Executives On The Qualifying Offer

The 2014 season is about to get underway in earnest and two of MLBTR's Top 50 free agents remain on the shelf.  Stephen Drew (No. 14) and Kendrys Morales (No. 28) are still looking for homes months after rejecting one-year, $14.1MM qualifying offers from their respective teams.  The qualifying offer system, now in its second year, appears to be getting quite a bit of criticism from agents and players around baseball, but that's nothing new.  Last winter, I asked Adam LaRoche for his thoughts on being linked to a compensatory pick and having to wait until after the holidays to sign.

"I think that it did [affect me]," said LaRoche, who inked a two-year, $24MM deal with a mutual option with the Nationals rather than the three year pact he wanted. "That's coming from people a lot smarter than I am that explained it to me. I think it affected a couple of other players worse than me, there are a lot of solid ballplayers out there still looking for a job.  It definitely hindered some teams from going after some guys…I think there were two or three, maybe four teams out there that it did affect as far as teams that were interested me but didn't want to give up that pick."

As you might expect, after conversations with high-level MLB executives, it seems that front offices are short on empathy for the predicament of the Scott Boras duo.  Executives recognize that the qualifying offer system favors clubs, but at the end of the day, they feel players and agents are responsible for anticipating demand appropriately before making their decision.

"It's certainly advantageous to the clubs, so I can understand why certain players wouldn't like it," said one National League executive.  "No one is forcing them to reject a one-year, $14MM offer which is pretty darn good and see if they can do better.  Honestly, that's just their reading of the marketplace telling them what to do and if it doesn't go the way they anticipated then they just misread the marketplace."

That might be a reasonable view for some, but Boras vehemently disagrees, recently telling ESPN's Jerry Crasnick that he feels as though Morales and Drew are "in jail" rather than true free agents.  From Boras' view, the system is having an unforeseen ill effect on the free agency process.  From the club's view, everything is going as planned.

"People keep talking about unintended consequences with the new system and I don't think they're unintended at all," one American League exec opined.  "I don't understand why anyone went into the current system thinking there weren't going to be lags in the market or thinking that teams wouldn't give second thought to [second tier] free agents."

The AL exec and others were quick to note that the qualifying offer system has not hampered the true cream of the free agent crop.  When the Mariners wanted to sign Robinson Cano, for example, their main deliberation was over cost and not the compensatory draft pick they would have to forfeit to the Yankees.  While Cano, an elite player at a premium position who was universally considered the top free agent prize of the winter, didn't have to give any thought to accepting the QO, executives argue that someone like Morales should have thought it over.  While Morales is an offensively gifted switch-hitter, his possibilities were limited since his appeal is mostly as a DH.  Teams would argue that this was all obvious in November and perhaps should have informed Morales and Boras to make a different choice.  

Of course, the current qualifying offer system is only a couple of years old but the concept of a restricted MLB free agency has been around for much longer.  The current QO construct replaced the widely reviled "Type A/B" system, which placed the better free agents in one of two tiers based on seemingly arbitrary criteria.  A team losing a Type A player would receive the signing club's top pick plus a newly-generated supplemental pick in the sandwich round (between rounds 1 and 2).  A team losing a Type B player would get a sandwich pick, but nothing from the club signing the player.  Agents and players were vocal about their frustrations with that system and executives that spoke with MLBTR expressed similar thoughts.  One executive called the formulas used to determine Type A or B (or C, pre-2006/07 offseason) status "antiquated" while another said that the system was "wrought with abuse and handshake offers" to circumvent its consequences.  While teams got used to that process over time, executives seem to appreciate the simplicity of the new system.  And as one high-ranking executive told MLBTR, the new system helps to "protect the middle reliever."  The old system would routinely lump a solid, but not spectacular reliever in the same group as an elite batter or starting pitcher, making free agency a frustrating process.  Now, under the current system, no team in their right mind would put a $14MM+ offer on the table for a seventh-inning reliever.

As Drew continues to look for a home, it has been reported that he would take a one-year deal from the Tigers in the neighborhood of the $14.1MM figure that he turned down just months ago.  While plugging Drew in for injured shortstop Jose Iglesias has to have some appeal to Detroit, the idea of sacrificing a pick for a one-year rental is surely unpalatable.  The execs who spoke with MLBTR said that they would be very unlikely to sign a QO free agent if they were only getting one year out of him, but each of them also conceded that they would consider it under the right circumstances.  If their club was right on the cusp of contending and losing a pick – projected to be towards the bottom anyway – made the difference, they would give serious thought to pulling the trigger.  This winter, Ervin Santana and Nelson Cruz both wound up signing one-year deals while attached to draft compensation, so those execs surely aren't alone in that thinking.  Meanwhile, all of the executives said that they would not rule out a player strictly because he was tied to draft compensation.  

After watching Ubaldo Jimenez, Santana, Cruz, Morales, and Drew struggle to find homes for 2014, some have assumed that the QO system will be drastically overhauled in the 2016 Collective Bargaining Agreement.  While it's bound to be a high-priority discussion for the union, executives caution that it's far from an automatic to be changed.  

"I don't know if it will be changed, but I think if they want it changed, they'll have to give something substantial back," the AL exec said.  "Now, whether that's something like an extra year of arbitration, I'm just not sure.  I don't think the owners would just give it back to the players, it's something that [the owners] bargained and negotiated for."


