though the Orioles were once in that group, their surplus of picks made them more willing to pursue Gallardo. Even after losing their first and second picks, the Orioles would still have four selections in the first 91 picks.

Two years ago, the Orioles used the qualifying offer process to sign two key free agents who went into spring training unsigned because they were tied to draft-pick compensation. Six days into spring training, the Orioles signed right-hander Ubaldo Jimenez to a four-year, $50 million deal, forfeiting their first-round pick, and then sacrificed a second-round pick to sign slugger Nelson Cruz to a one-year, $8 million deal.

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