It’s the start of spring training, do you know where your free agent is going to sign? That’s the question facing quite a few player agents right now, as spring training is already underway and their free-agent clients remain all too, well, free.
It’s no secret that there are still plenty of players, including some with pretty big names—like Ubaldo Jimenez, Ervin Santana, Nelson Cruz, Stephen Drew and Kendrys Morales—out on the open market. It’s also no secret that the primary reason for this is the qualifying offer (QO), a relatively new element that was put into effect with the most recent collective bargaining agreement following the 2011 season and has unquestionably undercut the market of many free agents who reject these offers.
And now, reports are springing up that indicate the Major League Baseball Players Association isn’t exactly thrilled with the way all of this is playing out for the remaining free agents, as Ken Rosenthal of Fox Sports reported recently.
While it’s unlikely that anything will change until the current CBA expires after the 2016 season, it’s at least worth considering some ways to go about fixing a problem that, ironically, MLB and the union unwittingly created.
First, though, here’s a look at the 13 free agents who received a qualifying offer, which in short, is a take-it-or-leave-it, one-year deal at an amount equivalent to the average of the top 125 salaries in the sport from the past season ($13.3 million after 2012, $14.1 million after 2013). If a player rejects the QO, he then costs his signing team a first-round draft pick.
The takeaway from this table? Of the 13 who rejected QOs back in November, all of only—count ’em—two signed with a team that directly lost a first-round pick as a result: Shin-Soo Choo, who wiped away the Texas Rangers top selection; and Brian McCann, who did the same for the New York Yankees, as he was the first of their four such signings.
Among the other six others who have signed contracts so far, four did so with teams whose first-rounders were either protected by virtue of being one of the first 10 selections (i.e., Robinson Cano, Curtis Granderson) or already surrendered due to a previous signing (i.e., Jacoby Ellsbury, Carlos Beltran). The last two? Well, Mike Napoli and Hiroki Kuroda simply returned to their “former” teams, so the draft pick never even factored in in the end.
Two of 13 free agents: That’s how many have been deemed worthy of forfeiting a selection this coming June, at least at this late stage.
Almost definitely, that will change once one of the so-called “Frozen Five“—Ubaldo Jimenez, Ervin Santana, Nelson Cruz, Stephen Drew and Kendrys Morales—sign their deals, provided at least a few of them find new homes rather than crawling back to their 2013 clubs with their tails between their legs.
In all between 2012 and 2013, qualifying offers have been extended to 22 different players in the first two years of this system—13 in 2013 and nine in 2012—and not a one has accepted.
Certainly, there are some cases where the player and/or his agent overestimated the market and would have been better off simply signing on the dotted line for one year at a hefty average annual value (AAV). Fact is, though, oh-for-22 should indicate that these offers aren’t considered worthwhile for one reason or another.
Keeping the draft-pick compensation in mind and in play—after all, teams should get some sort of reparations for losing a valuable player via free agency—here are a few suggestions that might tilt the table back in favor of free agents a little.
Protect Every First-Round Pick
Under the current system, only the top 10 draft selections are protected, meaning every pick from No. 11 on down can be lost simply by signing a player who negged a QO. That penalty has proven to be too much for many, if not most, clubs.
As Buster Olney of ESPN (subscription required) reported in January, some teams aren’t even considering the idea of offering a contract to any player anchored down by draft-pick compensation. That’ll limit such a free agent’s market, all right.
The simple answer, then, might be to make all first-rounders protected, not just the top 10. On one hand, this would remove some of the advantage the lesser teams (i.e., those who finished poorly enough the season prior to own a top-10 pick) hold over those who were either in the playoffs or in contention the year before.
On the other, if signing a free agent meant teams could only lose a selection in the second round (or at worst, the compensation or competitive balance rounds), there would be more interest due to a lesser forfeiture.