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88 Comments on "Executives On The Qualifying Offer"


cyyoung
1 year 5 months ago

I wish it was tougher, to help the Small Market teams and their fans.

ceraunograph
1 year 5 months ago

Toughening it has only seemed to help big market clubs like the Red Sox, and has done little to nothing for small market clubs except make it more difficult for them to sign middle-tier free agents.

daveineg
1 year 5 months ago

I don’t see that at all. The small market teams have no shot at the premier guys. Now they can get the second tier guys at more realistic prices plus if they want to keep a decent guy but can’t afford a long term deal, they can slightly overpay with a QO for one year. So far players haven’t read the market properly in particular though, Boras and he’s squealing the most.

ceraunograph
1 year 5 months ago

How’d this work out for the quintessential small market team, the Pirates? Well first, they couldn’t afford to budget for a QO for AJ Burnett, who signed a deal worth more than the QO, for which the Pirates got nothing. Now they continue to have a glaring need at first base, but the draft pick compensation is too severe for them to seriously entertain Kendrys Morales, who would be a considerable upgrade for them with regards to where they are on the win curve. The only team who has really been helped by the QO is the Red Sox, who will get a huge infusion to an already robust farm system. Perhaps they should raise the QO to something like 20m, then only the Canos and Ellsburys would be in line for it?

discollama
1 year 5 months ago

They could always see if the Mariners are interested in dealing one of Smoak or Morrison, and since the Mariners could use better OF defense a straight up deal of Morrison for Tabata seems possible.

Also, smaller market teams will be losing players to FA soon, players that are worthy of receiving QO’s, which will help balance out the Yankees and Red Sox getting all the comp picks. This is why I hate when people try to evaluate the system this early. The sample is just too small.

ceraunograph
1 year 5 months ago

Of course there are things that the Pirates can do instead of sign Morales, but that doesn’t change the inefficiency of this system. Star-level players on small market teams rarely reach true free agency with that team. They are either extended, or traded for a haul better than a comp round pick. The teams that regularly lose compensation free agents are the same teams that regularly sign those same free agents. For the middle tier of free agents, this is effectively a tax keeping their wages and future earnings down.

discollama
1 year 5 months ago

I fail to see how you can call it a tax with a straight face when the 14.1m QO is a higher AAV than guys like Santana, Morales, Cruz, and Drew are worth. Once players who have serious concerns (injury, defense, inconsistency, etc) start taking the offers, teams will become hesitant to hand them out and the market will correct itself.

pft2
1 year 5 months ago

The fact their teams offered them 14.1 million suggest your premise is false. A tax is anything which reduces your take home pay. Players all make less than they would on the open market without compensation, so it is a tax. So glad you like taxes..

You are right in that this could be a self correcting problem, but it requires some player to take less than they deserve and take one for the team (other players).

discollama
1 year 5 months ago

Except that Atlanta is in a unique place on the win curve and was suddenly struck by not one season ending injury to their rotation, but TWO. Even if the overall cost of Santana was around $22m, Atlanta is in a win now mode with very strong odds for making the post season and I’ve also said numerous times that an overpay for a one year deal is still hard to call bad. In ATL’s position, adding the best pitcher available without sacrificing an MLB ready prospect was the smart move.

Cruz would have gotten more than he deserved (again, entitlement issues), so would Morales, Drew, and Santana probably will make a little more than what he deserves given his recent history of being terrible. As for the tax issue, again, I never thought any of those four should take home an AAV of more than $12m tops (even then, I’d only consider giving that to Santana). All are heavily flawed players, none have superstar ceilings, most dont even have star ceilings, so why pay them like stars when their not? Because the market circa 2012 would have? It’s not a tax if they have the potential for greater returns by taking it than they do by rejecting it. If anything, it’s a tax on entitlement and greed,

hediouspb
1 year 5 months ago

all of the players sitting out right now are not worth 14.1/year. they would not be taking less then they are worth for 2014. without the offer they would get more years but way less aav. if a player would be looking at 3 years for $30 mil. and are given a q.o. they should take it. the team is offering them roughly 40% more then they are worth for one year.

Sky14
1 year 5 months ago

It would be a high AAV if they are getting a 5 year deal but not for one year. Everyone of those players was offered $14.1 million so their former teams clearly felt they were worth that much for one year. In the case of Santana, Atlanta paid him that plus gave up a draft pick and it’s assigned value.

discollama
1 year 5 months ago

Or teams figured that its worth the gamble to offer them the deal knowing that they would be blinded by greed. I say kepp offering them until they start taking them. Once they do, suck it up and smile for all the times that it worked in your favor.

BigDog330
1 year 5 months ago

I agree with discollama. I think the Mariners considered the one year $14.1 million offer to Morales as a slight over pay. Fans and media thought they were crazy, but Morales had already told the world that he would not accept a QO. The Mariners were willing to gamble a little money in hopes of getting Morales at a slight over pay for a season or the draft pick. Once the offer was rejected, I doubt it was ever offered again at that rate. They might not get the pick after all, but it was worth a try.
On the other hand, if the QO system didn’t exist, I would think the Mariners’ one year offer to Morales would have been closer to $12 million instead of the magic $14.1. Without the QO system to temp the Mariners (they love their draft picks), Morales would not have been “worth” $14.1 million.

LazerTown
1 year 5 months ago

But the union would most likely have to give something back in order to get the value raised. I’m not sure that it really affected enough players to make it worthwhile. Cruz and Morales were not $14MM aav players on the open market. The teams stretched in offering that, and they got lucky. I’m not sure what offers the players got, but we may not know if their market was hurt or not. They weren’t ever going to get $60MM/4 offers even without the QO.

pft2
1 year 5 months ago

Players don’t care about AAV as much. They look at total guaranteed dollars first and AAV second. A guy like Jiminez is much better off with 4/48 than a 1/14 deal even though the AAV is lower. Drew would be better off at 3/30 than 1/14 as well.

