Kyle Lohse and Other Pillow Contract Players

Players choose the services of Scott Boras for a simple reason. The simplest reason, even: he gets money.

But not even Boras can truly command the invisible hand of the market. See Kyle Lohse. Despite many seeing him as one of the best pitchers available in this year’s free agent class, Lohse remains unsigned into march — a far cry from the four-year, $40 million deal or higher many saw him attaining.

Of course, for all of Boras’s success, Lohse isn’t his first high-profile client whose market has dropped out from under him. The safe play given the age of most of these players (over 30) and MLB’s guaranteed contract system would be to take a multi-year contract at a depressed average annual value. Quite often, however, Boras has eschewed the long term deal for the “pillow contract,” a one-year contract so-called because it lets the player land softly from their bottomed-out market and get up and try again next season.

Let’s take a look at some examples.

Pillow Contract Players

Edwin Jackson

The Lohse-Jackson comparison can be educational in two ways. First, Jackson and Lohse were considered to be on a somewhat similar level entering free agency this season. Jackson looked better from a fielding independent perspective, but Lohse’s RA and ERA over the past two seasons were the best of the free agent class (meaning better than Zack Greinke and Brandon McCarthy), and one figured that distinction would be worth something.

Instead, Lohse is getting the treatment Jackson received after the 2011 season. The five-year, $50 million contract Jackson was looking for never materialized, and instead of taking a three-year deal worth around $30 million from Pittsburgh, Jackson took the pillow contract at $11 million with Washington. The situation is a bit different for Jackson — he was 28 at the time of the deal, whereas Lohse is already 34 — but it worked out and more, as he earned a four-year, $52 million contract with the Cubs this offseason. Jackson dropped Boras before signing the contract, but the pillow contract strategy still worked for the player.

Adrian Beltre

The pillow contract Beltre took after his disappointing (at least with the bat) stint in Seattle was brilliant: a one-year, $9 million deal with a $5 million player option. Essentially, it was a $14 million deal for Beltre, where he could forfeit the option for the clearly better prospects if he played well. He parlayed a .321/.365/.553 year in Boston into a five-year, $80 million contract with Texas — the best illustration of the pillow contract going right.

Ryan Madson

Madson reportedly had a four-year, $44 million contract in place with the Phillies last offseason. It fell apart, and with few teams looking for a closer that offseason, Madson was left with a one-year, $8.5 million deal with Cincinnati. Madson didn’t even pitch in 2012 after undergoing Tommy John surgery and now it appears he won’t be ready for opening day 2013 with Anaheim. The Angels paid just $3.25 million for the 32-year-old Madson despite the righty racking up over 1.0 WAR each year from 2008-2011 using either FIP or runs allowed.

Here’s one of the obvious perils Lohse faces with a pillow contract — at 34, injury risk becomes much more real than for a 28-year-old Edwin Jackson, for example. Lohse spent 84 days on the DL in 2010 after undergoing surgery for compartment syndrome in his shoulder and spent 54 days on the DL in 2009 between a groin strain and a forearm strain; he pitched under 120 innings in both seasons.

Francisco Rodriguez

Rodriguez made the somewhat surprising decision to accept arbitration from Milwaukee after the 2011 season. The decision earned him $8 million from the Brewers, but K-Rod had his worst season since breaking through in 2002. The 30-year-old (remarkably; remember, he was only 20 when he debuted in Anaheim) allowed a 4.38 ERA (111 ERA-) and 3.83 FIP (98 FIP-). Combine last year’s incompetency with his clubhouse and off-the-field issues, and it should be no surprise Rodriguez remains a free agent this season. Could he have gotten a two-year, $10-12 million contract had he tested the waters? Impossible to say for sure, but looking at the contracts relievers have picked up over the past two years, it seems like a distinct possibility — he posted a 71 ERA- and 72 FIP- in 2011 between the Brewers and Mets, a very solid year.

Eric Gagne

Gagne was another failed Brewer reliever. Milwaukee signed him to a one-year, $10 million dollar deal for a comeback attempt in 2008, but “Game Over” ended up referring to the wrong squad. Gagne blew seven saves against 10 conversions and seven holds as he finished with a brutal 5.44 ERA (128 ERA-) and 6.13 FIP (144 FIP-); he served up 11 home runs in just 50 innings. The Brewers threw another $1.5 million at him in 2009, but he never pitched in the majors again.

Kevin Millwood

The free agent landscape was a bit different in the mid-2000s, but Millwood arguably signed two pillow contracts. In 2003, he posted a 4.01 ERA (96 ERA-) in 35 starts. in 2004, he accepted arbitration from the Phillies after failing to find a long-term suitor, resulting in a one-year, $11 million deal. The gamble failed, as he dropped off in 2004 — he recorded a 4.85 ERA (110 ERA-) despite a 3.80 FIP (86 FIP-), and he was limited to 25 starts by a sprained right elbow.

He got a second chance with a one-year, $7 million contract from Cleveland the next season, and he capitalized in a big way. His 3.73 FIP was actually worse given the park (88 FIP-) but he posted a tremendous 2.86 ERA (67 ERA-), his second-best season behind his breakout 1999 campaign, when he posted a 2.68 ERA (59 ERA-) in 228 innings. The Rangers gave him a five-year, $60 million contract prior to the 2006 season — a deal in which Millwood essentially provided market value on non-playoff teams.

Conclusions?

The results here were mixed — the two reliever pillow contracts failed, and I would argue Millwood’s first attempt failed as well. Millwood’s second attempt as well as Jackson and Beltre saw the pillow contract work to perfection — between the pillow contract itself and the subsequent attempt, the players pulled in much more than they would have earned with a long-term contract the first year and perhaps more even than what they initially hoped for.

This mixed nature, in my opinion, is unsurprising. This strategy is specifically enticing to players of their nature — and of Lohse’s nature — because they offer wildly varying ceilings and floors. Jackson has always been viewed as a risky talent. Beltre was excellent as a younger player but his bat failed to show up in Seattle. Rodriguez and Gagne were dominant closers at one point but slipped in their late 20s. Millwood was an injury risk.

Lohse fits in perfectly with this group. His track record the past two seasons is fantastic, but he was terrible and injured in 2009 and 2010. At 34, there are questions about decline and further injury.

For Boras Corporation, the pillow contract seems like an obvious strategy — they have a large enough portfolio of clients to handle the risk of busting and the payoff for success is large. I would imagine the decision is tougher for the player. How confident are they in their ability to stay healthy? Have they kept their finances in order? Much of the decision likely comes down to the individual situation. But Lohse’s maximum long-term payday is likely dropping as the calendar crawls towards opening day, especially given the restrictive qualifying offer hounding him. Given the success of other starting pitchers employing the pillow contract strategy under Boras, my expectation is he eventually finds a one-year deal and attempts to try the market again next year.