The Future of the Qualifying Offer

Update: As pointed out to me on Twitter, the CBA explicitly prohibits (page 90, section c) teams and agents from agreeing to avoid the qualifying offer in the way I suggest below. So, this entire post is now academic. But still kind of interesting, perhaps. The points about the imbalanced incentives are still true, and I wouldn’t be at all surprised to see the MLBPA negotiate significant changes into the next agreement.

This winter marked the first off-season under the new terms set out by the Collective Bargaining Agreement, which included a complete overhaul of the free agent compensation system. Back in November, teams had to decide whether their free agents were worth a one year, $13.3 million contract offer in order to receive a draft pick if the player chose to sign elsewhere. Only nine players received the qualifying offer, and in David Ortiz‘s case, it was mostly academic, as he was working on a two year deal with the Red Sox and never even made it to free agency.

Interestingly, of the eight players who did receive a qualifying offer and elected for free agency, half of them remain unsigned. Adam LaRoche has a standing two year offer to return to the Nationals, but has had problems drumming up enough interest elsewhere to force Washington to give him the third year that he’s looking for. And then there’s Michael Bourn, Kyle Lohse, and Rafael Soriano, who each remain without a team and seemingly without any serious suitors. While we don’t actually know what conversations have taken place between teams and agents, speculation exists that the loss of a draft pick has been a significant deterrent to clubs pursuing these players.

That speculation gains some steam when we look at the prices for players who did not receive a qualifying offer, but were eligible to receive such an offer. Among those who didn’t receive an offer for 1/13:

Edwin Jackson: 4 years, $52 million
Angel Pagan: 4 years, $40 million
Mike Napoli: 3 years, $39 million
Torii Hunter: 2 years, $26 million

Three of the four signed deals for the exact same $13 million AAV that was established by the qualifying offer, but got that price on a multi-year deal rather than on a one year commitment. Pagan is the only one who fell short of an $13 million AAV, but given that he got four years at $10 million apiece, he’s obviously doing better than if he would have accepted 1/13. Toss in Cody Ross getting 3/26, and there are five free agents who weren’t offered, but then found a much better deal on the market.

There are basically two conclusions we can draw; either five different teams badly misread the market for their players, or the market for players not requiring compensation is different than the market for players who come with the loss of a draft pick attached. On the one hand, it’s easy to look at Jackson getting 4/52 and think the Nationals just screwed up, but on the other hand, we only have evidence that Jackson got 4/52 in an environment where he didn’t come with compensation attached. We simply don’t know what he would have gotten had he received a qualifying offer from Washington.

Under the old system, decent middle relievers who achieved “Type A” status via the Elias ratings were the ones that got caught in the net of unintentional consequences. The new system was designed in part to eliminate that problem, and replacing the tiered free agent classes with a higher qualifying offer was a good choice. However, it appears that the additional changes made to the draft and the rules surrounding how compensation is handled has created a new problem area, and one that may end up undermining the system entirely.

The main issue, as I see it, is the imbalance of incentives on the two sides of the compensation ledger. In tweaking the system, the new agreement simultaneously raised the penalty for signing a player — only the first 10 picks are now protected, and the slotted values means that a team cannot make up for the loss of a high pick by paying more for players drafted with later selections — while reducing the reward of letting a player walk by halving the number of selections a team received and eliminating the chances of getting a pick in the middle of the first round. In essence, the new system places a significant tax on free agents who receive the qualifying offer, but only passes on a fraction of that tax to the team being compensated.

It is now far more harmful to sign a free agent requiring compensation than it is beneficial to lose one. This is exactly the opposite of how the old system worked, where the allure of multiple draft picks often incentivized teams to let their free agents leave, as the reward for losing a Type A player was larger than the penalty for signing one. MLB was right to fix that imbalance, but they very well may have gone too far in the other direction. By having imbalanced incentives, the new system has created a middle ground where both the team and the player can theoretically achieve maximum value by avoiding the qualifying offer system entirely.

