The Qualifying Offer and You

Hello there, friends. If you are a fan of the San Francisco Giants, congratulations on your recent world championship. If you are a fan of the Detroit Tigers, the opposite of that. If you are a fan of any other team, then for at least the last week or so you’ve probably been looking forward to the start of the offseason. The offseason is when baseball teams are most able to change themselves, and a changed baseball team is a better baseball team. Or at least that’s the hope, if only sometimes the reality.

The offseason means trades, but the offseason also means rumors and the offseason means free agency. Thanks to the new CBA that before long we’ll be able to stop referring to as the “new CBA”, free agency is going to look a little bit different from how it used to. I’m referring specifically to free-agent compensation, and at the core here is the concept of the “qualifying offer”. That’s a term you’re going to see thrown around — that’s a term you’ve already seen thrown around — and we should discuss it. It’s not that complicated, so if you’re unclear about qualifying offers and if you have a few minutes, lend me those few minutes.

Remember those Elias free-agent rankings? Remember the A-, B-, and C-grade Elias free-agent rankings that were based on stuff like, I don’t know, game-winning RBI and body mass index? Those are gone. Which is good, because those were impossibly terrible, and which is bad, because it was fun to talk about how they were impossibly terrible. The Elias free-agent rankings still existed at a time that PITCHf/x existed. It was like for part of the year, Major League Baseball took a helicopter to the grocery store, and for another part of the year, it took a horse. The Elias-based compensation system was hopelessly broken and now it’s been replaced by a new system.

In the past, in order for there to be free-agent compensation, a player would’ve had to (A) be ranked highly by Elias, (B) be offered arbitration, and (C) sign with a new team. Now, it’s simpler. If a team wants compensation for a lost free agent, it must extend to that free agent a qualifying offer. If the player subsequently declines the offer and/or signs with a new team, compensation will be received. There are details.

The qualifying offer is a one-year contract worth the average of the top 125 salaries. This year, that average is $13.3 million. A qualifying offer may only be extended to a potential free agent who spent the entire previous season with the same team. So, for example, Josh Hamilton is eligible, but Zack Greinke is not, having been dealt to Anaheim in July. The qualifying offer must be extended within five days of the conclusion of the World Series, which means midnight this Friday. The player then has seven days to make a decision regarding the offer. The former window is referred to in the CBA as the Quiet Period. The latter window is referred to in the CBA as the Acceptance Period. It is absolutely vital that these windows have names.

If a player accepts the qualifying offer, that’s it, he’s signed. If a player doesn’t receive a qualifying offer, he’s free to sign anywhere and there’s no compensation to talk about. If a player declines the qualifying offer and signs elsewhere, or if a player signs elsewhere within the Acceptance Period, then that’s where compensation becomes a thing.

I should note that there’s no compensation if a player is extended a qualifying offer, and then he subsequently signs elsewhere on a minor-league contract. For this to happen would require that both the player and the original team have just a completely miserable, inaccurate idea of the market. This is in the CBA. Minutes were spent making sure this made it into the CBA.

Compensation for the original team is one draft pick, between the first and second rounds. Gone are the days of a team losing a free agent and adding the 16th or 17th pick. In the event that there are multiple compensation picks between the first and second rounds, those picks will be made in reverse order of winning percentage in the most recent season. So, if the Rangers get compensation for losing Josh Hamilton, and the Cardinals get compensation for losing Kyle Lohse, the Cardinals’ compensation pick will come before the Rangers’ compensation pick, because the Cardinals won five fewer games in 2012.

And the signing team also loses a pick. It loses its highest available pick, outside of the first ten picks, as those are protected. The pick doesn’t get transferred to the original team. Instead, the pick just vanishes into nothingness. It ceases to exist, nobody talks about it, and the draft gets a little shorter. This is still enough of a penalty to serve as a deterrent. For example, this report suggests that teams will be a lot more interested in Torii Hunter if the Angels don’t extend a qualifying offer.

So, yeah, it’s simple. With the best free agents, extending a qualifying offer is a no-brainer, as they’re certain to do better in the market. With lower-level free agents, it’s more of a gamble, as teams will have to try to predict the market before it develops. As I can tell, this is a list of players who either will be extended a qualifying offer in the next few days, or who might be extended a qualifying offer in the next few days. Some of these decisions are tougher than others.

As noted, guys like Zack Greinke and Anibal Sanchez are ineligible, as they were included in mid-season trades. So the Angels will either re-sign Greinke or watch him leave for nothing. James Loney is also ineligible, because he was included in a mid-season trade, and is bad. Bad players are not literally ineligible, but they are effectively ineligible.

