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Valencia and his impressive head of hair are headed to Norfolk.
When Valencia was purchased from the Red Sox back in November, he was viewed as a possible backup infielder and bat to platoon with Wilson Betemit at designated hitter. Dan Duquette was quoted as saying that Valencia's numbers against left-handed pitching were impressive, which of course is the opposite of Betemit's numbers against lefties.
With Valencia out of the race for a place on the bench, one might think that Ryan Flaherty now has a better chance to make the roster but I don't think that's the case. For one thing, Flaherty is a left-handed hitter so it doesn't solve the problem of who will DH against lefties. I'm betting that when all is said and done Flaherty will also be optioned so that the Orioles can keep someone on the bench who can hit lefties but who can also play the outfield given the uncertain status of both Nick Markakis and Nolan Reimold. Even if both players start the season on the roster, having another possible outfielder (and one who, unlike Nate McLouth, can hit lefties) will provide them some insurance and the option to give Reimold or Markakis a little bit of rest.
While it remains to be seen who might get that spot on the bench, options include Steve Pearce (try not to hold this against him), Conor Jackson, or Russ Canzler, all of whom have played both 1B and OF. I suppose you could also consider Lew Ford an option, but I don't think he has much of a chance to make the team despite his gaudy spring numbers. Of course, of those possibilities, only Canzler is on the 40-man roster.