For instance, let’s say you’re a player headed to arbitration with five years of service time, and you’re set to become a free agent next winter. Just for fun, we’ll call you “Kendrys Morales“. In the next few weeks, you’re going to have to decide how much to ask for in arbitration, and come to some sort of an agreement with the Mariners on a salary for 2013. You’re in line for something like $5 to $6 million in salary, and then you hope to prove that you’re 100% healthy, have a monster season, and then cash in with a big paycheck next winter. However, you know that if you do have that monster season, there’s a decent chance the Mariners will make you a qualifying offer, and you might very well end up as next year’s Adam LaRoche or Kyle Lohse. In an ideal world, you’d be able to convince the Mariners to agree to not make the qualifying offer, so that your best case scenario would be hitting free agency unencumbered next winter.

From the team perspective, the value of adding a pick in the 25-35 range is real, but it’s not so large that they couldn’t be persuaded to give up their right to make a qualifying offer. Let’s just make up a number and say that the Mariners valued a compensation pick as a net asset of $5 million, and they thought that there’s a 50/50 chance that Morales will have a good enough season to earn the qualifying offer. Under those assumptions, the Mariners would be better off taking $3 million from Morales now rather than gambling on getting a future draft pick. A bird in the hand and all that.

If Morales went to the Mariners and said he’d take a $3 million discount in salary for 2013 — say, down to $2.5 million — in exchange for their agreeing to not make him a qualifying offer after the year ends, I’d imagine that the Mariners would at least consider the option. And it seems pretty likely that Morales would be better off as a non-compensation free agent next winter than he would be with an extra $3 million in his bank account for 2013, since the tax is imbalanced and works more as a deterrent to signing mid-level qualifying offer free agents.

I wouldn’t be at all surprised to see this become something of a trend for teams and agents negotiating short term contracts for arbitration eligible players. We’ve already seen these types of clauses attached under the old system, where teams agreed to not offer a player arbitration in order to sign a free agent, and that system promoted player movement, where this system actively dissuades it. You know that agents have taken note of the qualifying offer players, and they can’t be overly interested in putting their clients in that situation. Negotiating pre-arranged deals that waive the qualifying offer put their players in the best position to reap maximum rewards in free agency, and because of the imbalanced incentives, they can give up less to their current teams than they can command from their new teams in the future, with the deal still being a net positive value for everyone involved.

There are probably some teams that have enough cash to not be too interested in that kind of swap, and are more likely to use the qualifying offer system to ramp up their draft budgets. However, for a team with budgetary restrictions, turning potential future value into present day cash might be a very enticing scenario, especially since adding one pick at the end of the first round isn’t the kind of haul that they used to be able to get under the old system.

The qualifying offer system is a significant improvement over the old way of doing things, but I do wonder how long it will take for teams and agents to start exploiting the imbalance and generally just avoiding the new system altogether. The combination of all the changes seem to have moved the incentives from ditch to ditch, and now guys like Lohse and Soriano are the ones getting dinged. I can’t see this current system being maintained for too many more years without some changes. Either everyone is going to start negotiating their way out of the qualifying offer, or the player’s association will realize it is working as a de facto tax increase on player salaries and want to negotiate it away. Either way, I’d imagine the next CBA will bring another adjustment to the system, and perhaps another overhaul if everyone decides that the current system is more trouble than its worth.



Print This Post



Dave is the Managing Editor of FanGraphs.


Sort by:   newest | oldest | most voted
isavage30
Guest
isavage30
3 years 8 months ago

I think you could say the Nationals screwed up regardless, since had they made the qualifying offer, a.) most likely Jackson wouldn’t have taken it, and they would’ve got a comp draft pick or b.) if Jackson did take it, but the Nationals didn’t have a use for him, they could’ve easily traded him since his contract would’ve been very attractive to a lot of teams.

John C.
Guest
John C.
3 years 8 months ago

I believe that they couldn’t have traded him without his written consent until mid-June. FWIW

23553
Guest
23553
3 years 8 months ago

Yeah, they really didn’t want him.

