Each Team’s Penalty For Signing A Qualifying Offer-Rejecting Free Agent

Since we just looked at what teams would stand to receive in draft compensation if they lost a free agent who rejected a qualifying offer, now it’s time to explore what each team would have to give up in order to sign a QO-rejecting free agent.

To recap the mechanics: if a free agent has played the entire 2024 season with a team and he has never received a qualifying offer in the past, he is eligible to be issued a QO within five days of the end of the World Series.  The qualifying offer is a one-year deal worth the average of the salaries of the top 125 highest-paid players in the majors, and this winter, the QO is worth $22.025MM.  An eligible free agent can simply accept the QO and thus avoid free agency entirely, but if he rejects the QO, his former team is now in line to receive some draft-pick compensation if the free agent signs elsewhere.  This only relates to qualified free agents from other teams, as a club can re-sign its own qualified free agents with no penalty.

Here is the (mostly set) rundown of what every team will have to give up if they sign qualified free agent.…

Revenue Sharing Recipients: Diamondbacks, Rockies, Reds, Brewers, Pirates, Marlins, Athletics, Mariners, Tigers, Royals, Twins, Guardians, Orioles, Rays

Should one of these clubs sign a qualified free agent, they will have to give up their third-highest selection in the 2026 draft.  Since most of these smaller-market teams are part of the Competitive Balance bonus rounds of the draft, their third-highest pick likely won’t mean their third-round pick, and the situation could be further complicated if any of the teams trade from their CBR picks.  The Competitive Balance selections are the only draft picks eligible to be traded — for the 2025 draft, five total picks over the two CBR rounds were made by teams who acquired those selections in trades prior to draft day.

These lower-spending teams usually don’t splurge on bigger-name free agents in general, yet last offseason saw the Diamondbacks sign Corbin Burnes, and the Athletics (!) sign Luis Severino.  The Tigers also made a push to land Alex Bregman, and Detroit might feel more pressure about sealing the deal on a splashy move this winter since Tarik Skubal is only a year away from free agency.  The Orioles or Reds could be candidates to spend a little more than usual, with Cincinnati trying to build on a playoff appearance and Baltimore trying to bounce back from a disappointing 2025.  Seattle could also explore qualified free agents, but the M’s are more likely to first focus on trying to re-sign one of their own guys in Josh Naylor, who isn’t eligible for a QO.

Teams Who Don’t Receive Revenue-Sharing Funds, And Who Didn’t Pay The Competitive Balance Tax: Giants, Cardinals, Cubs, Braves, Nationals, Rangers, Angels, White Sox

For signing a qualified free agent, these teams would have to surrender their second-highest pick of the 2026 draft, and also $500K from their bonus pool during the next international signing period.

The rebuilding Cardinals and White Sox and won’t be spending big in free agency.  The same is very likely true of the Nationals, whose own rebuild period is likely to be extended since new president of baseball operations Paul Toboni will need time to evaluate (and overhaul) the organization.  Texas is planning to either stand pat on spending or reduce payroll.

Under Alex Anthopoulos, the Braves have generally been more inclined to build their roster through trades or their own farm system rather than long-term free agent deals, but Atlanta could change tactics after a losing season in 2025.  The Angels figure to be active in free agency, even if spending bigger on a qualified free agent might not necessarily be on the radar.  San Francisco signed qualified free agent Willy Adames last winter, and are again expected to at least check in many of the major free agent names.  There doesn’t appear to be much optimism that the Cubs will re-sign Kyle Tucker, but they could respond to a Tucker departure by making some other prominent signings.

Part of the equation for these clubs and the clubs in the next two categories could be what other picks they’re receiving this winter, to balance out their draft capital.  For instance, if Tucker rejects a QO and signs elsewhere, the Cubs would get a compensatory pick just before the start of the third round of the draft.  While a lower selection than whatever Chicago’s second-highest pick would be, getting another draft pick back and then losing a pick to sign a qualified free agent somewhat makes it a wash for the Cubs.

Teams In Limbo: Astros

As noted in the last post, it won’t be known until December (when the luxury tax numbers are officially calculated by the league) whether or not the Astros managed to sneak under the $241MM tax threshold. RosterResource has Houston slightly under the threshold while Cot’s Baseball Contracts has the Astros slightly over the line.  Given this discrepancy and the narrow margins involved, we’ll keep the Astros in their own special grouping until the league issues the official Competitive Balance Tax numbers in December.

Since Houston were tax-payors in 2024, the Astros might have reset their CBT status if they were indeed able to stay under the $241MM line.  Being a two-time payor means an escalating tax rate, and that tax bill would keep escalating if the Astros again finished over the $244MM threshold in 2026.  Caveat: the collective bargaining agreement expires after the 2026 season, so the qualifying offer system or luxury tax system might very well be adjusted or even heavily changed in a new CBA, so a repeater-tax status might no longer be a concern to the Astros or other teams.

Staying under the 2025 tax line also means the Astros could be more willing to explore signing qualified free agents, though their tax-payor status last winter didn’t stop the team from signing Christian Walker.

As noted in the previous post, the Rangers could end up as tax-payors and the Red Sox may have ducked under the tax line, depending on the league’s final calculations.  We’ll stick with both teams in their current categories for now, as Cot’s and RosterResource had Texas narrowly staying under the tax line, and both sites had the Red Sox slightly over going the line.

Competitive Balance Tax Payors: Padres, Dodgers, Mets, Phillies, Red Sox, Yankees, Blue Jays

As one would expect, these teams face the stiffest penalties.  For signing a QO-rejecting free agent, these clubs would have to give up $1MM in international bonus pool money, as well as two draft picks — their second- and fifth-highest selections in the 2026 draft.

All seven of these clubs are clearly in win-now mode, so the higher penalties shouldn’t be much of an obstacle towards a pursuit of qualified free agents in most cases.  (The Padres are the probable exception since they’re operating within a narrower payroll margin.)  Since every team would prefer to keep their draft picks if they can help it, the tax payors might target non-qualified free agents who aren’t tied to draft compensation.  For instance, while the Dodgers are expected to at least check in Tucker’s market, Los Angeles could consider any number of other free agents before aiming at the outfielder that will cost the most in both contract size and additional draft penalties.

Since re-signing your own QO-rejecting free agent comes with no penalty, this could make some of these clubs more inclined to retain their own impending free agents rather than seek out new talent.  Bregman and the Red Sox have mutual interest in a reunion, the Phillies have been public with their desire to keep Kyle Schwarber, and the Blue Jays will undoubtedly be keeping tabs on Bo Bichette.

Should a club sign more than one qualified free agent, they will have to additionally forfeit their next-highest draft pick. For signing two QO-rejecting free agents, the revenue-sharing group would have to give up their third- and fourth-highest picks in the 2026 draft. The teams who didn’t exceed the CBT or receive revenue-sharing funds would have to give up their second- and third-highest picks, as well as $500K more of their international bonus pool. The luxury tax payors would face the heftier penalty of losing four draft picks — their second, third, fifth, and sixth-highest selections.