Sky14
1 year 5 months ago

Matt Garza is an example of your point. He was offered a 3 year deal at essentially the AAV of the QO by the Twins (3 years 42 mil) but opted for Brewers offer with higher guaranteed dollars (4 years 50 Mil).

NL_East_Rivalry
1 year 5 months ago

Not really. Santana took a deal with the Braves and was willing with the Jays for 14 when the Twins offered 3/30.

NL_East_Rivalry
1 year 5 months ago

your solution would only hurt small market teams more than it would help. If small market teams want to retain big players without giving them as much, maybe they shouldn’t be on the hook for 100% of their salary.

Kadoc
1 year 5 months ago

If there was no draft pick compensation for Morales, several teams would outbid the Pirates anyway. So the main difference is before they couldn’t, now they can but (understandably) aren’t willing to sign him.

Steve_in_MA
1 year 5 months ago

Not true. The Pirates made a choice about how to spend the league’s money. They have massive income from revenue sharing and from the luxury tax. More than $20 Million. They simply chose not to spend it on making a QO.

MB923
1 year 5 months ago

“The small market teams have no shot at the premier guys.”

Mariners signed Cano, O’s signed both Cruz and Ubaldo, Indians signed Swisher and Bourn last year, Braves signed BJ Upton. I’m probably missing many others as well.

johnsilver
1 year 5 months ago

That is preposterous. Tampa, the small market team.. Is the one that gamed the old CBA for draft pick by offering them arbitration the most!.

John
1 year 5 months ago

If the qualifying offer is so bad, how did it make it into the CBA???

LazerTown
1 year 5 months ago

It’s not really that bad, only for certain players caught right at the cusp. It’s an improvement over the old A/B ranking system. Many teams like it, many players do not like it. The union will have give up something in the next CBA if they really want it. It really only affected a few players, so I really doubt that it would be enough to lead to a work stoppage, especially since these were really incomplete players that turned down offers that were higher than their true market value. Morales and Cruz especially, they are NOT $14MM aav players, they are not elite, neither is in the top 50 hitters last season, and then they bring no defense value.

pft2
1 year 5 months ago

Actually, there are broader ramifications that the players may not be aware of due to poor leadership. Lesser deals for 3 WAR players translates into lower arbitration salary growth, forces players to consider team friendly extensions, and may ultimately affect the elite end of the market.

LazerTown
1 year 5 months ago

More players were affected by the old system. Sure it does drop the salaries down, but for a select few free agents, and some arbitration eligible players. What would the MLBPA have to give up in order for them to get rid of the QO? There are a whole bunch of things that could have a ton of ramifications for more players. And there really is enough players affected to lead to a work stoppage. The players are being paid big money, and even if a few are trampled on, the players are happy.

pft2
1 year 5 months ago

Because the union leaders are co-opted? Its’ a good question, the MLBPA has been quite weak over the last 10 years or so which is why players share of the revenue pie has slipped about 3% (about 6 % in salary) and is lower than other sports. Of course, its a bigger pie.

Not all players agree with everything the MLBPA leadership agrees to. Most players only care about themselves. The QO system affects only about a dozen players per year although it may save owners about 2% in total financial commitments which is why owners like it

If MLBPA maintained their revenue share, every player would be making 200K more than they are now..

LazerTown
1 year 5 months ago

MLBPA has also kept maximum salaries, hard salary cap, and unguaranteed contract for players out of baseball.

discollama
1 year 5 months ago

All of which are a crying shame

discollama
1 year 5 months ago

“No one is forcing them to reject a one-year, $14MM offer which is pretty darn good and see if they can do better. Honestly, that’s just their reading of the marketplace telling them what to do and if it doesn’t go the way they anticipated then they just misread the marketplace.”

That quote is exactly what I’ve been saying this entire time. Just because players and agents are misreading the market, are too greedy, or feel too entitled based on past contracts, to take a fair offer doesn’t mean that the system is broken.

LazerTown
1 year 5 months ago

That’s true, but I hate to see players monetarily tied to a place just because they don’t want to. Say teams value that pick of $5MM, should the player have to earn that much less to move? Maybe Morales really didn’t like Seattle after being in Anaheim, not saying is the case, but should he really have to give up earning power?

Maybe make it so the QO is only available once. It would in essence give that team an extra year of control of the good but non-elite players, while allowing the player to not have to face this every year.

Or I like the suggestion of having the offer required to stay up until a certain date. Players don’t always know where their market will be. Maybe make it to the end of the year. Yankees would have guaranteed kept that offer up for Cano, but what about for Cruz? He would have been able to check out the market first, before turning the offer down. Thus the team would have been very likely to not even offer it in the first place. He really isn’t an elite player so I don’t think he should have that much draft pick compensation tied to him. Maybe even make it tiered, so QO can be $10MM or $20MM and the lower tier is only a 2nd or 3rd round pick.

discollama
1 year 5 months ago

Earning power? $14.1m is much more AAV than he’d have gotten if he never got a QO. I would have been surprised if he managed more than a 2/20 deal. If he had taken the offer he’d only need a 1/6 offer for 2015 (which he would have gotten more than that as long as he didn’t fall apart, I mean Hart got that from the Mariners after missing a whole season and having injury risk attached to him) to earn more than what he’d likely get on the open market without compensation. Or, if he was spectacular, he’d get another QO around $15m, if he took it, then it’s probably a $10m profit for him.