Will
Guest
Will
3 years 8 months ago

I’m fairly sure that the Nats made a deal with Jackson when they signed him to his 1 year deal last year, to not make him a qualifying offer. He was offered 3 year deals with other teams in 2012, but Boras had him take a one year deal with the Nats, thereby delaying his long term contract a year. As part of the one year contract, Boras surely added a stipulation requiring the Nats not to make a qualifying offer to maximize Jackson’s value.

Besides that, they didn’t really screw up. They clearly valued Haren more than Jackson. Haren costs the exact same as Jackson’s QA would have cost, so there’s no financial difference. They’d have been stuck with 6 SPs for 5 spots (and only Zimmermann and Strasburg still have minor league options).

Trent
Guest
Trent
3 years 8 months ago

Great post. What makes a player eligible to receive a qualifying offer?

Sleight of Hand Pro
Guest
Sleight of Hand Pro
3 years 8 months ago

They’re a free agent after 6 years of service time, and the team chooses whether or not to offer them one.

Trent
Guest
Trent
3 years 8 months ago

So every player facing a free agent year is eligible?

Pirates Hurdles
Guest
Pirates Hurdles
3 years 8 months ago

Only players entering free agency that spent the entire season on one ballclub. Anyone traded in season (like in July) cannot be offered.

Tim
Guest
Tim
3 years 8 months ago

Why would Morales give up $3m now to avoid a potential QO when he could take his full arbitration salary now and just accept the QO if it comes? It’s only likely to seriously hurt the FA value of players whose value is close to 1/$13 anyway, and those players can just take the 1/$13 rather than giving up a bunch to avoid the possibility.

jtmorgan
Guest
jtmorgan
3 years 8 months ago

It’s all about locking up guaranteed money.

taprat
Guest
taprat
3 years 8 months ago

Regardless of the imbalanced incentives, I still don’t understand why those players didn’t receive qualifying offers. 1 year, $13.3mm seems like a fair deal in all cases, and a very good deal in some cases. I don’t understand what the teams were thinking.

bradsbeard
Guest
bradsbeard
3 years 8 months ago

Dave, do you think the Commissioner would be against a sign and trade in this circumstance? It seems like such a move wouldn’t be inconsistent with what I understand to be the goals of the FA compensation system (helping teams retain their FAs by discouraging teams from signing to FAs, compensating small market teams who can’t compete on a money level by giving them extra minor league talent, etc.).

Pirates Hurdles
Guest
Pirates Hurdles
3 years 8 months ago

Pretty sure MLB said any sign and trade would not be allowed. MLBTR had a story on this last week.

bradsbeard
Guest
bradsbeard
3 years 8 months ago

Didn’t see that story, would you happen to have a link? I should clarify that I was thinking of a sign and trade where the team that gives the QO could re-sign their FA and then trade him. Although, a scenario where one team who was not afraid to lose their pick signed a player and then traded him to a team that was would be interesting (although it would seem to cut against the at least one goal of the compensation system).

Will
Guest
3 years 8 months ago

The CBA gives both parties the right to redress if an action is perceived as solely designed to circumvent the spirit of the agreement. In this case, Selig would have to make a ruling, which, of course, would be subject to appeal. There are several other loopholes in the CBA that would fall in the same category. For example, the use of team options in contracts could help teams circumvent the luxury tax.

Pirates Hurdles
Guest
Pirates Hurdles
3 years 8 months ago

http://www.mlbtraderumors.com/2012/12/teams-could-seek-loopholes-for-compensation-free-agents.html

Seems like it was more Tim Dierkes conjecture not an actual ruling.

bradsbeard
Guest
bradsbeard
3 years 8 months ago

Thanks for posting that. It does seem like it would be less of an issue if the “collusion” is between the team with the departing FA and another team, and not between two other teams.

vivalajeter
Guest
vivalajeter
3 years 8 months ago

I’m not sure the QA team would want to do a sign-and-trade though. Take the Braves and Bourn as an example. What incentive do the Braves have to sign Bourn then trade him? They’re going to get a good draft pick when he leaves, and I doubt a team would give away more value than that. Sure, Bourn could get screwed with the new system – but why should the Braves care about that? By doing a sign and trade they would be receiving less compensation than they’d get if they just allow him to sign elsewhere.

bradsbeard
Guest
bradsbeard
3 years 8 months ago

I thought that too, but I think there are some scenarios where it might make sense. The Braves, in particular, since they are in serious contention might prefer to pick up a near MLB ready minor leaguer or a lesser veteran player who could fill a hole. There might be a team who is willing to give up that player in order to (1) sign Bourne and (2) retain their 2nd round pick and the associated bonus pool money.

