There’s been a lot to get excited about this week, what with, you know, spring training starting and all. Now that the teams have some games under their belt, the “player X is struggling, so DOOOOOOOM” or “player Y really is in the best shape of his life, so THIS IS HIS YEAR” small sample size narratives can really get rolling. It’s not like they will almost certainly look dumb in a couple of weeks, much less a couple of months, right? But, hey, there’s actual baseball being played. There’s been other big baseball news in the last week though, and one of the big stories was the Rangers signing Ian Desmond to a one-year, $8 million deal.
This made the bigtime sports news for a number of reasons. Desmond is going to make a little over half of what he would have made had he accepted the Nationals’ qualifying offer at the beginning of the offseason. There’s also the fact that Desmond turned down a seven-year, $107 million deal from the Nationals a couple of years ago that bought out his remaining years of service time at the time the offer was made, making it basically a five-year $90 million deal that he turned down.
For the Rangers, getting Desmond at that price has some folks pegging it as the best deal of the offseason, despite the draft pick compensation attached. Despite the fact that Desmond is untested in the outfield, his bat should play well enough there to make it an upgrade to one of the areas that Texas failed to address this offseason. But we’re not here just to talk about Desmond, we’re here to check in on the qualifying offer system (QOS) generally.
The QOS replaced the Elias Type A-Type B player compensation system when the current Collective Bargaining Agreement was signed during the 2011 offseason. The end goal of the QOS, like the A-B system it replaced, is ostensibly to compensate teams, specifically smaller and mid-market teams that were going to lose players they drafted and developed to the large market teams in free agency. On the players’ side, the main goal of the QOS was to reduce the number of players who would be affected by draft pick compensation in the offseason. The move away from the A-B system was also partly inspired by the trading of players for draft picks, as in 2010 as when the Rays ended up with two picks in the first round and six of the first 100. The move to the QOS also took that crazy player rating system out of the picture. Rating players on an A or B (or C, if you want to go further back) scale could get a bit, well, contentious, as you can imagine if you have ever read a comments section on a sports website.
The QOS is fairly simple, at least on its face. If a free-agent-to-be is tagged with a qualifying offer, which must happen within five days after the World Series ends, he has seven days to accept the offer, in which case he will stay with his current team for one-year and will be paid the average of the top 125 salaries in the MLB ($15.8 million this year). One the other hand, if he declines the offer, if he signs with another team, the signing team will give up their first round pick, unless they have a protected pick in the top ten, in which case they give up their second round pick. The team losing the player receives a sandwich pick in between the first and second rounds. A player that is traded during the prior season is not subject to a qualifying offer.
The first year went down without any major hitches, as only nine qualifying offers were extended and teams were presumably still getting the hang of how the whole thing was going to play out. It may have taken a little longer for the players to find homes than usual, but ultimately the players did and there wasn’t too much made about the deals the players signed. In the 2013-2014 offseason, though, we got our first taste of the downside of the QOS, when Stephen Drew and Kendrys Morales both rejected qualifying offers and ended up not signing until May 21 and June 8, respectively. Both players had the kinds of careers to that point and seasons in 2013 that would have warranted a multi-year deal, but both were still in limbo when the season started. It’s worth noting that neither player received the qualifying offer from the team that drafted him and that Drew ended up returning to the Red Sox, who aren’t exactly a small market team, on a one-year deal. So what was going on?
The industry has seemingly come to grips with the notion that aging curves don’t work the way they used to, when (at least some) older players were likely aided in recovering from injuries by substances that are now off limits, and we’re unlikely to see many of the ridiculous ten-year contracts that take players into their 40s like we have seen most recently with Robinson Cano and Albert Pujols. Even Giancarlo Stanton’s mega-mega-deal only takes him to age 37 (with a team option for his age-38 year) and his contract has an opt-out provision after his age-30 season, another increasingly common strategy employed by teams to avoid paying for players’ decline years. The ridiculous contracts of the past are going to young players like Stanton or Trout, to keep them away from free agency, or to those who reach free agency while still young, like Justin Heyward this year (who has not one, but two, opt outs) and presumably Bryce Harper in a few years.
As youth has become more important to front offices and teams have become more loathe to commit big dollars to older players, draft picks have become more important because, well, that’s how you get young players. Even the so-called super-rich, free-spending teams like the Yankees and Dodgers are holding their draft picks close these days, which makes perfect of sense given not only the fact that draft picks have a quantifiable value but also because of the bonus pool money associated with draft slots. All of this has created a perfect storm for players who don’t reach free agency until they’re older or are looking for a further contract but can still get tagged with a qualifying offer.
While the elite players, the Greinkes and Heywards of the world, are going to get signed, no matter what sort of (reasonable) draft pick compensation is attached to them, it’s the type of market the Ian Desmonds of the world are going to suffer from under this system. Thanks to a rough start, Desmond had a down year in 2015 and, despite the fact that he’s a rare beast, a dinger-mashing shortstop who put up over 10 WAR over the prior three seasons while playing solid defense, he’s only 30 and he’s signed to laughable $8 million one-year deal to play left field. Plus, if Desmond has a bounceback year and Texas is contending (or at least close enough not to throw in the towel and trade him), he’ll be looking at another qualifying offer next year and be right back where he was at the beginning of this offseason but a year older.
While Desmond certainly was the biggest loser thanks to the QOS this year, he was not alone. The Dodgers hit Howie Kendrick with the offer, and because he didn’t take the $15.8 million on the table, now he’s back with Los Angeles on a two-year deal at $10 million per year for his age 32 and 33 seasons. We’re talking about a second baseman whose OPS+ has, since his rookie year in 2006, only dipped below 100 once (when it was 99) and was at 118 in 2013 and 116 in 2014. As with Desmond, last year was a down year for Kendrick, but the season before he put up 5.3 WAR. He’s consistently been one of the better second basemen in the game and yet he’s signed at a bargain deal by the Dodgers precisely because they put the qualifying offer on him in the first place. Dexter Fowler’s market value also obviously clearly took a big hit thanks to the Cubs’ on a one-year deal with $13.5 million guaranteed (and a mutual option that is almost guaranteed not to see the light of day).
But this wasn’t just another year where some players had their market screwed up by the QOS, it was also the first year that players actually accepted the qualifying offer. Colby Rasmus is back with the Astros for another year, but now as their highest paid player. Brett Anderson and Matt Wieters are back with the Dodgers and Orioles, respectively, although Anderson is now out for 3-5 months after undergoing back surgery. If the current system stays the way it does and teams keep extending qualifying offers they way they are now, we can expect to see more of this, but we’ll be discussing that more when we look at how to fix the QOS and whether it in fact needs fixing.
All in all, the QOS clearly has some issues. The whole point of the way that baseball salaries are structured under the current system is that players pay their dues to the union and are underpaid until they reach free agency and are then ostensibly overpaid to make up for the time they put in or else they negotiate deals to buy out their remaining service time. While the QOS is an attempt to level the playing field for the teams that can’t afford to retain their players, there are clearly unintended consequences to the system. Players are waiting months to find a team. Players are getting paid way less than they would be otherwise. Big market teams are using the QOS to undercut the market value of their free agents and end up with them back in the fold on cheap deals.
What should the MLB do with the QOS when the current CBA expires this coming December? What are the alternatives and would they create more problems than they fix? Are the issues significant enough that they even merit fixing or maybe the market just needs time to correct itself? We’ll be back soon to take a look at some of the alternatives and their potential ramifications on the state of the qualifying offer.