The great thing about this system is that players can avoid the stigma of compensation by accepting a deal for a higher AAV than they are worth, and if they play to the level that they did in the year where they were extended the QO, then they’ll likely not get another, and if they do, they’ll get another over pay that gives them a raise off of their last deal. This is entirely about players getting greedy, feeling entitled, or misreading the market. None of which is the fault of the CBA, the system, or the teams.

LazerTown
1 year 5 months ago

The QO was definitely higher than the market for certain players, but I’m sure players like Cruz and Morales are giving up at least some earning power.

discollama
1 year 5 months ago

Cruz and Morales are the poster boys of being worth less than the AAV of the QO. Santana is also worse than the QO would value him, but on a one year deal, it’s not a big issue for a guy that does have his talent level. This is why he got a contract of the same value as the QO from Atlanta. They had a glaring need, and on a one year deal, it’s not a terrible overpay. But, Santana himself is probably worth something around a 3/36 deal without compensation.

pft2
1 year 5 months ago

Atlanta also paid with the loss of a 1st round pick and slot money, making the total cost for 1 year around 22 million

NL_East_Rivalry
1 year 5 months ago

If Santana does well, they get about 4 million back in the form of the compensation pick, if he doesnt do well they will be happy they didn’t sign him long term. If he does well but not great, Atlanta should be happy with what they got in return for the need and let him find a new home without a QO or if they feel risky roll the dice on another year.

Still an emergency overpay. 22 million for one year of a mediocre guy isn’t okay for another few years. I’m glad some of the players are realizing that rejecting the offer can be a bad thing. What i hope happens next is players agreeing and therefore teams stop offering certain players QO’s in fear they will accept.

We haven’t even seen a full cycle of this system come into play and people want to burn it down. To me it seems like the teams are doing a lot more research than the agents.

LazerTown
1 year 5 months ago

This. Ervin shouldn’t have accepted, because he was worth more than the offer. Morales and Cruz though should have accepted, and we need those types of players to accept, or at least one to accept, so that teams are a bit more hesitant to actually hand out the offer. Ubaldo, Ellsbury, McCann, Cano, Choo, Kuroda, Napoli, Beltran, Granderson all did good with the offer out there.

Sky14
1 year 5 months ago

Your last point made me think of the AJ Burnett situation. The Pirates didn’t have the budget to offer him the QO but if they had, he would have been forced to make a decision on whether to retire or play a lot sooner or be faced with a severely depressed market. Fortunately for Burnett things did not unfold this way but if it had it would have added another wrinkle to this QO discussion.

BigDog330
1 year 5 months ago

You don’t want to give the players two months to make up their mind. With Morales this season, the Mariners needed to go on to plan B after they felt Morales wasn’t coming back. Their plan B (Hart) would not have been available in January. Players should be able to make a good judge of their market after talking to other clubs for a couple weeks. They might not be ready to sign by then, but they should know if it is reasonable to decline the QO.

Joe Clark
1 year 5 months ago

I see the argument here, but I don’t think it tells the full story. A player/agent could accurately assess his own market value yet still be burdened by the QO if that player is unable to assess the value that a given team will place on a draft pick, which is more variable. Moreover, if you accept this argument, then you have to read it as if the QO itself has no effect on a player’s market value. The QO lowers a player’s market value before they’ve even entered the market. It is a tautology that if a player can’t find a contract for the money/years they want then that player misread the market. That doesn’t mean that the QO had nothing to do with regulating the market, which is the players’ complaint.

Edit: Just to note that when I say the QO “lower’s a player’s market value,” I don’t mean that the QO itself undervalues a particular player–as someone else noted, Drew probably wouldn’t have gotten $14MM AAV–just that once the player is tied to a draft pick, their market is diminished in ways that are not always predictable.

discollama
1 year 5 months ago

Well, Fangraphs did an awesome job of assessing what a pick was worth (I think it was some where between 3-5x the pick’s cash value), which actually worked out well for calculating what Cruz got vs the QO. It’s fairly obvious that the QO will lower a player’s market. And I said before the season ended that players like Morales or Cruz getting offered a QO should take them since their market would be tanked similarly to better players than them in 2013 like Swisher, Bourn, and Lohse. If I could see that their market value would be lowered, then why didn’t their agents see it? Why couldn’t the players see it? Why? Greed! Overvaluation of talents relative to the market! Entitlement based on pre-QO contracts! The most important thing that the players must figure out is how to adjust to the market, and so far they haven’t done it. Once they do though, and they start looking at the QO’s in terms of AAV instead of total value, the teams will adjust and this sort of thing will stop.

Joe Clark
1 year 5 months ago

True enough that you can assess the value of a draft pick, and of course any player/agent should in this situation. My point is that it adds a complex wrinkle to the overall market assessment. Especially since the value of the draft pick will fluctuate just like the value of a player based on a number of other contemporary transactions. Otherwise, I am uninspired by the explanatory value of greed. I do agree that players will eventually adjust and this sort of thing will become less common, but that does not mean that it will be any more equitable of a labor market.

discollama
1 year 5 months ago

But it’s not THAT complex, at least no more complex than what an agent should be expected to do anyway. The value of the pick won’t fluctuate, it’s pretty steady with a decent hike every year. The only fluctuations will come from teams having different picks and/or the team valuing the potential of the pick to help rebuild than what the FA will bring. Really, there’s not much reason for the Mets to not sign Drew given their protected pick, but they’re probably worried about tying up that money on a player with a lengthy injury history and who has been worth less than two fWAR per year over his career. For them, the ability to see what their incumbent players can do at SS is probably worth more than the cost of Drew. But they would probably feel the same way even without compensation attached.

