Changes MLB Can Make to Fix the Qualifying Offer Dilemma in Free Agency

Jason Catania@@JayCat11MLB Lead WriterNovember 15, 2014

AP Images

The qualifying offer slump now has reached epic proportions, to the point where Major League Baseball should be at least a little worried that this still relatively recent format just isn't going to hack it.

On Nov. 10, all 12 free agents who had received a qualifying offer (QO) this offseason rejected, meaning in the three-year history of this new wrinkle, the QO has gone a whopping and disturbing 0-for-34.

Players Who Received a Qualifying Offer This Year
PLAYERTEAM
Michael Cuddyer*Rockies
Ervin SantanaBraves
Melky CabreraBlue Jays
David RobertsonYankees
Pablo SandovalGiants
Francisco LirianoPirates
Russell MartinPirates
James ShieldsRoyals
Victor Martinez**Tigers
Max ScherzerTigers
Hanley RamirezDodgers
Nelson CruzOrioles
*Signed with Mets, who forfeit No. 15 pick in 2015
*Re-signed with Tigers, who forfeit potential compensation pick
MLB.com

As an elite bat, Victor Martinez didn't hurt his stock by rejecting the QO: He still got $68 million over four years to stay with the Tigers.
As an elite bat, Victor Martinez didn't hurt his stock by rejecting the QO: He still got $68 million over four years to stay with the Tigers.Gregory Shamus/Getty Images

That's right: Not a single one of the 34 players since 2012 has been enticed into inking a one-year contract at the average of the 125 highest player salaries—even though that rate might be above what some of them would receive on an average annual value (AAV) basis.

Amount of QO and Number of Players Who Rejected By Year
YEARQO AMOUNT# PLAYERS
2012$13.3 million9
2013$14.1 million13
2014$15.3 million12
TOTAL34
MLB.com

Here's really where the problem comes in: The QO is attached to draft-pick compensation for no good reason.

If a team signs a player who declined the offer, said team loses a valuable first-round selection the ensuing June. (Unless it's one of the first 10 picks, which are protected; in that case, the team forfeits its next-highest pick instead.)

This can, in some cases, drastically impact the market for such a free agent, because if teams are unwilling to surrender a selection (and the allotment from the draft bonus pool that comes with it), those clubs won't go after a player in which they otherwise might have interest.

Meanwhile, the club that loses a QO decliner is rewarded with another draft choice (a compensation pick) at the end of the first round once the free agent signs elsewhere.

This allows teams to gamble that it's worth tendering the QO and then hope a free agent will turn it down, thus simultaneously netting a draft pick for the team and undercutting the player's market.

Now, this isn't necessarily a big problem in the case of the top-tier free agents.

Turning down the QO isn't going to impact the stock of Max Scherzer, arguably the top free agent this offseason.
Turning down the QO isn't going to impact the stock of Max Scherzer, arguably the top free agent this offseason.Leon Halip/Getty Images

When a team already is willing to cough up nine figures to land, say, Max Scherzer or Pablo Sandoval this year, or Robinson Cano or Jacoby Ellsbury last year, surrendering a draft pick isn't exactly a major deterrent.

But when it comes to the non-elite free agents, the QO can hinder the market—sometimes too much.

Think back to last winter, when Nelson Cruz's asking price started out at about $75 million—a number he likely would not have landed even without the QO rejection, partly because he also was coming off a 50-game performance-enhancing drug-related suspension—only to drop until he had to sign a one-year pact with the Baltimore Orioles. In late February. For $8 million.

In the end, Cruz, who wound up being a massive bargain because he led MLB with 40 homers in 2014, would have made nearly twice as much had he simply said, "$14.1 million for a year? Sounds good to me!"

Kendrys Morales turned down the QO last year, then had to wait until after the draft to find a new home with the Twins.
Kendrys Morales turned down the QO last year, then had to wait until after the draft to find a new home with the Twins.Hannah Foslien/Getty Images

And he didn't even get the worst of it. Stephen Drew and Kendrys Morales said pish-posh to the QO—and then couldn't find a team willing to relinquish a draft choice by inking them. Like, not one.

Here's what Drew said to Nick Cafardo of The Boston Globe when he was still unsigned in mid-March:

You fight for the right to get to free agency, but then it takes a little bit away with draft-pick compensation attached to it. Nobody wants to give up that draft pick.

It’s unusual because I’m an experienced player, but because there’s a draft pick hanging over your head, it’s not really the free agency without strings attached.

Drew eventually returned to the Boston Red Sox for about $10 million in late May—two full months into the season—and with his tail firmly between his legs.

Morales had to wait until after the 2014 draft in June before the Minnesota Twins took pity on him with a prorated $12 million deal.

Drew and Morales, perhaps in part because they didn't have a normal spring training and missed so much time, had especially poor 2014 seasons.

Those two, and Cruz—as well as the trio's agents—obviously deserve a huge chunk of the blame for completely misreading their markets.

