Ken Rosenthal reports that the value of a qualifying offer for free agents this off-season has been set at $17.2 million. That represents an increase of $1.4 million over last year’s value of $15.8 million. The qualifying offer is a one-year deal worth the average of the top 125 salaries in MLB. Teams that make a qualifying offer to a player that ends up being rejected receive a compensation draft pick in the upcoming draft. The team that signs the player who rejected a qualifying offer gives up their earliest non-protected draft pick.
As we’ve seen in practice over the past couple of years, this process does not hinder the price of franchise players and inner-circle superstar free agents. It can, however, hinder the market for the middle class of free agents, inasmuch as it costs any team who would sign a QO-attached player both the player’s new salary and a first round pick. Just this past year Howie Kendrick, Yovani Gallardo, Dexter Fowler and Ian Desmond were all unsigned as of the beginning of February after finding few takers on the open market, likely in part because the draft pick made them too rich for other teams’ blood. In the past Nelson Cruz was a noted QO victim, signing an $8 million deal following the 2013 season. It obviously gives the player’s previous team — the one which extended the qualifying offer — a huge advantage in retaining the player, as they don’t have to give up a draft pick to themselves.
Still, the qualifying offer is becoming more attractive to players. This past year, for the first time, a player actually accepted a qualifying offer. Three actually: Brett Anderson, Colby Rasmus and Matt Wieters. One of them was pretty happy with it!
For players who like their current situation and/or are looking for a one-year deal with which to build value for their next free agent opportunity, yes, it’s probably nice to have. And, given how some QO-attached players have lingered on the market for a long time in recent years, the bird-in-the-hand value of the QO may be looking better as time goes on.
For someone like Dexter Fowler or Nelson Cruz, however, it’s hard to argue that the qualifying offer hasn’t hurt their marketability. Every player’s case is different, but the macroeconomics of the situation don’t necessarily work for the players’ benefit in the aggregate. If the player can fundamentally change the game for a team, sure, they’ll give up a pick. But they won’t do it in order to make incremental improvements. The draft pick is simply worth far too much to teams these days and offsets the “average” inherent in the QO calculus.
Rosenthal notes that the QO will likely continue on into the new Collective Bargaining Agreement which is expected to be in place early this winter, so it would seem that the players seem content to keep the system in place. Maybe because, macroeconomics aside, they like that it’s there in case they need it. Maybe because alternatives, including the A/B/C-level free agent system in place was worse. Maybe they just have bigger fish to fry. We won’t know until the new CBA is in place.
But the QO does cost players something, overall anyway. And I wonder whether what they’re getting in return for it is worth as much as that which they are leaving on the table.