ceraunograph
1 year 5 months ago

This is essentially the old game show conundrum “What’s in the box?”. Say you’ve already won a prize on the game show. It’s a decent prize, but certainly not the best prize they offer. And then the box is offered to you. it could be that great prize you always wanted, or it could be a much worse prize than you’ve already won. What do you choose? It’s really easy to sit at home and say you’ll take the prize you already have, but when you only have a short time to make a decision that could affect your entire life and career, there is no right answer. That’s what QO free agents are faced with. They may only get one chance at free agency for their entire careers, and they assume %100 of the risk in this case. And the QO simultaneously depresses the potential reward. It is doing nothing to maintain competitive balance, all it is is harming the careers of successful major leaguers who aren’t superstars.

discollama
1 year 5 months ago

Except players can see what is in Box 1, and their agents should be able to come up with a close approximation of their market values knowing that there is a penalty for not taking Box 1. This isn’t happening and players and agents would have us shedding tears for players turning down higher AAV than their worth and then suddenly not being able to get the contracts that they feel entitled to. Boohoo. Poor players too greedy to accept a $14.1m contract for one year of work.

ceraunograph
1 year 5 months ago

You seem so determined to ridicule the greed of a few players, but not the greed of the immensely wealthy owners who are profiting form this system? Player share of the overall revenue pie has dropped significantly. Yet it is the players who the consumers are paying to see. These players may literally never get another chance to earn a baseball contract in their lives. And now there is an impediment to getting any semblance of fair play for the players who have performed well enough over their careers to reach free agency. These players have put in countless labor hours, at wages far below what the free market would give them for the first seven years of their careers. Morales could have signed a huge contract when he was a young first baseman who was a lock for 30 home runs a year, but a market system that forced him to make the major league minimum kept him fromt he opportunity to be paid fairly for his services, and then he was hit with the most unlucky of injuries imaginable. And now that he has finally worked his way back to being in line for a good payday, his market is squeezed by the fact that a team can’t sign him without losing money they could then use for draft bonuses. That’s not player greed, that’s ownership greed, made possible by MLB’s anti-trust exemption. But sure, blame the greedy players instead.

Dave
1 year 5 months ago

How about we blame the greedy agents instead who are the catalyst for jacking salaries up into the stratosphere and making the viscous cycle of salary increases and ticket prices a constant thing even when a team hasn’t sniffed the playoffs in a decade.

Boras and the guys like him who haven’t played a single day of professional ball are the problem. They’re just doing what they’re supposed to be doing, but in a way that really ruins it for everyone.

On a side note, how many industries give 45% of revenue back to the employees anyway? I’m going to guess that number is quite low, so I’m not sure why we’re claiming that the owners of MLB teams are screwing their employees while the owners of Apple aren’t, or at least are making it out to be something abnormal, which it isn’t. Every business tries to pay their employees as little as possible while retaining top talent. Baseball ain’t that much different.

discollama
1 year 5 months ago

Perhaps because I root for my teams to do well, not my favorite players to be priced out of town. If the MLBPA had agreed to a salary cap, we could have avoided at least one strike, and those strikes nearly crippled the game forever and this wouldn’t be such a huge issue. So sorry, the players in their salary negotiations can get bent. They make so much with their ridiculous salaries that one year of a FA contract will set them for life. It’s also the insane salaries of players that force admission prices up, not just the greed of the owners. So next time a family of four struggles to be able to go to a game or two because of ticket and concession prices, lets not forget that there are players on the DL making $20m.

pft2
1 year 5 months ago

Maybe the marketplace is rigged though. Remember, MLB is a 3 time loser when it comes to collusion. As the author mentioned, the penalty for signing a free agent has been around for awhile. Whats changed in the marketplace?
A collective decision by all teams to assess a higher value on the cost of the pick and slot value? In a free and competitive market each team makes an independent judgement which tends to have significant variation, and any consensus takes place over a longer period and not suddenly like this.

discollama
1 year 5 months ago

Really? Suggesting collusion? There’s no evidence of it though, and the changes you mention were MLBPA approved. If these players were sure things and still struggling, ok then, maybe. But they’re not. They’re oft injured, two are defensive liabilities, one is an offensive question mark, one is terribly inconsistent in pitcher friendly parks, and ALL are over 30.

BigDog330
1 year 5 months ago

The QO market was never meant to be “a free and competitive market”. The QO system was created to help the teams hold down their costs of higher priced free agents. Labor agreed to the system. Everyone that thinks the system is broken don’t realize it was never meant to be fair. It is not collusion when labor agrees to it.
It is probably working as designed. If a couple players accept a QO, things would be as expected.
I would make one change to the system, but not to fix it. I suspect the team I root for will only sign free agents if their first round selection is protected. I would like to see ALL the first round protected instead of just the top 10 picks. That way my team could win AND sign good free agents.

Luke Wise
1 year 5 months ago

These players should consider that $14.1m can cripple a team that doesn’t really have the budget to pay out on the deal, but is more interested in an extra draft pick. By accepting the QO the player gets paid well for a year while the team is forced to move players to clear payroll. When the season ends will the club risk the same thing happening again? If a club has an out of options prospect ready to fill the position left by a parting FA, but that player accepts a QO, that creates a problem for the franchise. The players have just as much opportunity to expose “flaws” in the system by accepting a QO as they do by not accepting it and complaining that they can’t find a job.

sparek
1 year 5 months ago

Agree with this! Well said.

One of these days (I really thought it’d be this past offseason) a player is going to accept the qualifying offer and the offering team is really going to be put in a bind.

