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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7 Comments on "Explaining Qualifying Offers"

2 years 10 months ago

very good article thanks for the update on draft pick compensation

2 years 10 months ago

Not a fan of this. With draft spending limitations, the rule changes with international free agents, and now this…it seems like the few ways for small market teams to compete have been taken away.

2 years 10 months ago

It’s good to see that the first 10 first round picks are protected.

2 years 10 months ago

Teams outside the Top 10 in the draft losing picks is going to limit movement some.

For the Greinke’s and Hamilton’s of the free agent class, its probably not an issue, but lesser free agents could see teams avoid them because they don’t want to give up their 1st round pick.

I know that for me unless its Greinke or Hamilton being signed, I don’t want to see the Dodgers give up a 1st round pick to sign any other free agent.

2 years 10 months ago

what is being used to determine the draft order of the supplemental picks?

2 years 10 months ago

I like it. It stops large market franchises like the Yankees, Red Sox and Dodgers from hoarding free agents and forces teams to invest in their farm system. Farm Systems are the lifeblood of any MLB franchise, and this rule solidifies that.

2 years 9 months ago

Great info, thanks.