MLB’s current free agent qualifying offer system was established in the last collective bargaining agreement. This is the fourth year it’s been in place. During that time, it’s caused a lot of consternation among fans and players alike. You can make a strong argument that it favors rich clubs with money to burn, while unfairly and unnecessarily penalizing mid- to low-tier free agents.
A new CBA will have to be negotiated next winter and the QO system will likely be a topic of discussion. In the first three years of its use, 34 players were extending a qualifying offer and all of them declined. Some of them went on to ink lucrative contracts, which serves as evidence having the draft pick compensation doesn’t hurt top-tier free agents. However, players like Kyle Lohse were forced to settle for contracts that were below market value. Kendrys Morales ended up waiting until after the June draft to sign and that probably cost him millions.
On top of that, you had situations where the Yankees and Red Sox — and this year, the Dodgers — were handing out three qualifying offers, approximately $45 million in one-year contracts, in a single offseason. That’s something smaller market clubs like the Brewers, Twins, Rays, Reds, and Royals could never risk. It’s not that the Yankees and Red Sox necessarily wanted those players back. In some cases, they did. But mostly, they just wanted the draft pick compensation.
The most obvious example is when the Yankees extended the offer to reliever David Robertson. How many clubs can you think of that could risk giving a $15M contract to a reliever? Those teams netted extra draft picks or were able to sign players with draft pick compensation attached without suffering severe penalties because the draft pick compensation they received offset the picks they had to forfeit. It was a competitive advantage not shared by lower market clubs.
HOUSTON, TX – OCTOBER 12: Colby Rasmus #28 of the Houston Astros reacts after hitting a solo home run in the seventh inning against the Kansas City Royals during game four of the American League Divison Series at Minute Maid Park on October 12, 2015 in Houston, Texas. (Photo by Bob Levey/Getty Images)
Based on the first three years of this system, one could make a very compelling case that it just wasn’t working. It wasn’t helping teams keep talent. Instead, it hurt some free agents and mostly helped mostly only the rich clubs. But this year is different. For the first time in history, a player accepted the qualifying offer. In point of fact, three players accepted the QO: outfielder Colby Rasmus, catcher Matt Wieters, and left-handed starter Brett Anderson.
For each player, it represents a bet on themselves, a wager that they will improve their stock, which in turn will allow them to get a better contract next offseason. But one wonders how much each would have been able to secure without draft pick compensation attached. It ends up benefiting the club — especially the Orioles, who get to keep their catcher when they had none to replace him. So in that respect, this is an instance of the QO doing at least one part of what it was intended to do.
But it still might hinder those players’ earning potential. I know it’s easy to cast that critique aside when they’re getting a guaranteed $15.8 million in one year. But what if they don’t do well? What if they get hurt and are unable to secure a major league contract? They might have been able to go out this winter — without draft pick compensation — and get a three-year contract worth $30 million. They might make more on an annual average value in that single season by taking the QO now, but could end up making less in total. It was their choice to take that gamble, but they were forced into making that decision because of the draft pick compensation.
TORONTO, ON – OCTOBER 21: Marco Estrada #25 of the Toronto Blue Jays throws a pitch in the first inning against the Kansas City Royals during game five of the American League Championship Series at Rogers Centre on October 21, 2015 in Toronto, Canada. (Photo by Harry How/Getty Images)
Then there is the special case of Marco Estrada. He was extended the QO, but instead ended up signing a two-year deal with the Blue Jays. It’s hard to say for certain that Estrada signed for less than he could get on the open market. It’s also hard to say he didn’t want to return to Toronto in the first place. But I have to believe the QO in this case was leverage against the player. It’s like saying, “Here, take this two-year deal or go out into free agency and see what you can get when a team has to give up their first-round pick for you.” So yeah, the QO was successful in helping the Blue Jays retain a pitcher they wanted. It just seems too unfair to the player.
And that’s the biggest problem. More than anything else, this system appears designed to suppress earning potential for free agents. That’s all it truly does. Only this year have we seen team retain players as a direct result of the qualifying offer. And it’s come at the expense of wages and long-term security for those players.
There are draft picks that move hands, but the money remains the same for the most part. There aren’t extra draft picks that materialize from this process. Besides that, those rich clubs get to manipulate the system in a way which small market clubs can’t. So the teams that stand to benefit the most from extra draft picks are those rich teams.
This suppression of earning potential is what the they owners want and will fight to keep. It might not have been their goal, but when Wieters, Rasmus, and Anderson accepted their qualifying offers, it gave the owners the examples they needed to support their argument that the system is fine as is. As a result, I’m going to guess the system remains unaltered during the next CBA.