Like the article says, the qualifying offer system is meant for player like Cano, or Ellsbury, or Greinke or Hamilton. It’s not meant for players like Drew or Morales. Seattle had no intentions of bringing Morales back, they just wanted the draft pick. Morales should have realized this and accepted the qualifying offer. If enough players start doing that, you’ll stop seeing clubs extending a qualifying offer to those fringe free agents.

pft2
1 year 5 months ago

Yes, players can do this and maybe next year someone will accept a QO. However, players take a risk of being injured that hurts their market value the next year, and as Boras says, its a revolving door, so they may end up getting a QO next year if the team does not mind paying 14.1 million to avoid the risk of a longer term deal.

The best thing is to wait until June, and then the team losing the player does not get the compensation they expect and might make a more serious effort to resign the player the next year.

In Drews case he was never drafted or developed by the Red Sox. Signed a 1 year deal and gave the team 10 million in surplus value. What the heck are the Red Sox being compensated for?

Britalb
1 year 5 months ago

Pft2, I’ve been browsing your posts. You’re a bright guy.

The draft pick penalty is clearly designed to depress the market, and to penalize the farm systems of teams that are trying to buy their way to a championship. What would you suggest instead?

Luke Wise
1 year 5 months ago

The only problem with waiting until June to sign is that other players are in mid-season form and you haven’t played in a live game since September or October of the previous season. A person can train and stay in shape, but not playing in a live game puts you well behind the others. You start out out slow in June or hit the DL a time or two, by the end of the season your value isn’t nowhere near what it could have been. Although I suppose a player could play in an independent league up until June to keep their form, could they not?

I do see where you are coming from in Drew’s case. The only thing Boston ever invested in him was cash.

BigDog330
1 year 5 months ago

I think by waiting for June they expect their market to grow. Teams not willing to spend a draft pick might be willing to make an offer at that time. I just can’t understand why Boras thinks someone will pay top dollar in June when two months of the season are gone. A player will make more if he plays the whole season. Maybe they expect a new team to throw a four year contract at a previously unwanted free agent… but really?

Steve_in_MA
1 year 5 months ago

Every team can afford to make at least 1 QO. Every small market team gets more than $14.1MM from MLB each year in revenue sharing and luxury tax apportionment. Its a matter of choices on how that money is to be used. No one is crippled by it. They simply have to spend the league’s money on the “on field” product, rather than making distributions to ownership.

Paco
1 year 5 months ago

I don’t really understand this discussion – basically the system has impacted a tiny number of players, and really only Drew is suffering (since Morales would have been better off taking the deal, and so he would have arguably benefited from the system if he had been smart and accepted the qualifying offer).

Britalb
1 year 5 months ago

Clearly, the compensation system hurts good players who would prefer the security of a long-term deal. I can see your point that Drew is greedy – $14 million could save a lot of lives if it were spent in the right places – but Drew has been injured the past few seasons, is finally healthy, and is hoping to find a more stable situation. He’s willing to leave money on the table, so long as he is fairly compensated in comparison to his peers. Can you blame him?

In relation to small market teams, I think the new system is fairer than the old. The salary cap makes draft dollars scarcer, and teams less likely to want to give up picks, driving down the price of free agents. It also distributes draft dollars more equitably, and no longer allows picks to be gamed with handshake deals to Type B agents. Teams like the Red Sox and Yankees used to be able to offer a huge bonus to a “hard sign” pick, and get the equivalent of a first round pick in a later round, or offer a late season contract to a Type B free agent, essentially buying a second-round pick. Now there is a much more level playing field.

Meanwhile, teams like the Pirates get to enter the competitive balance lottery. This year the Pirates will pick fifth after the second round, right after the Rays, who already do quite well and have a pretty good farm system. These picks are tradable, which could prove really interesting as GMs figure out their next angle.

As a Red Sox fan, I miss the old days.

Dave
1 year 5 months ago

You say clearly, but I’m not sure it’s exactly clear who was hurt this year by the system any more than their actual asking price, age, injury history and overall performance based on what was available on the market and in the farm systems of teams who needed a specific position.

The draft pick attached had some drag, but if the guys were worth long term deals, they would have had them since the draft pick doesn’t change based on the contract signed. 1 year or 10 years, same pick.

At the end of the day Scott Boras and his “go for the biggest paycheck which I will guarantee you” strategy is now hitting a point where it’s not necessarily going to work for every single free agent. If the price MLB pays is two mediocre aging veterans not getting a 20m/year payday, I think we should all say that’s okay and Boras should encourage more players to take the offer.

I’d personally like to see a style where the offer stays on the table until the FA signs with another team and the MLB team gets the opportunity to match it, but that’s probably far off from being agreed on. Would the Yankees knowing how much Seattle had put on the table have agreed to match? It’d be a much more interesting environment for free agents for sure.

Britalb
1 year 5 months ago

Some of Drew’s problems are a result of his mediocre hitting in the World Series, and his injury history. But I find it hard to believe the pick hasn’t significantly depressed his market.

Until recently, Drew’s asking price hadn’t been leaked. I’m not sure if he was asking something unreasonable, or if the teams that might have been interested happened to place more value on a pick than Boras anticipated. As Joe Clark points out above, the notion of a fixed value for a pick is misleading – each team will value the opportunity cost differently, and with each pick lost by a team that signs a free agent, the remaining picks that had been after that pick get better.

I agree this season doesn’t look so good for Boras, who seems to be losing his ability to go over the head of the GM straight to the owner. I suppose that’s partially because some of his mega-contracts haven’t worked out too well for the teams involved.