The problem with this scenario though is why would the team trading with the Braves want to pay Bourne more money than his market will bear without the sign and trade AND give up a major league piece. However, for some teams, signing Bourne may be less about money than it is about the draft pick. They have money to allocate to the MLB team, but since spending on the draft is capped, they might value the draft pool money more highly than some of the money they can use to acquire Bourne.

Pedro
Guest
Pedro
3 years 8 months ago

What Olney was suggesting was a 3rd team which has already forfeited a draft pick to sign the player in question. For example, the Indians signing Bourn and trading him to the Mariners for a prospect. Prospect would be valued somewhere between the 3rd round pick the Indians just lost, and the 1st round pick the Mariners would have lost. Both teams win. Though, I guess the Braves get jipped?

Pirates Hurdles
Guest
Pirates Hurdles
3 years 8 months ago

The other side of the qualifying offer that is not really covered he is that Soriano and Lohse could have said yes to $13 million rather than risk free agency. Perhaps allowing (empowering) teams to retain a player at fair value for an additional year is an intended consequence of the new rules.

In reality Soriano’s agent should have easily seen the writing on the wall with GM evaluation of closers.

geefee
Guest
geefee
3 years 8 months ago

I think you’re probably right. Excepting elite free agents and those who sign with a team having a protected pick, the qualifying offer could function like MLB’s Franchise Tag.

Will
Guest
3 years 8 months ago

I wrote about this issue a couple of months ago (see below). Although a small number of free agents will be adversely impacted, the new CBA rules generally favor the players because many fewer will be given a qualified offer than be granted arbitration, and, a fraction of that number will have a high enough profile to make teams overlook losing a draft pick.

Big market teams also make out well because they are in the best position to make qualifying offers. If anyone balks at the new rules in 2016, it will probably be the smaller market teams, who lose draft pick protection, get fewer benefits from losing a FA, and find it too prohibitive to sign FAs.

As for player negotiating present value for qualifying offer denouncements, that might happen for a couple of players, but I don’t think it would be beneficial or applicable to most. It might happen here and there, but I doubt it would become systemic.

http://www.captainsblog.info/2012/11/10/free-agents-yankees-to-benefit-most-from-new-free-agency-rules/18221/

Also, one small correction: I think you meant the Cubs “screwed up” regarding Jackson’s contract.

Sleight of Hand Pro
Guest
Sleight of Hand Pro
3 years 8 months ago

no, he meant the nationals. the guy signed for $52M. whether the nationals thought he was worth 1/13 (they obviously didnt), its a mistake to not offer, since its clear other teams viewed him as worth 1/13. all they needed was for him to decline to get their pick. the fact that he got 4 years at that salary shows they misread this market pretty badly, or at least thats the implication.

Will
Guest
3 years 8 months ago

Right, after re-reading, the implication was the Nationals screwed up by not making the qualified offer. My prejudice against the wisdom of the Cubs offer got in the way. Thanks.

John C.
Guest
John C.
3 years 8 months ago

Although I was surprised that the Nationals did not extend an offer to EJax, it’s possible that their fear was not based on a misread of the market, i.e., whether another team would offer him 4/$52 million (or whatever). It was that EJax would accept the offer and they’d get stuck with him rather than someone else (Dan Haren, as it turns out) that they’d rather have in that slot for that salary.

Given the trouble that less-than-marquis (not Jason) players have had getting offers after declining the tender, it’s a not unreasonable fear. Yes, Jackson got 4/$52 mil from the Cubbies. But Lohse, Bourn, Soriano and LaRoche are not going to get equivalent money, quite possibly because of the draft pick penalty.