Ervin Santana is going through this process all over again after declining a qualifying offer for a second straight year.
Ervin Santana is going through this process all over again after declining a qualifying offer for a second straight year.David Goldman/Associated Press/Associated Press

If you think the players and their reps learned their lesson, though, think again: Both Cruz and starting pitcher Ervin Santana, who also turned down the QO last offseason (more on him below), are going through the process all over again this year.

But that doesn't mean the current qualifying offer system, which has gone 0-for-34 and resulted in its share of unintended consequences for players and teams alike, couldn't use fixing—or at least an adjustment or two.

Here are some suggestions.

Up the Salary Average Ante

Instead of making the QO worth an average of the top 125 player salaries, make it an average of, say, the top 100 or even the top 75 AAVs.

The offer still would be only for one season, but that would hike up the pay to the point where one of two things would be bound to happen.

Either teams would be much more hesitant about tendering the QO to a borderline candidate for fear of having to risk $18 million or $20 million being added to the budget. Or some players would have to take it, if only because the money would be too good to pass up.

Yankees closer David Robertson passed up a chance at $15.3 million, but would he have done the same if given a QO at $18 million?
Yankees closer David Robertson passed up a chance at $15.3 million, but would he have done the same if given a QO at $18 million?Patrick Semansky/Associated Press

Two Years Instead of One

If these first three years of the QO have taught us anything, it's that players obviously value some sort of stability in their contracts, meaning multiple years often is preferable to a higher AAV.

Turning the QO from a one-year deal into a two-year pact would mean a bigger commitment from the team, which again might make some squads less likely to extend a QO unless they know they want the player.

And the players at least would receive a little more security going forward. Maybe then a free agent presented with a QO actually might accept, putting an end to this ugly 0-for-34 rut.

A Trade Shouldn't Matter

Under the current rules, a free-agent-to-be who is traded midseason cannot be presented with a QO at the end of the year.

This is primarily to prevent teams from stocking up on expiring players via trade and then reaping the draft-pick compensation rewards, something that had been happening to a small extent under the previous format.

Thing is, that can cause two similar free agents—one who was traded, one who wasn't—to be valued very differently on the open market.

Matt Garza got the multi-year deal he was looking for from the Brewers, all because he was traded in 2013.
Matt Garza got the multi-year deal he was looking for from the Brewers, all because he was traded in 2013.Gene J. Puskar/Associated Press

This is exactly what happened a year ago with Matt Garza and Ervin Santana, two similarly talented mid-rotation right-handers.

Garza was ineligible for a QO since he'd been traded from the Chicago Cubs to the Texas Rangers in July 2013. His market last winter was much more robust and natural, since he wasn't tied to any compensation, and he landed a four-year, $50 million deal in late January.

Santana, meanwhile, stayed with the Kansas City Royals for the entire 2013 campaign, rejected the QO and then, because his market was artificially undercut by being anchored to a lost draft choice, he had to settle for a one-year deal worth $14.1 million from the Atlanta Braves in mid-March—after spring training was underway.

As former big league pitcher-turned-analyst CJ Nitkowski writes for Fox Sports' Just a Bit Outside: "Garza benefited from the Cubs being a bad team in 2013. Why should players who weren't moved during the year be penalized in free agency while those who were traded gain an advantage? They shouldn't."

Forget Forfeiting a Pick Altogether

Ultimately, this suggestion would address the primary problem with regard to the QO: loss aversion.

When the free agent is not an elite, top-tier player, clubs have shown an inclination toward not losing their draft pick rather than toward focusing on the addition of talent.

Perhaps the simplest solution? Do away with the concept that a team that signs a QO-rejecting free agent has to give up a selection in the following draft.

The club that loses the player still can be compensated with a pick after Round 1—same as now—but eliminate the penalty element for the signing squad on the other end. That way, the only buyer's remorse comes if the player doesn't live up to his contract.

At some point, a player will accept the qualifying offer, which can't go oh-for-forever. But it hasn't happened yet, three years in. Maybe it will next year. Or maybe only after MLB makes some changes to the system when the current collective bargaining agreement expires after the 2016 season.

Statistics are accurate through the 2014 season and courtesy of MLB.comBaseball-Reference.com and FanGraphs unless otherwise noted.

To talk baseball or fantasy baseball, check in with me on Twitter: @JayCat11.

Related

    Middleton: Phillies May Be 'Little Bit Stupid' with FA Money

    MLB logo
    MLB

    Middleton: Phillies May Be 'Little Bit Stupid' with FA Money

    Tim Daniels
    via Bleacher Report

    Report: Yanks, A's Discussing Gray Trade

    MLB logo
    MLB

    Report: Yanks, A's Discussing Gray Trade

    Tim Daniels
    via Bleacher Report

    Every MLB Team's Biggest Obstacle to Winning Offseason

    MLB logo
    MLB

    Every MLB Team's Biggest Obstacle to Winning Offseason

    Zachary D. Rymer
    via Bleacher Report

    Report: Padres Remain Interested in Syndergaard

    MLB logo
    MLB

    Report: Padres Remain Interested in Syndergaard

    Alec Nathan
    via Bleacher Report