Having the QA stay on the table is an interesting idea. It would certainly keep teams from gaming the system, but it would also tie up capital and cap space. Different game, but interesting.

pft2
1 year 5 months ago

“Clearly, the compensation system hurts good players who would prefer the security of a long-term deal.”

The problem is not compensation, its the penalty on the team signing, which is a tax on the player who has paid his dues by playing 6 years at below market rates and giving his team tens of millions in surplus value.

discollama
1 year 5 months ago

Is he really healthy though? Dude hasn’t played in 125 games since 2010. I’m not about to sign him long term until I can see that he can manage at least a 140 game work load again. He and his agent are insane to think that he would be in such high demand this off season.

ubercubsfan
1 year 5 months ago

Ugh, my post keeps getting deleted after I edit it. :(

I still think a hybrid of the two systems would be the best.

1) Get rid of this insane Qualifying Offer based on top 125 players in baseball. Do it by position and use average of top 10 for position players, top 50 for starting pitching, and top 69-70 relief pitching.(that’s 33% of the players at your position.) This will lead to more parity in offers given. Some positions will not make as much as others with this system. If the players salary is currently more than that average, they must be offered 10, 15, 20%(whatever seems reasonable with this method) more as their Qualifying Offer.

2) No more losing a pick if you sign a player that was offered a Qualifying Offer. The offering team will get their pick after each round in order of reverse standings. However, if they offer multiple Qualifying Offers, they get 1 extra pick PER round with a max of 10 extra picks.

3) Teams that offered a Qualifying Offer will be given a bonus pool given of 1.5% per Qualifying Offer given. So if a team offers 10 Qualifying Offers, they can overslot their draft by 15%. Now to put this in perspective, Astros for Rounds 1-10 had total around 11,698,800. That would pump up 13,453,620(not insanely higher, but could be very helpful to a rebuilding team.) This could maybe be applied to the international spending cap as well.

4) Rework the Competitive Balance pick to be based on a 4 or 5 year average of their win/loss record.

In the end, I would expect much more Qualifying Offers from ALL teams, small market and big alike. However, this will not penalize any signing team at all. Players will get their paydays, teams will get something back that can help them int he future, and signing teams don’t have to do the lost draft pick dance.

pft2
1 year 5 months ago

Why should a team be penalized for signing a free agent. Why should “good” free agents be taxed after serving their 6-7 years time playing for peanuts.

Give the team losing a player compensation, and eliminate the penalty (lost pick). Problem solved.

Alternatively, tax only the elite free agents and calculate the QO based on the top 50 salaries.

Wek
1 year 5 months ago

No players get paid peanuts during their first 6 years in the MLB. The arbitration years and the super two status are there to compensate good and great players for their performance. What about those players who get paid twice as much their worth during their first 6 years (due to arbitration) like Ike Davis? You cant just look at one side of the coin and make a blanket statement.

ubercubsfan
1 year 5 months ago

I don’t see why you are disagreeing with my post.

My proposal doesn’t hurt anybody. 0 people are penalized. Teams losing players get their bonus via draft budget increase.

Gnotorious
1 year 5 months ago

It looks to me like it’s just Boras clients that have a problem finding a gig. Drew and morales this year, loshe and Bourn last year. I’m no genius but I can see a pattern.

pft2
1 year 5 months ago

Loshe and Bourn both get 3-4 year deals that were 2-3 times what the value of a QO was,

Kieta Vivian
1 year 5 months ago

He has no idea how to move mediocre players. All 4 of the players you mentioned also arent worth half of what they were offered in their QO’s to begin with. Serves them right for listening to him.

ztoa
1 year 5 months ago

Pretty sure they all wouldn’t mind 14MM per season. But they aren’t out there looking for 1 year deals, they’re looking for some thing like 2+ years. So teams offer these QOs to fringe guys, they can then pay 7.05MM towards the player’s first year w/his new team.

pft2
1 year 5 months ago

These are not fringe guys. Most of them are coming off 3 WAR seasons

Wek
1 year 5 months ago

And everyone of them has glaring flaws that are hard to overlook (injury history, 1-dimensional player, consistency, etc.).

ztoa
1 year 5 months ago

Fringe in the sense that they don’t deserve draft compensation attachment. Most of the guys are FA-B type guys.

Bob George
1 year 5 months ago

MLB should just go to a free agent compensation system like the NFL uses. A team signing players doesn’t surrender anything. The team losing players, if the players are ranked high enough, gain a bonus draft pick at the end of certain rounds based on the value of the player(s) they lost, but only after figuring in what free agents they also signed. That’s assuming MLB even wants to continue with a compensation system, which only benefits the owners. In the NFL teams do not get compensatory draft picks until 1 year later.

pft2
1 year 5 months ago

“”I don’t know if it will be changed, but I think if they want it changed, they’ll have to give something substantial back,” the AL exec said. “Now, whether that’s something like an extra year of arbitration, I’m just not sure.”
==========================
How about a lockout, that grab your attention AL exec?

How about players demanding a drop in service time requirement to 5 years if the QO stays?

How about no further discussion on PED penalties until this is resolved?

How about players getting 50% of revenue instead of the current 43%?

Players don’t have to give up anything. There is no sport without them.

Lets remember, service time of 6 years before free agency exists only because of the players agreement, According to the binding arbitration ruling in the 70’s, players legally should be free agents after the 1st contract, typically 1 year, expires.

