A Suggestion to Improve the Qualifying Offer System

Pitchers and catchers report to spring training this week, but there are still some pretty good unemployed players. And the most prominent of the remaining job-seekers — Ubaldo Jimenez, Ervin Santana, Stephen Drew, Kendrys Morales, and Nelson Cruz — all remain on the market in part due to the fact that they received a qualifying offer from their previous organization, attaching draft pick compensation in the process. All five will eventually sign, and like Kyle Lohse a year ago, most of them will probably end up with multi-year contracts for more than the $14 million in guaranteed money that they turned down in November.

However, several players and the MLBPA have been vocally unhappy with the way that the tax has encumbered some of the non-star players who have received qualifying offers, and even if we accept that the rule is designed to deflate player salaries and not actually compensate teams for losing players of value — if the system was just about compensating for a loss, it wouldn’t need to tax the signing team in the process — the drawn out process of keeping quality major leaguers on the market until February or March isn’t good for anyone. It is almost certain that the player’s association is going to ask for the qualifying offer system to be renegotiated in the next CBA, while MLB is likely to want to continue to keep some kind of compensation tax in place to help deflate free agent prices.

So, in thinking about potential alternatives to the qualifying offer system, I wonder if perhaps a very small tweak to the rules could actually produce a large change in how the system operates, and resolve perhaps the primary sticking point for the players. That change? Remove the expiration date from the qualifying offer itself.

Right now, players are given seven days to gauge their value on the open market before deciding whether to accept or decline the qualifying offer. In reality, the first seven days of free agency tell a player almost nothing about their own market, and for many of the players who have gotten caught in the qualifying offer net, their actual market didn’t develop until after the winter meetings, when the big fish get out of the way and let teams shift their focus to secondary players. Players can’t really shop themselves around during that seven day window, because in nearly every case, teams are not prepared to extend contract offers to free agents in the first week of November.

So what if we just got rid of that seven day window, and made the qualifying offer a standing contract that was available to the player for the entire off-season? If a team wants draft pick compensation for losing a free agent, then they would have to essentially guarantee a one year, high salary safety net to a player, giving them the ability to seek a longer deal in free agency while always having the ability to take a “pillow contract” at any point during the off-season.

For the elite players, the ones where the qualifying offer is a no-brainer, this would essentially have no effect. There is no point in the winter in which the Yankees wouldn’t have gladly taken Robinson Cano back on a one year, $14 million contract. This rule change would have no effect on the top tier of free agents.

But it would likely act as a significant deterrent to teams making qualifying offers to players that they hope turn the offer down, rewarding them with an extra pick and no commitment to the player beyond that first seven days. Would the Mariners have made Kendrys Morales a qualifying offer if they had to essentially hold back $14 million and their DH spot until he made his decision, knowing that he could choose to rejoin the organization at any point during the winter? Applying an actual cost to the offer from a team’s perspective would help ensure that the players who received a qualifying offer were actually players that the teams didn’t want to lose. Which should be a requirement for a team receiving compensation, I would think.

The direct result would probably be that fewer of these bubble players would receive a qualifying offer. Forcing a team to put part of their off-season planning on hold while the player shops himself around would force teams to only make the offer to players that they are either sure will sign a larger deal with another team or that they would love to have back for that one year at the qualifying offer price. But the league isn’t likely to agree to a rules change that simply reduces the number of qualifying offers that are made, so the player’s association would have to make a concession to try and keep the rule balanced between team and player interests. The nice thing about this rule change is that it would naturally setup a second rule change, fixing another problem with the system: players traded mid-season could be eligible to receive the qualifying offer again.

Right now, getting traded during the year is a get-out-of-jail-free card for players, and getting moved at the trade deadline can be a huge financial boon to the player. Players who get traded to contenders at the deadline immediately become more attractive as free agents, and this creates two tiers of free agents not based on their own abilities or market values, but based primarily on a decision made by a third party that has little or nothing to do with what that player should make as a free agent. If the worthiness of a team receiving compensation was based not upon how long they’ve employed that player, but upon their willingness to extend a standing qualifying offer, then traded players could also be included in the qualifying offer again.

So while players like Nelson Cruz and Kendrys Morales might get removed from the pool of players who receive a qualifying offer, players like Zack Greinke, Ricky Nolasco, and Matt Garza could be added back in. Essentially, these moves would take qualifying offers away from marginal players but restore them to better talents who happened to be traded mid-season, which is a more logical place for those qualifying offers to land. The number of qualifying offers probably wouldn’t change that dramatically, but the quality of the players receiving the offer would go up substantially.

Restoring the qualifying offer to traded players would trickle down in to the value teams receive when they trade players at the deadline; if a buying team knows they can attach a qualifying offer to a high quality player they acquire in July, they are more likely to give up better prospects to obtain that player, leading to a better return for the seller. And if we’re really looking to compensate teams for losing players that they can’t afford to retain in free agency, increasing the trade value of players traded at the deadline is likely a better way to do it than giving them a draft pick after letting the player walk for nothing.

By making these two small tweaks to the system, we would likely see a near elimination of the qualifying offer being made to marginal free agents who may not realize that they are marginal free agents until the offer is no longer on the table, while simultaneously restoring the offer to higher value free agents who happen to have enough value to be moved at the trade deadline. The system likely wouldn’t move the total number of players receiving the offer by a large degree, but would ensure that teams only get compensated for players that they actually wanted to retain.

Any system is going to have its flaws, and the current system is certainly better than the ridiculous Type A/Type B distinctions of the past. But with a few tweaks, the qualifying offer setup could work even better than it does now, and eliminate scenarios where decent enough players are unemployed in February and March because they misread their own market.

Addendum: As pointed out in the comments, an additional improvement could be to make the standing offer revokable by the team, so that a team could choose to move on and sign another player to replace the QO player if they felt it was necessary. By revoking the QO, the player would no longer have compensation attached, and would be free to sign with any other team as a normal free agent. You would need to require teams to give some sort of notice to the player, letting him know he had ~48 hours to accept before the QO was revoked, but this would be an interesting additional option to allow players and teams to fully flesh out the market without being held hostage by the qualifying offer.