The effects of qualifying offers on free agency

How the qualifying offers will affect MLB free agency

11/9/13 in MLB   |   Eric_   |   7716 respect

Blog Photo - The effects of qualifying offers on free agencyFree agency in baseball has (slowly) gotten underway, but the first big decisions have already been made. These decisions tend to go unnoticed by most, but they are very important since the new CBA went into effect. I'm talking about qualifying offers, and in certain cases, they can significantly affect the market for a player.

The way qualifying offers work is that a team may offer one to any of their impending free agents that were part of the club the entire season. The qualifying offer is a 1 year deal for $14.1 million, the average salary of the 125 highest paid players. If a qualifying offer is issued and not accepted by the player, then the team is entitled to draft pick compensation if the player signs elsewhere. That pick comes at the end of the first round usually, known colloquially as the sandwich round. In addition, the team that signs that player loses their first round draft pick (unless it's in the top 10, in which case the team loses their second rounder).

Hardball Talk has a summary of which players received qualifying offers. The 13 players are:

Robinson Cano (NYY)
Hiroki Kuroda (NYY)
Curtis Granderson (NYY)
Carlos Beltran (STL)
Shin-Soo Choo (CIN)
Ubaldo Jimenez (CLE)
Jacoby Ellsbury (BOS)
Mike Napoli (BOS)
Stephen Drew (BOS)
Kendrys Morales (SEA)
Brian McCann (ATL)
Ervin Santana (KC)
Nelson Cruz (TEX)

For many of these guys, issuing the qualifying offer was a no-brainer. Cano, Granderson, Ellsbury, Beltran, Choo, Ellsbury, and McCann will all receive large multi-year deals, either with their current teams or somewhere else. Given the demand for pitching, Jimenez and Santana will likely receive large deals as well, while Kuroda will likely get something close to a $14.1 million annual value on a shorter deal due to his age.

For the rest though, they could be facing a tight market. The poster child for what can happen is Kyle Lohse. The Cardinals issued a qualifying offer, and thus he waited and waited for a contract, as teams decided he was not worth losing a first round pick. He didn't sign until a week before the season started. The two players who should most worry are Nelson Cruz, who had his usual numbers but is 33 and coming off a PED suspension, and Kendrys Morales, who brings some power (a surprising rarity in this market) but isn't considered a fantastic player. For those two, their best hope other than resigning might be hoping that a team with a top 10 pick takes a look, like what Cleveland did with Nick Swisher and Michael Bourn last winter.

On the other side, the most prominent free agent not to receive a qualifying offer was Matt Garza, who was ineligible due to the midseason trade to Texas. After that, it was likely AJ Burnett. For the Pirates, $14.1 million is a large part of their budget if Burnett happened to accept, a risk they couldn't take. Others that did not receive qualifying offers include Jarrod Saltamacchia, Tim Hudson, Bronson Arroyo, and Bartolo Colon.

One other thing to note about the qualifying offers this year. This was initially sold as a way to help small market teams pick up more draft picks. This is after the new CBA capped draft bonuses, ending an advantage the small markets would utilize by using their limited resources on the draft to build from within. Look at the teams who issued the offers though. The Yankees and Red Sox make up six of the 13. Another four were issued by playoff teams. The only real small markets that might get a boost are the Royals, Indians, and maybe the Mariners depending on your definition of small market. For all of baseball's lip service about competitive balance, all the recent changes have been a detriment to small markets, as Peter Gammons pointed out earlier this week. That remains something to watch going forward.
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11/10/13   |   kantwistaye   |   4211 respect

Eric_ wrote:
Pretty much. The owners wanted to control costs of amateur players, and I'm guessing they didn't listen to their baseball ops people on the repercussions.

NBA did same thing in their last CBA by making the luxury tax even more severe. Sadly that was done purely for small market owners and had the opposite effect, so MLB owners aren't quite as incompetent as NBA owners.

11/10/13   |   Eric_   |   7716 respect

kantwistaye wrote:
This new CBA was an awful deal for small market teams and I don't think most fans realize it. Between this and pretty much disincentivizing small market teams from making midseason trades for big names (can't get compensation in offseason) it really hurts those teams abilities to make moves to keep players and/or get compensation for them.

Pretty much. The owners wanted to control costs of amateur players, and I'm guessing they didn't listen to their baseball ops people on the repercussions.

11/10/13   |   kantwistaye   |   4211 respect

This new CBA was an awful deal for small market teams and I don't think most fans realize it. Between this and pretty much disincentivizing small market teams from making midseason trades for big names (can't get compensation in offseason) it really hurts those teams abilities to make moves to keep players and/or get compensation for them.