Yesterday, Dexter Fowler re-signed with the Cubs, taking $13 million for one year, or $2.8 million less than he would have made had he accepted the qualifying offer back at the beginning of free agency. Along with Yovani Gallardo and Howie Kendrick, Fowler became the third QO-offered player to accept a deal that was worse than the one they passed up, and Ian Desmond seems likely to join them in that group when he signs as well. These four players were crushed by the draft pick compensation that the QO attaches, as teams were reluctant to give them long-term deals based on perceived risks with their skillsets, but also didn’t want to surrender a valuable draft pick for a short-term asset.
The qualifying offer has worked for MLB teams, driving down free agent prices by serving as a tax on salaries for a select group of players, but because it’s so regressive in nature — and is inequitably applied — it is highly unpopular, and will almost certainly be revised in some way in the next CBA. There have been any number of suggestions for how to amend the system; I suggested removing the seven-day acceptance window a few years ago, and Nathaniel Grow pointed out that the system could work better if it moved to a multi-year offer, instead of a one-year tender that players are loathe to accept before testing the market. There’s also a pretty rational argument that the system should just go away entirely.
But those are big changes. Big changes are difficult, and often have unintended consequences, so more frequently, people prefer to make tweaks rather than overhauls. So if we look at the current qualifying offer system, agree that it needs adjusting, but limit the potential solutions to things that would be easier to agree upon and wouldn’t be a dramatic shift from what is already in existence, is there a way to make it so that players like Fowler, Kendrick, Gallardo, and Desmond don’t get stuck in free-agent limbo after they learn that the market isn’t going to give them the long-term deal they were seeking?
I think there is. As we saw with Fowler’s desire to obtain an opt-out in the deal he was negotiating with Baltimore, players who don’t get long-term deals after turning down a QO shift their priority to wanting to get back on the market as soon as possible. Unfortunately for players like Kendrick, Gallardo, Fowler, and Desmond, teams don’t want to surrender a pick in order to just have a player for one year; the cost of surrendering that selection, and the pool money that goes along with it, are too high for most teams to justify without being able to amortize it over multiple years of expected value.
So what if MLB just got rid of draft pick compensation for one year deals? Under this scenario, any player who turns down the QO can, at any time, sign a one year deal with any team, and the signing team does not surrender a draft pick in order to sign the player.
It is, in some ways, an expansion of my idea to extend the qualifying offer out beyond the seven day window, though that still locked the player into accepting a deal from just one team, and put teams in a position where their offseason plans could be held hostage by a player who could blow up their budget or their depth chart by taking a deal after they had already moved on to other alternatives. In this scenario, instead of having the qualifying offer remain in place for the entirety of the offseason, players who tested the market and found it less exciting they had hoped would still be able to pivot into a short-term deal and try for a big contract again next winter.
For players at the top of the market, this wouldn’t change anything. David Price wasn’t taking a one year deal, and when you’re paying $230 million, giving up a pick worth ~$10 million isn’t a big tax on the price. All the guys who were going to get multi-year offers would almost certainly still get multi-year offers under this scenario, as the long-term value would still be in place to justify surrendering the pick. The big change would potentially be seen in the middle tiers of the free agent market, which is where the draft pick tax represents a significant portion of the price teams have to pay.
If teams could keep their draft pick by offering one year deals, we’d very likely see a shift towards shorter-term, higher-salary offers, and probably a pivot away from the multi-year deal with an early opt-out that we saw this winter. The incentive would then be on teams to get players who aren’t looking for 4+ year deals to settle for one year instead of two or three year deals, and with the removal of the draft pick tax from the cost, teams should rationally be willing to move some of that saved value into the player’s salary. If you value the pick you’d have to give up on a multi-year deal at $10 or $15 million, then it makes sense to give the player $5 million more in salary to get him to take a one year deal.
Overall, this would probably create a system where there was a dramatic difference in the annual average value of a multi-year deal versus a one year offer, so players would have to choose whether they wanted to maximize their salary or take a significant discount to get some security. Most players would probably still choose the security of a multi-year deal, as there are non-monetary benefits for the player’s families and lifestyle. But when a player found that the market wasn’t what they were expecting, they would no longer be trapped, unable to pivot to a short-term deal because of the draft pick compensation that currently exists.
If neither side has the appetite to tear up the existing system and start over — or just eliminate the system entirely — then a more minor change like this could help alleviate the situations that cause the most grief. Rather than having quality players sitting around while spring training begins, this change could create an opportunity for players to accept that the market doesn’t want to give them a long-term contract, and still sign an equitable deal that reflects their value on for one year. I’d prefer a larger overhaul of the system myself, and would be in favor of scrapping draft pick compensation entirely, but if a more minor change is desired, then something like this could solve the biggest issue with the qualifying offer system at the moment.
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