Fibi
Guest
Fibi
3 years 8 months ago

There are several comments speculating on why the Nationals didn’t make a qualifying offer, and whether or not this was a mistake. But, notwithstanding the fact that it would be against the rules, am I the only one wondering if this isn’t in fact the first case of a team and player making exactly the kind of handshake agreement that the author was forecasting?

Remember, EJax was a very late sign last year, signing a one year deal after seeking a multiyear deal to no avail. I don’t think you need to be a conspiracy theorist to consider the possibility that the 2012 contract came with a handshake agreement not to make a qualifying offer. Barring a dominant 2012 the Nationals would have plausibility. And the handshake could include the option to give a qualifying offer if and only if the Nationals were willing to go 4/60.

William
Member
William
3 years 8 months ago

The compensation system is designed primarily to help small market teams get some compensation. I think penalizing a team from signing a high prices free agent was just the residue of design, a way to give picks to the small market teams. I think the penalty just just be thrown out altogether. In the new system, no teams loose any picks, and the small market team gets a sandwich pick as is. Nobody gets digned and it works out for everyone

Deacon Drake
Guest
3 years 8 months ago

I don’t think it was a fact of the Nats making a mistake with Jackson, as they had several pitching assets that were not going to be part of the future (Jackson, Lannan, Maya, etc). The risk of devaluing him by signing, having him accept, and be relegated to the bullpen was not worth the value of a draft pick.

The Nats were in up to their necks in trades and Haren and an offer to Jackson may have endangered those talks.

Bill
Guest
Bill
3 years 8 months ago

Much ado about nothing. I am sure that Soriano, Bourne and the others have received interest, probably even a pretty good contract. I’m sure someone has offered 3/30 at least for Soriano, he just hasn’t taken it because he thinks he can get more. Bourne, I’m sure someone has offered 4/50+, but again, he wants more.

Sleight of Hand Pro
Guest
Sleight of Hand Pro
3 years 8 months ago

you really think soriano would turn down 3/30 at this point?

cs3
Member
cs3
3 years 8 months ago

Bill-
Thinking that Soriano would have turned down 3/30 is ludicrous.

geefee
Guest
geefee
3 years 8 months ago

3/30 is exactly the kind of offer Soriano (through his agent, I imagine) turned down the qualifying offer to get. No contender is desperate enough to gut their 2013 draft for the right to pay market value for Soriano rather than some other reliever…at least not yet. Somebody will sign him eventually, but he’s going to take a bath on the deal.

Bill
Guest
Bill
3 years 8 months ago

Gut their 2013 draft? How many picks in the 20-32 range pan out? 1/4 or less? Yes, you can find a trout I suppose, but it’s also a crapshoot.

San Fran and LA still lurk, along with NYY whom despite having Mo back for one more year I’m sure wouldn’t mind that deal for Soriano.

Toronto, you just traded for Dickey, Johnson, Reyes and you want Janssen to close?

Tigers still need a closer.

Others could include White sox (Reed?), Angels (all in?), Nationals (Clippard/Storen?), Brewers or Pirates (would be stupid for both, but they have a need) so yeah, I think he wants 4/50, at least 4/45.

carl
Guest
carl
3 years 8 months ago

It’s an interesting question. Say the chances of a 1st round pick out of the top 10 making it to the majors is 1/3 and those that make it provide, i dunno, $5M in value for the 6 years of team control (2 wins a year). They’ll make, say, $1.5M the first 3 years and, I dunno, $6M the arb years… so, they’ll cost $7.5M and provide $30M of value. Which is $22.5M of value (but only 1/3 of them make it, so it’s really $7.5M of value).

So, that analysis would mean that you should expect to lose something like $7.5M in value if you receive a qualifying offer. Presumably, of course, teams and agents have someone spend more than 5 minutes making up numbers to come up with an actual valuation… but it seems likely if you get a qualifying offer and aren’t SURE you are going to get your contract, you should just take it. I can understand why LaRoche wanted to cash in on what will likely be his best season

pft
Guest
pft
3 years 8 months ago

So teams are not all that interested in acquiring an extra pick by making a qualifying offer but fear losing an equivalent pick by signing a free agent who declined a qualifying offer?