Mike1L
1 year 5 months ago

The last thing in the world players could possibly want is to have the vast majority of players be free agents every year. Prices would sink rapidly to reflect oversupply. Marvin Miller understood that.

pft2
1 year 5 months ago

It would not be every player every year. Many players are already tied up with multi-year contracts as opposed to in Marvin Millers day when almost nobody had a multi-year deal. Now is the perfect time. Teams would adopt by locking up their young players first, and paying the older players less. That’s the way it should be. Tough sell for players on the cusp of free agency though, but they are outnumbered

TigerDoc
1 year 5 months ago

I am with the exec’s on this, Boras completely misread the demand for Drew and Morales. He is SO intent to take his clients to free agency and cash in. And he is arrogant enough to think he could get an owner to pay multimillion’s for bag of bones.
This is an evolving system. Agents will adapt, and may be more likely to have their clients take the QO in time. And GM’s will adapt, limiting the QO’s to players they really want back.

pft2
1 year 5 months ago

No other agent has ever accepted a QO, and Boras has got good deals for all his guys at the end of the day. Markets change, sometimes you get caught up in the change. Teams anticipated players refusing the QO because they know its not a good deal. Both Drew and Morales are only 31 coming off good seasons, and talk by many pundits were that Drew would get more than 3/39 at the start of the offseason.

Mike1L
1 year 5 months ago

What’s interesting about this is how few players are impacted, and how large a fuss they are making about it. And, they aren’t the premier players either; rather they are a handful of useful, but not star quality types who decided to turn down a lot of money. Personally, I’d do away with the entire system and let there be unbridled free agency without forfeiture. But for the MLBPA to stage a walkout over this, or give up something that is meaningful to the vast majority of players is completely insane. A collective bargaining agreement is exactly what it says–collectively bargained with interests being exchanged. It should be addressed in the next CBA, but acts of self-immolation are ill-advised. You have to give to get.

pft2
1 year 5 months ago

In negotiations and poker sometimes you have to bluff, while making the other party think you might actually do it.

Also, like I said elsewhere, the impact of suppressed salaries among these players could spread to arb eligible players and other free agents as they are comps, and how you adjust for the value of a pick can be tricky since its not well defined

As for the give and receive part, good point. Right now Clark is about to cave and give the MLB longer PED suspensions without holding that card to play at the next CBA, or to use it to force the CBA to be reopened. MLBPA leadership has been so weak the past 10 years MLB owners are bit by bit pecking away at gains acquired by a tougher leadership

Mike1L
1 year 5 months ago

A threat to stage a walk out and put at risk hundreds of millions in salary for over 700 players in order to get the Stephen Drew’s and Kendry Morales’ of the world the contracts they think they are entitled to is simply not credible. You fight the fights you can win, you bluff when you can credibly bluff, and there are, as you point out, far bigger fish to fry. The suppressed salaries of a handful are not likely to be a guideline for arbitrators, because the issue of suppressed salaries is so constantly in the news that every arbitrator realizes it’s not market.

pft2
1 year 5 months ago

Well, I agree players would not agree to walkout over the QO alone, but what if there was something that worked for most of them, which is free agency after 5 years service time, changing service time calculations to be 6 years from the 1st season they play in MLB, or free agency for all after age 29 season (or 6 years service time, whichever comes first).

So Clark says scrap the QO penalty of draft pick loss for the signing team or we walk out to get one of the above and you can keep your QO as is. MLB has more than twice as much to lose from a work stoppage as players since players only get 43% of the revenue

It may be that players are just content with what they have and won’t risk a penny to benefit future player, many unions have suffered the same fate, but good union leaders see the danger in complacency and can rally the troops, which is why some many of them get coopted by the industry.

1 year 5 months ago

I don’t think that the draft pick is the main deterrent with the Tigers signing Drew. I think that they just don’t want to pay that much for a shortstop, and Drew isn’t worth the money that he’s asking for. While the Tigers have had offensive oriented shortstops with Carlos Guillen and Jhonny Peralta, they’ve shown a preference for less expensive players at the position. This is especially true in a year when they’re trying to allocate resources elsewhere, such as extending Cabrera and Scherzer.

We’re down to the point where the only real impact is to suppress that segment of the free agent market. As far as helping teams who develop players and can’t afford to keep them, that’s not happening. The QO system is giving the extra picks to the wealthiest teams more than others.

pft2
1 year 5 months ago

Scherzer talks have broken down. With Scherzer, V-Mart, Hunter potentially gone next year, an aging owner who may be gone soon, and with Verlander and Cabrera approaching their declining years, the time to go for a championship is now.

The odds are a lot slimmer with a replacement level SS. Drew was a 3.4 WAR SS last year and is willing to play for 1/14. Would not be surprised if he would take some deferred money since what he most cares about is getting the QO off his back

Robert Eichhorn
1 year 5 months ago

If I were an agent, I’d advise my client to accept the QO and then hold out in Spring Training to get the multiyear offer they want. The team will be screwed because their offseason budget will be hampered, and they’ll be forced to negotiate in good faith. It’s not a free market if some teams refuse to consider these guys because if the draft pick compensation. Meanwhile teams are willing to pay inflated salaries to players without the draft pick compensation. Teams make these QO knowing players will reject them knowing players will reject them to get a multiyear deal in order to get the draft pick and then don’t negotiate in good faith afterward. Yes, one year at 14 million is generous, but the players want longer term security and should have the right to negotiate with as many teams that want to bid for the player without losing a draft pick. Players should have the option to take an offer sheet back to their original team and force the team to accept the terms negotiated with a new team, relinquish the draft pick or negotiate a sign and trade. Players would be more accepting that this is a down market if all 30 teams could negotiate without consequences of losing a draft pick.