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Explaining Qualifying Offers

For the first time since baseball’s collective bargaining agreement was finalized, teams, agents and players will navigate a new system for determining free agent compensation: qualifying offers. The offers are due today, so there’s no better time for a refreshed primer. Here’s a look at draft pick compensation under the sport’s new CBA:

• Type A and Type B designations have been eliminated. Instead, teams will have to make players a qualifying offer to be eligible for draft pick compensation. 
• The value of the qualifying offer, which is determined annually by averaging the top 125 player salaries from the previous year, will be worth $13.3MM this offseason. All qualifying offers are for the same duration (one year) and the same amount ($13.3MM for 2012-13). 
• Teams have until five days after the World Series to make qualifying offers. At that point the players have seven days to accept.
• Once a team makes a qualifying offer, the player has two choices: he can accept the one-year deal or decline in search of other offers. If he declines the offer and signs elsewhere, his new team will have to surrender a top draft pick (the selection doesn't go to the player's former team). 
• Teams that sign free agents who turned down qualifying offers will surrender their first round picks. However, the forfeited picks don't go to other MLB teams. Instead, the first round simply becomes condensed.
• The first ten selections in the draft are protected. Teams with protected picks will surrender their second-highest selections. The Astros, Cubs, Rockies, Twins, Indians, Marlins, Red Sox, Royals and Blue Jays have protected first round picks this offseason. The Pirates' ninth overall selection (compensation for failing to sign their 2012 first rounder) is also protected.
• The player’s former team will receive its compensatory selection at the end of the first round. Teams now obtain one compensatory selection, instead of two.
• If teams don’t make a qualifying offer, the player can sign uninhibited.
• Only players who have been with their clubs for the entire season will be eligible for compensation. So Zack Greinke and Shane Victorino definitely aren’t getting offers.
• Check out Tim Dierkes’ preview of which players will get qualifying offers from earlier in the week.

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