If the value of a 25-35 slot pick is about 5 million, would not teams simply offer 5 million less than they otherwise would offer if said player did not have a qualifying offer?

So if Adam Laroche thinks he is worth 3/44 on the “free” market and a team agreed, a team would offer 3/39. Likewise, a Napoli who received an 3/39 offer would get only 3/34 if he had received a qualifying offer.

Obviously, players who get longer deals have fewer problems as the cost to recover the 5 million is less on an annual basis than for shorter term deals.

rubesandbabes
Guest
rubesandbabes
3 years 8 months ago

The owners have now posted a 1-0 result in the amateur draft, signing everyone they drafted (except Mark Appel), and with lesser $ amounts than previous years. It’s a huge win for the owners.

International signing restrictions, complicated penalties for excessive team payroll including loss of draft picks, free agents impacting a team’s amateur draft and draft budget, all very cost saving for the owners.

Until there’s a Yankee rebellion, the owners keeping the scheme together will benefit most teams, with the player needing to achieve arbitration eligibility / FA status before getting the $.

It would be interesting to see a team like say the Dodgers sacrificing draft picks, because once it starts, well, what’s the sense of hanging on to a 3rd round draft pick for a $300mil payroll team?

Hank
Guest
Hank
3 years 8 months ago

Minor nitpick Dave… 13.3mil is not the exact same as 13mil.

There is no reason to even slightly shade it, especially when you have Pagan at 10mil stuck in there (even though you mentioned he’s getting less). EXACT should mean something, especially for a SABR and numbers guy.

A lot of your articles do these minor tweaks… using words like “obviously” (as if there can be no debate). It is a way to artificially strengthen an argument when it is not really needed.

Pagan is “likely” better off; saying he is obviously better off means you can see very clearly to next year and know he won’t get a 3/26.7mil contract (had he accepted 13.3mil this year) in an environment you paint as highly inflationary. 9mil per is less than 2 wins, with the inflationary environment you continue to tell us about, you don’t think he gets paid for ~5WAR over 3 years next offseason if he hit the market? Perhaps, but I don’t think it is “obvious” and it is far from a certainty that he would get less than 3/27

David
Guest
David
3 years 8 months ago

He had a career year in 2012, what if he regresses? Gets injured? He’ll be a year older and can’t sell his age-31 season to teams again next year. The reason players sign long term contracts is to avoid these risks. The uncertainty you mention is precisely why he’s better off with guaranteed money now than hoping he repeats his 2012 performance and gets a better offer next year.

vivalajeter
Guest
vivalajeter
3 years 8 months ago

David, your post doesn’t really contradict what Hank is trying to say. Hank’s not saying he should have waited a year. In fact, he said that Pagap was likely better off with his current deal. But that doesn’t mean he was obviously (or definitely) better off.

You ask what happens if he regresses or gets injured. But what happens if he has another 4.5+ WAR season? 2010 was actually better than 2012 for him (based on fWAR), but he was dreadful in 2011. If he had another 2010/2012-caliber season, he’d be one more year removed his 2011, and he’d have 3 very good seasons out of 4. There’s certainly a chance he gets more than 3/26.7 next year after putting up another good season in 2013.

Patrick
Guest
Patrick
3 years 8 months ago

The changes in a sense really aren’t all that different. In the past prospective free agents had to be offered arbitration in order to qualify for compensation, and then the players had the opportunity to accept or decline. A lot of players didn’t get offered arbitration and became free agents without compensatory picks, allowing their previous team to be off the hook. Had a team like the Angels offered Hunter a qualifying offer and he would have accepted, the Angels would have been on the hook for that $13.3 million.

And that point is important to remember. Any of these players that are in limbo right now could have called their teams “bluff” and accepted the qualifying offer. It shouldn’t be a huge surprise that 3 of them are represented by Boras, as the new draft rules definitely could be construed as anti-Boras without any loopholes yet discovered.

