Posted by: Mike Cornelius | November 8, 2015

Free Agency Begins With A Process That’s Broken

The lights are out now, even at Kaufmann Stadium and Citi Field. Winter comes to the Great Game, and until the clarion call of pitchers and catchers report rings out to herald the annual renewal, fans must content themselves with the business of baseball. It is a stark counterpoint to the lovely game itself, for in the coming weeks of free agency, salary arbitration, contract negotiation and personnel movement there is scant room for sentiment.

For the fourth year the offseason begins with the issuance of qualifying offers to players about to enter free agency. It’s a process created by the current collective bargaining agreement, serving as the latest approach in a long series of efforts to enhance competitive balance by compensating teams who lose a star to the lure of a fat contract dangled by another franchise. At the same time it’s meant to provide those players with a meaningful alternative to free agency. So far, at least, it isn’t working.

On its face the qualifying offer process is fairly simple. Teams can extend one-year contract offers to any player on their roster who is about to become a free agent. The contract value is equal to the average of the top 125 salaries from the previous season; which this year means a one-year deal at $15.8 million, up from $15.3 million last year and $13.3 million when the system started in 2012. A player who accepts the offer plays on for another year at the set rate, after which he can again test the market; or perhaps again be extended a new qualifying offer. A player who turns down the offer enters free agency, but any team that signs him forfeits its highest unprotected draft pick (the top ten picks in the draft’s first round are protected).

Although massive cable deals are changing baseball’s financial playing field it’s still tilted in favor of some teams, as will always be the case. The idea behind the qualifying offer process was to compensate teams who might not be able to compete in the annual winter carnival of free agency by diminishing the ability of their richer rivals to stock their farm systems through the draft. The compensation is both direct and indirect. The latter in that the draft pick isn’t transferred to the team that loses a free agent; rather it simply disappears, reshuffling the draft order. The direct relief comes in the form of a compensatory pick for the player’s former team, made at the end of the first round.

But problems appeared right from the start, for both teams and players. In the first two years this system was in place, twenty-two qualifying offers were extended. Ten of them, or just less than one-half of the total were made by the Yankees (six) and the Red Sox (four). Neither of the free-spending AL East rivals are the type of team this approach was supposed to help. But there in the South Bronx and on Yawkey Way were the franchises leading the way in stripping opponents of early draft picks while adding compensatory picks for themselves whenever a highly coveted player was lost to free agency.

Part of the initial reluctance of some teams to extend qualifying offers was uncertainty over how players would respond. After all, if a player accepted an offer, the team was on the hook for a large one-year contract. It was a quick decision to extend offers to the premier members of each free agent class, those players who were clearly in line for multi-year contracts worth far more than the predetermined qualifying offer amount. But what about mid-level players, wouldn’t one or more of them jump at the chance for a payday in the area of $15 million?  And the general manager who made that offer to a player whose market value was half or two-thirds of that number, how foolish would he look, especially if the player had on off year?

That possibility was designed as the rein on qualifying offers, except that in the first three years, of thirty-four offers extended none were accepted. That’s in part because agents loath the concept and have consistently advised players to reject the deals. But even without such advice, which it’s worth noting has not always been sound, players themselves have been cool to the one-year contract. During the early years of a major league career, when a player is under team control, he can be paid a modest sum relatively speaking. Those numbers go up once he becomes eligible for arbitration, but it’s not until free agency arrives that players have the opportunity to test their true value on the open market. That’s also when they can ensure financial stability for their post-playing days by negotiating a long-term contract. At that point in a career the possibility of a four-year deal at $10 million per year can look far more attractive than one season with all of its unknowns in terms of performance of injury, even if it is at $15 million or more.

That date with potential financial freedom also doesn’t come quickly. A player must have six years of major league service, not six calendar years but in effect six full seasons on a big-league roster to qualify for free agency. Kyle Lohse first stepped onto a major league mound on June 22, 2001. But the right-hander didn’t qualify for free agency until the end of the 2012 season, when the St. Louis Cardinals made him one of the first group of players to receive qualifying offers. Lohse went 16-3 in 2012, leading the National League in win percentage; but he didn’t sign his next contract until the final week of Spring Training in 2013, thanks in no small part to the draft compensation attached to his free agency.

Lohse is by no means the biggest loser under the current system. Kendrys Morales, Nelson Cruz and others have seen their value as free agents hurt by qualifying offers; but the award surely goes to Stephen Drew. The infielder was tagged by the Red Sox after their 2013 championship run. Drew made more than $9 million as the team’s second baseman, and on advice of agent Scott Boras turned down Boston’s qualifying offer. He then languished on the sidelines with Boras unable to secure a contract with any team. Eventually Drew rejoined the Red Sox the following May and was later traded to the Yankees. This season he played in New York on a one-year, $5 million contract.

All of this has led to this week, when teams extended a record twenty qualifying offers to would-be free agents. The Dodgers and Orioles each tagged three of their players. Perhaps they can swing it at Chavez Ravine, but fans can bet that Peter Angelos doesn’t expect to be paying nearly fifty million dollars for just one-third of his starting lineup at Camden Yards next season. The system has swung too far in one direction, with teams now assuming that players will decline the one-year deal.

Given the glut of offers, perhaps this will be the year when the system starts to correct itself. Perhaps Houston’s Colby Rasmus, or San Diego’s Ian Kennedy will sign on the dotted line. Perhaps John Lackey will be happy to make $15.8 million in St. Louis after being paid $507,500 to pitch for the Cardinals this season. And if they do and then underperform, GMs will pause this time next year.

But if an unprecedented number of qualifying offers only produces an equally unprecedented number of rejections then both sides, and especially the players, should seek changes in the next collective bargaining agreement. Making the offer a two-year deal is one idea worth considering, as is rewarding the player’s former team with an extra draft pick but not penalizing his new club. The one thing that’s clear is that the most recent attempt to soften the blow of free agency is penalizing players and not helping low-budget teams. This year’s qualifying offers are in the batter’s box, and the count is 0-2.



  1. I hadn’t looked at the issue from this perspective, but I think you’re right. The current system my be unsustainable, if the purpose was to help foster competitive balance. On the other hand, players could also begin to use their own best judgment and not necessarily take the advice of their agents (who themselves have much to gain from a player rejecting a qualifying offer.) It’ll be interesting to see if any players accept these qualifying offers this off-season. At any rate, if a player turns down fifteen million dollars to play baseball for one year, then cannot land a better free agent deal afterward, I doubt many fans will shed a tear for his predicament.
    Very nice overview,

    • Hey Bill, I agree that this is one area where a number of players have not been well served by their agents. No doubt when it was made a part of the current CBA both sides assumed that some mid-level free agents accepting qualifying offers would limit their use. Perhaps this is the year we finally see that. If not I hope that the process is changed in the next round of negotiations. As it has evolved it’s hurting players and not helping low-budget teams.

      Thanks as always,


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