In last week’s article on the qualifying offer system (QOS), we took a look at how the current QOS came to be, what its stated goals are and some of its consequences. The current Collective Bargaining Agreement expires in December and the QOS is certainly one of the issues that the owners’ and players’ representatives will be debating. Indeed, the MLBPA is already putting it out there that the QOS is in its crosshairs. The purpose of this article is going to be to look at some of the options and alternatives.
Eliminate the QOS Entirely
As previously discussed, it looks more and more like the QOS isn’t doing what it’s supposed to do, that is, reward teams for losing talent that they drafted and developed and help out the small and mid-market teams that can’t afford to pay their premium free agents to stick around. Rather, it seems to be suppressing the value of mid-level free agent contracts, which is either a bug or a feature of the system (if you’re an owner). In an article at Fangraphs published after the first in the series, Craig Edwards goes into more detail about the teams which have extended qualifying offers, the service time of the players and the numbers of the organizations that players have been with prior to receiving an offer. It doesn’t paint a pretty picture and, if you weren’t cynical about the QOS doing what it was supposedly supposed to do, take a look at those numbers.
Simply getting rid of the QOS all together seems like it would probably be the best option since there’s not really a baby to throw out with the bathwater here. Unfortunately, that probably isn’t going to happen. Some sort of compensation system has been a part of baseball for a while and the owners aren’t likely to want to get rid of it, as the idea, in theory, of getting draft picks when you lose major league talent to free agency is a sensible one and, in practice, the current system is deflating the value of certain players which allows teams to retain their services for less than market value which ultimately means more money in the owners’ pockets. While it’s likely that we’ll see some sort of change to the QOS this winter, it’s quite unlikely that we will see the compensation system for departing free agents go the way of the dinosaurs.
No Changes to the QOS
This was the first year that we saw a single player accept a qualifying offer and there were three accepted. The players saw Kendrys Morales and Stephen Drew sit out the first part of the season a couple of years ago and they saw Ian Desmond, Howie Kendrick and Dexter Fowler end up with unfavorable deals this year. Next year, if teams hand out qualifying offers as freely as they did at the beginning of the current offseason, it’s likely that we’ll be seeing more non-elite players accepting qualifying offers. Theoretically, as more of those players accept qualifying offers, teams will respond by limiting the number of offers they extend and will instead only extend the offers to the truly elite players and the market will correct itself.
Part of the problem here is psychological. The psychological aspect is that the very notion of a player choosing to accept a qualifying offer is, in essence, asking the players to “bet against themselves.” The players have been drafted, proven themselves enough in the minors to warrant being called up to the majors, then well enough in the majors to stick around while being payed less than free market prices for their services to arrive at the point in their careers where they can finally earn their worth, only to have to accept a one year contract at a fixed amount with no long term security in the event of an injury, is problematic. Players and their agents are going to believe that a team will be willing to sign them to a multi-year deal. After all, if Ian Kennedy could sign a five-year, $70 million contract, why couldn’t Desmond, Kendrick or Fowler come up with something better than they did? Even if we might see players “adjust” to the current QOS, in terms of more players accepting offers so that they can avoid having to accept one-year deals at below market rates, it would remain patently unfair to those players that they can’t be paid what they deserve and it’s unlikely that we aren’t going to see some changes to the QOS this coming offseason.
Make Qualifying Offers a “One Time Thing”
With this change, qualifying offers would only be applicable one time, to players when they hit free agency after their six years of service time is up. Whether or not it would apply to a player who signed an extension that bought out his remaining service time is up for debate, but however it is structured, this is a minor tweak to the current QOS that at least prevents players from having to deal with this over and over again.
While Kendrick is “safe” for a couple of years, both Desmond and Fowler could be looking at another qualifying offer at the end of the 2016 season if the Rangers and Cubs are in the hunt for the playoffs come the trade deadline. Of course, this means that if Fowler maintains anything near his current level of production and isn’t traded away for some other missing piece midseason, he’s as close as you can come to a lock to getting another qualifying offer next year. As it is, the Dodgers, not exactly a poor, small market team, got a draft pick this year for Greinke, even though the Dodgers were his fourth team and he’d been in the majors since 2004. This wouldn’t fix any of the overarching problems in the QOS, but it seems like a logical, minor change that should be implemented if the current system remains more or less as-is.