The biggest part of the new draft rules that is often overlooked is the fact that the Astros second-round pick will no longer be somewhere in the 60s. At this point in time it can be no lower than the 43rd overall selection. The new draft rules were made to truly help the teams that finished with the worst records and are perceived to be in the worst overall position due to record, finances and market size.

I was actually surprised that 9 players were made a qualifying offer. I thought heading into the offseason that Josh Hamilton could have been the only one.

pft
Guest
pft
3 years 8 months ago

According to my calculations using B-ref, a 25-35 pick will yield an average WAR of 3.5 with a 10% chance a player drafted in this slot is a 10+ WAR player. If so, assuming 3.5 WAR is worth 17.5 million and has a surplus value of 50%, then that’s 8.75 million less bonus and development costs. So I guess 5 million is a good estimate. Just checking.

Once you get into the 40’s the value of the pick drops about 30% and stays constant at least through pick 75, which is all I had time to check. A top 5 pick is worth 4 times as much as a 25-35 pick,

ttnorm
Guest
ttnorm
3 years 8 months ago

I have never seen anything this optimistic on the WAR value of draft picks.

Hardball Times have done several pieces on this:

http://www.hardballtimes.com/main/blog_article/analyzing-the-mlb-draft-using-war/

http://www.hardballtimes.com/main/article/valuing-the-draft-part-one/

http://www.hardballtimes.com/main/article/valuing-the-draft-part-2/

In short, the Expected First 6 Year WAR = (10.9 + (-5.1 * pitcher) + (3.1 * college)) * selection ^ (-.52)

Thus the #1 pick has a 6 year expected WAR value of 10.9 (not adjusting for HS/College and Hitter/Pircher). The #30 pick pick has a 6 year expected WAR value of 1.9.

Based on Victor Wang’s formula, the average top 5 pick has 6 year expected WAR of 6.94 and the average 25-35 pick has a 1.86 value which is close to 4X so we pretty much agree on the regression rates.

ttnorm
Guest
ttnorm
3 years 8 months ago

Oops, sloppy work by me.

The formula above is from Sky Andrecheck over at Baseball Analysts.

http://baseballanalysts.com/archives/2009/06/the_draft_and_w.php

pft
Guest
pft
3 years 8 months ago

My numbers were career WAR and for most players the bulk is earned during the first 6 years with the exception of the average or better players, those with career WAR’s in excess of 10. I guess the impact players contribute more than I estimated.

So according to your formula you get 10.9 WAR for a #1 pick, while using career WAR I get 24 WAR. For 25-35 I got 3.5 and your 6 yr is 1.9. So seems using career overstates the value, doubles it. However, most teams are now smart enough to sign the stars to extensions that eat up free agent years
at below market rates, so 6 year is not perfect either.

So a 25-35 pick using 1.9 6 yr WAR only has a surplus value of about 5 million, less bonus and development costs. Call it 3 million.

I guess its the hope of hitting the lottery with a star, which is less than a 5% probability. Then you are looking at surplus values in excess of 20 million and up to 50 million for the superstars.

firmin
Guest
firmin
3 years 8 months ago

the people who screwed up this time around were the agents who thought that mid level talent was going to get signed with the draft picks attached. truth is if you are not a top talent you are better off staying where you are when offered the 13+m. no team is going to sign you for more and lose a pick.

RC
Guest
RC
3 years 8 months ago

I think the big thing here, is that the draft pick penalty is totally unneeded, and is too costly for anyone but a superstar.

The penalty made sense when there were no real penalties for going over the tax threshold, but now that we’ve got heavy draft pick penalties, there’s no real reason to double penalize (IE, you get hit for the player, and hit again if you have too many expensive players).

Keep the sandwich pick for the team losing the player. Get rid of the penalty for the team gaining one.

pft
Guest
pft
3 years 8 months ago

Agree with you on getting rid of the penalty, but it does its job by suppressing FA salaries, albeit only the middle class of FA.

wpDiscuz