Buster Olney talked about the other other day (Insider-only) how teams and agents were looking into a possible sign-and-trade arrangement where a team like the Cleveland Indians, whose first round pick at 5th overall is protected, meaning they can’t surrender it by signing a free agent, and whose second round pick has already been forfeited after they signed Nick Swisher, would sign a player like Bourn, Lohse, or Soriano, losing their third round pick, and then trade the player they signed to another team, receiving compensation for their lost draft pick in return. Olney clarified on Twitter that such a sign-and-trade could not be a situation where the Indians say signed Bourn and then traded him to the team that gave them the best offer- Tim Dierkes of MLB Trade Rumors tweeted that such a deal would be regarded by Major League Baseball as collusion and would not be allowed. Instead, Bourn would agree to the terms of a contract with another team and that other team would come to terms with the Indians on a pre-arraigned deal. Reading Olney’s piece and the discussion surrounding it, it’s pretty amazing how many hoops teams are willing to jump through in order to keep their first round picks. But that may not have been the craziest part. A talent evaluator Olney quoted in his article had this to say.

“If the Indians were willing to consent to the type of arrangement suggested above I would imagine they would receive pretty solid prospects in return — at least a B group type guy.”

Wait a second- we’re talking about the Indians losing a third round pick here. How in the world would they receive a good prospect in return for that? According to Baseball-Reference, you have to go back to 2004 for the last time the third round of any MLB Draft had more than three players that were each worth a total of 2.0 WAR for their MLB careers. That’s a pretty modest standard- that’s what an average big league starter should manage per season and we’re talking their entire careers here- but the players have still failed to reach it. Obviously the Indians shouldn’t receive nothing in a sign-and-trade, but wouldn’t you think they would be getting more of a low minors lottery pick or utility type than a real prospect? The issue here is not just the draft pick itself but also its slot value within the draft system under the new Collective Bargaining Agreement that was signed last year. Losing that third round pick would mean that the Indians would not only lose a potential big league contributor but also around $450,000 to work with as they try to sign their picks in the first 10 rounds of the draft, and that could wind up being quite significant.

For all the Indians know, they could be drafting a low-upside college player in the third who might only sign for $300,000 and use the $150,000 in savings to sign their first round pick. Losing their third round pick in addition to the second round pick they already forfeited would mean that the Indians would lose a lot of flexibility to get all their players signed, and if they have a high school player at the top of the board that may be a tough sign, it could force them to draft conservatively the rest of their draft and select players they knew would sign for below-slot. We’re not just talking about a difference of one prospect here. Losing their third round pick could cost the Indians the ability to take chances on players from rounds 4 to 10 as well. In 2012, the Indians drafted high school players with their 2nd, 3rd, 4th, 7th, and 8th round picks. If they executed a sign-and-trade, they might be able to draft only one or two high school players if they go for one with their first round pick. Back in 1998, the Indians drafted a 6’7″ high school lefty named CC Sabathia with their first round pick. Three years later he was a 17-game winner in the big leagues. Imagine if the Indians had instead drafted a college player who would sign for less money in an attempt to get more values across their entire to draft and missed out on a player who was a critical part of their team for eight years?

What is a Grade B prospect? Every evaluator you asked would likely give you a different answer, but John Sickels of Minor League Ball called the Rays’ Alex Colome a Grade B prospect entering 2012. In Colome, we’re talking about pitcher who certainly has risk involved with him as he missed an opportunity for a big league call-up at the end of 2012 with some shoulder fatigue, but he has electric stuff and the ability to be a solid big league starting pitcher or fireballing late-inning reliever at some point in 2012. That’s not an insignificant player, and a player like Colome could very well be better than whoever the Indians would have drafted in the third round of next year’s draft. The other side of the coin is, as Olney pointed out, that Wil Myers was a third round in 2009 before becoming a super-prospect. Nevertheless, would you really trade a solid prospect like Colome for a complete unknown commodity? The answer has to be no- but that’s not the question we’re asking. The Indians’ third round draft pick that’s potentially on the table in a sign-and-trade is not just a potential prospect but financial flexibility that could determine the course of the Indians’ entire draft.

If a sign-and-trade scenario for a player like Michael Bourn is feasible and demand for Bourn is high enough that the only thing standing in the way from a team signing him is the potential loss of a first round pick, the Indians will certainly field offers for a sign-and-trade and will make it happen if they’re offered the right prospect in return. But at the same time, unless desperation to sign Bourn causes a team to offer the Indians a much better prospect than they should, their third round draft pick and the flexibility it gives them may be too valuable to trade.

Buster Olney reported (Insider-only) that some MLB agents and general manager believe that Lohse could command a contract in the range of 60-75 million dollars. How in the world is that possible? First off, Lohse is 34 years old. Do you really want to give a four or five years contract to a pitcher who is already 34 years old? But that’s only the start. Despite his great record and ERA, there were several problems with Lohse’ performance in 2012. Lohse posted struck out 6.1 batters per 9 innings, walked just 1.6 per 9, and posted a 0.8 HR/9. His groundball rate was also just 40.4%. His FIP was noticeably higher than his ERA at 3.51, and his xFIP was all the way up at 3.96, right around league average. Kyle Lohse doesn’t strike anybody out, and although he doesn’t walk many batters, it’s not like he’s a pitcher with great command like say Tim Hudson who is able to compensate by forcing a ton of groundballs. Lohse’s stuff is mediocre- he throws a low-90′s fastball with a little sink, a very good changeup, but then just a decent breaking ball. Why would you commit long-term to a pitcher like Lohse?

The perfect comp to Lohse is another pitcher who was in a very similar situation: Joel Pineiro. Pineiro had a great year with the Cardinals in 2009, going 15-12 with a 3.49 ERA, a 4.4 K/9, a 1.1 BB/9, and a 0.5 HR/9 in 32 games and 214 innings pitched and then signed with the Los Angeles Angels of Anaheim as a free agent for 2 years and 8 million dollars. He posted a 4.47 ERA and a 4.30 FIP in two seasons for the Angels and did not pitch in the major leagues this season. Pineiro and Lohse have a lot in common. Other than the obvious Cardinals connection, Pineiro is 104-93 in his career with a 4.41 ERA, a 5.4 K/9, a 2.5 BB/9, and a 1.0 HR/9 in 1754.1 IP. Lohse is 118-109 with a 4.45 ERA, a 5.6 K/9, a 2.6 BB/9, and a 1.1 HR/9 in 1973 IP. Lohse is actually a tick worse than Pineiro! Even in their breakout seasons, Pineiro beats Lohse in both FIP and xFIP, registering 3.27 and 3.64 marks versus 3.51 and 3.96. Both pitchers don’t miss too many bats, but at least Pineiro was three years younger when he was a free agent and he actually forced groundballs. How is it possible that Pineiro only got 2 years and 16 millions dollars when Lohse looks primed to get a major multi-year contract?

Good luck to whichever teams signs Kyle Lohse. The Yankees, Red Sox, Dodgers, Nationals, and Diamondbacks are the his rumored destinations and one of them is going to give him a ludicrous contract given his abilities. The Rays would love to see the Yankees or Red Sox sign Lohse and watch him completely fall apart. Kyle Lohse is a solid pitcher. But thinking that he deserves the money he’s about to get is simply setting yourself up to fail.