Remove Draft Pick Compensation for Short Contracts
Dave Cameron at Fangraphs recently proposed this idea that draft pick compensation would only be tied to players who signed multiple-year deals. The Greinkes and Heywards of the world are always and forever going to get signed and the draft pick compensation that’s attached to them is just paying to play when you want to sign free agents. Teams that had a need for the Fowlers and Desmonds but weren’t going to give up a draft pick to sign them could still sign them to a one-year deal. Were this type of system to be put in place, we would probably see the rise of high priced one-year deals for free agents tagged with qualifying offers. If this change were applied along with the “one time thing” fix, it would certainly solve the problems we’ve been discussing.
Remove the Seven-Day Acceptance Window
If the player didn’t have to decide in just seven days whether or not to accept a qualifying offer, that would certainly change the nature of how teams approached decisions about whether to extend offers. The seven days a player currently has to decide whether or not to accept an offer goes down while the offseason stove is still pretty cold. If there wasn’t a deadline for a player to accept, the player could always take the offer further down the road after they’ve seen how the market is playing out for their services.
Obviously, the big problem here is that this would screw up teams’ plans if they had other designs for the offseason in terms of replacing the departing player. The solution there would likely be some sort of system whereby the team could withdraw the offer with a certain amount of notice to the player and they could decide whether or not to accept. If the teams were overly concerned about the qualifying offer screwing up their offseason plans, they would be more careful and only extend them to players who were truly deserving of them, rather than attempt to game the system.
Raising the Amount of the Offer
As currently constructed, the QOS sets the value of the offer based on the average of the 125 top annual salaries in the MLB. If it were changed so that the number was arrived at through taking the average of the top 100, 75 or 50 salaries, the amount the teams would have to pay the players would go up something like $1 to $5 million. An increase in the amount owed the player would change the calculus on the teams’ part in extending offers and we would likely see teams being more conservative with handing them out, fearing that players would accept them. The higher the amount, the more likely that offers would only go to elite players who are going to get signed no matter what, rather than to the players who are currently being negatively affected by the current QOS.
Make the Offer a Multiple-Year Offer
This one is certainly fairly complicated in terms of details, but if the qualifying offer were a multiple-year contract as opposed to a single year, the players would receive the certainty that comes with signing a multiple-year contract and the team would have to weigh the consequences accordingly. While this would certainly go a long way to creating a more equitable system, depending on what the terms are, it’s complicated enough that it is pretty unlikely to see the light of day.
Make All First Round Picks Protected
As it stands now, only the ten first picks in the draft are protected, meaning that, if one of the teams with one of the first ten draft picks signs a free agent with a qualifying offer, they give up their second round pick rather than their first. While plenty of great players have come after the first round, the statistical drop off in the likelihood of a player making the majors after the first round is greatly diminished and the value associated with those picks therefore drops off quite a bit. If teams weren’t being penalized so extremely and giving up their most valuable draft pick, the calculus changes and the players likely wouldn’t be sitting out during spring training or signed to below-market deals.
Get Rid of the Lost Draft Pick
This idea would have the team that loses a player in free agency still gain a sandwich pick in between the first and second rounds of the draft. The team that signs a player who had a qualifying offer, however, wouldn’t have to give up a draft pick in order to do so. The team losing a free agent still gets compensated with a bonus pick, but now there isn’t a penalty for signing the player, who can choose whether he wants to play for another year at the current rate under the QOS or hit the market. The immediate appeal of this system is that it would let the regular market dictate the free agents’ contracts but still reward teams that lose free agents. While the notion that the current system penalizes the rich teams that sign away the poor teams’ free agents, we’ve seen that this is clearly not how it’s working.
One of the arguments against this system is that it would dramatically increase the number of free agents that get tagged with an offer as teams scramble to get draft picks for as many players as possible. In some ways, this might be a feature, rather than a bug, as it would actually reward teams for drafting and developing players who were worthy of multiple year contracts, especially if it were used in combination with some of the other fixes suggested, in particular the offer only being applied to a player once. Regardless, even if teams did get too aggressive and apply offers too freely to fringe candidates, players would probably start accepting those offers and screwing up budgets and the market would sort itself out as teams exercised more caution in handing them out.
With the exception of keeping the QOS as-is, each of these changes would result in a system that is more equitable to players in terms of getting paid fair market value now that they have put in dues. Some of the solutions are probably too complicated to implement. While extreme, severing the ties between the draft compensation and free agency completely would probably be the best solution, but also the least likely to happen. With the current money being made in baseball, it seems unlikely that either side is going to take a truly hardline stance on the QOS issue and allow it to be the reason that labor negotiations break down. It does seem likely that we’re going to see some changes, though, and whether it’s one of the changes described here, a combination of them or something else entirely, that’s a good thing.