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Orioles, Yovani Gallardo agree to three-year, $35 million deal

Orioles beat reporter Eduardo A. Encina talks about the club agreeing to a three-year deal with former All-Star pitcher Yovani Gallardo. (Kevin Richardson/Baltimore Sun video)

SARASOTA, FLA. — The Orioles' pursuit of right-hander Yovani Gallardo began back in November, when they first identified him as one of the pitchers in a robust free-agent market who could upgrade their starting rotation.

It took until two days into spring training workouts for pitchers and catchers, but the Orioles finally completed a lengthy negotiation with Gallardo, agreeing to terms on a three-year deal worth a guaranteed $35 million, according to an industry source.

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The agreement is pending a physical.

The deal, which does not include an opt-out clause, also includes a fourth-year club option for $13 million that would bump the Orioles' total investment to $46 million. The Orioles would pay Gallardo a $2 million buyout if they do not exercise his option for 2019.

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Gallardo, who turns 30 on Feb. 27, will make $9 million this season, $11 million in 2017 and $13 million in 2018.

Gallardo hoped to arrive at the Orioles' spring training complex in Sarasota on Sunday to take his physical, but because the deal wasn't agreed to until early Saturday evening, his arrival could take until Monday.

Asked earlier in the day whether he felt he was close to a deal, Orioles executive vice president Dan Duquette said there was still "a lot of work to do."

"There's situations where either the situation comes together and you have a deal or you agree you're not going to have a deal," Duquette said. "Those situations come up all the time, but we're always trying to build our roster so we're trying to look for opportunities all around and it just seems like the last few years the offseason has extended into the training season for the club."

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One of the primary storylines for the Orioles entering spring training was a battle for the fifth rotation spot, but the addition of an established starter like Gallardo — a nine-year veteran who pitched for the Milwaukee Brewers and Texas Rangers — essentially rounds out the team's rotation.

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.

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.

The addition of Gallardo is the latest move in one of the busiest offseasons in Orioles history. The club has invested nearly $250 million on free-agent contracts this offseason and now has a payroll upwards of $150 million, which is by far the largest in team history.

Gallardo had been issued a qualifying offer by the Rangers, so the Orioles will forfeit their first-round draft pick (14th overall) in order to sign him. The Orioles were initially hesitant to give up the pick, but as the offseason went on, their stance changed. And the club became the front runner for Gallardo and outfielder Dexter Fowler, who is also tied to draft-pick compensation.

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 Brewers.

The 2010 All-Star has also been durable throughout his career, pitching 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-round pick, they still have five selections in the first 91 picks in the upcoming draft. If they end up signing Fowler, they would now lose the 28th overall pick, which was compensation for losing Chen.

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.

"The Cruz deal, we weren't interested in giving Nelson Cruz a one-year deal and giving up a first-round pick and our assessment of his addition to the team and the market, that worked out for the club," Duquette said. "For the club, it's been a little bit more difficult choice this time around. We're drafting higher this time in the draft. On paper, that pick should command more value, so we have to take a longer look at what the value of that pick is as compared to how we can help our club. But the idea is to have a good team every year, right?"

With Gallardo now in the fold, the Orioles could pull a similar move with Fowler, who was reportedly seeking a two- or three-year deal worth $12 million to $13 million annually.

The Sun was the first to report that a deal with Gallardo was close. MLB Network was the first to report that an agreement was reached.

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