No Draft-Pick Penalty…At All
What if this approach were taken to the extreme? What if there were absolutely no loss of a draft pick for signing a QO free agent?
Under such a scenario, just like the first one, any club that loses such a player would still gain a compensation pick that slots in after Round 1 of the draft. In other words, teams that say bye-bye to a key player continue to get what they do now, but no team has to worry about giving up a valuable selection or the corresponding money budgeted for that draft slot.
The big problem here? This might serve to widen the gap between the haves and have-nots from the last season, as well as between the big- and small-market clubs: The former would never be penalized for a big-money signing, while the latter likely wouldn’t be able to afford to take advantage of the no-penalty policy anyway.
If the current process is proving anything, though, it’s that many teams deem the cost of a high draft pick as a price unworthy of anything other than a premium free agent, like Choo or McCann. This is, more or less, the loss aversion theory.
Increase the One-Season Salary
As state above, a QO is the average of the top 125 highest salaries in baseball from the previous season. While $14.1 million—the amount this time around—is rather steep, perhaps upping the ante a bit would help.
Think about it: All 22 QOs have been rejected to this point. The obvious reason for this, is that the players and their representation believe they can score a multi-year deal rather than have to settle for a one-and-done pact.
If that one-year salary were based on, say, the top 50 in the game—thus raising the QO a few million dollars—it’s more likely that a player presented with the opportunity to make, oh, $18-$20 million for one season would jump at that. For example, Cruz would have, even if it meant losing the chance for the security that comes with a three- or four-year contract.
On the other side, this would give teams, including the big-market boys, much more pause when it comes to floating a QO that could hinder a budget and payroll, even if only for one year.
All in all, fewer QOs would be offered up, and those clubs that still take that risk just might be saddled with an extra $20 mill or so that wasn’t in the plan when the player accepts.
Multiple-Year QOs
The flip side to the previous possibility? Instead of upping the salary, QOs could be extended from one- to two-year deals.
This would make teams think long and hard about trying to gain an extra draft pick simply by sending out a qualifying offer to any old free agent for two key reasons.
One, clubs would have to worry about not one but two years, which adds a whole new dimension to things, including injuries, roster construction and payroll considerations.
Two, players would be much more likely to go for a contract that brings at least a little bit of stability—not to mention, a pretty nice annual salary.
Sure, guys like Robinson Cano, Jacoby Ellsbury and Choo would still be candidates for this kind of QO, but do you really think teams potentially would want to be on the hook for two years for lesser players, like Drew or Morales, let alone older ones, like Carlos Beltran?
Conditional Loss of Draft Pick
There may be something to any of above options, but perhaps the best suggestion is to make this whole process conditional.
Everything would stay the same as it is now, with the only difference being that any team that signs a free agent who rejected the qualifying offer would lose a draft pick—on the condition that the AAV of the player’s contract matches or exceeds the one-year salary attached to that year’s QO.
To put that in current and simpler terms: A contract given out this year to any of the above 13 players that averages out to $14.1 million or more would then cost that team a selection come June.
Examples? Well, all of the eight QO free agents who have signed to this point have done so for at least $15 million per year, so those deals would result in a lost pick.
This way would solve the problem facing just about all of the current Frozen Five, since the loss of the pick is a bigger impediment than anything else right now. But if teams could still sign one of the remaining QO free agents without having to worry about erasing their first-round draft pick—as long as the AAV came in under $14.1 million—that would keep a lot of doors open.
For instance, if the Baltimore Orioles, who have been linked to Santana per Rosenthal, didn’t have to worry about giving up their No. 17 overall selection, they would be much more likely to consider handing out, say, a three-year, $40 million contract.
That way, the O’s get their much-needed starting pitcher without forfeiting a valuable commodity come June, and Santana gets to enjoy a multi-year pact after a strong 2013 season.
Hey, it’s not the mega-deal Santana and his reps had been hoping for at the start of the offseason, but it’s certainly better than having no home as spring training starts.
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