Hopefully that clears just about everything up for you. And if you’re curious about the CBA, here is the full thing, ready for your perusal. The compensation section begins on page 88, but why skip ahead? There’s no more baseball for months. Now’s the time for reading.



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Jeff made Lookout Landing a thing, but he does not still write there about the Mariners. He does write here, sometimes about the Mariners, but usually not.


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Fred
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Fred
3 years 10 months ago

One too many jokes for my taste.

Garrett
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Garrett
3 years 10 months ago

Which one?

bookbook
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bookbook
3 years 10 months ago

One too few for mine. Which of us is right. Cater to me, fangraphs!

momotigers
Guest
momotigers
3 years 10 months ago

Seconded. More jokes, por favor.

If you can’t wade through a few jokes in a baseball article, you’re clearly wound a bit too tight.

Scott
Guest
Scott
3 years 10 months ago

James Loney jokes are the best (and easiest) jokes!

Guest
Guest
Guest
3 years 10 months ago

Yeah, he spent the whole first couple paragraphs being amused with how clever he was, i.e. doing a bad Cistulli impression. The whole “look at me writing about writing” thing, or “quirky conversation with the reader” thing, is getting old fast.

Sullivan is much better when he gets to the point, especially when breaking down in-game strategy or showing us a statistical quirk.

ThirteenOfTwo
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ThirteenOfTwo
3 years 10 months ago

I find it hard to believe that a writer like Jeff would do Cistulli impressions in his writing, no offense intended to Mr. Cistulli.

PalousePirate
Guest
PalousePirate
3 years 10 months ago

You obviously are not familiar with his work. He has been writing like this for years at Lookout Landing. It is one of the reasons that he has many adoring fans. If you don’t like his writing, then don’t read it.

jim
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jim
3 years 10 months ago

good thing you made sure to comment that, i’m sure jeff really cares what you think

Fred
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Fred
3 years 10 months ago

Apparently I am in the minority, but I think he would appreciate the feedback.

joser
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joser
3 years 10 months ago

Fred, you definitely should ask for your money back.

Ace
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Ace
3 years 10 months ago

Jeff,
does Angel Pagan not make this list? Ie, he’s probably not worth 4/50 in the FA market, but 1/13.3 doesn’t seem like a crazy risk (1 year deal and all).

Bobby Ayala
Member
Member
3 years 10 months ago

Pagan doesn’t make the list because no one in their right mind would pay him $13.3 for 1 year.

kev
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kev
3 years 10 months ago

wait, someone in their right mind would give rafael soriano 13.3 over 1?

Spencer
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Spencer
3 years 10 months ago

As a Giants fan it would make a fair amount of sense if the market for Pagan is really 4/40M or somewhere thereabouts.

The Giants could get Pagan for 1y/13.3M with an eye on bringing Gary Brown up the next year to man center.

momotigers
Guest
momotigers
3 years 10 months ago

But someone might offer him 1/13.3 if they think he’s more likely to search for some long term security in his best chance for a big contract of his career.

It’s a gamble, but the Giants would, at best, get an extra, early draft pick and, at worst, one year of Pagan – overpriced by 4M

theeiffeltower
Member
theeiffeltower
3 years 10 months ago

Looks like a simple oversight to me–dude’s out-WARed Hunter and Upton two of the last three years, and is five years younger than Hunter.

Bobby Ayala
Member
Member
3 years 10 months ago

No one’s giving Hunter $13.3 for 1 year either.

Bobby Ayala
Member
Member
3 years 10 months ago

Grandma? Is that you?

Woodman
Member
3 years 10 months ago

The Elias free-agent rankings still existed at a time that PITCHf/x existed. It was like for part of the year, Major League Baseball took a helicopter to the grocery store, and for another part of the year, it took a horse.

More like taking a helicopter to the grocery store, then using a horse to travel to another country for some important business meeting.

I mean: the Elias rankings are for player evaluation in terms of value, while PITCHf/x is more useful for scouting and the like.

GrassRockFish
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GrassRockFish
3 years 10 months ago

It’s interesting that the value of the qualifying offer is a fixed number rather than a minimum number. There could be cases where a team wants to ensure they get compensation, but also might want to tempt a player into signing for one year at an amount they’d be comfortable with (e.g. the Rangers could offer Hamilton 1/$25 in case he wanted to go into free agency on a stronger note next year). I guess there’s no reason a team wouldn’t just make that offer prior to the “Quiet Period”, I’d just assumed the qualifying offer was a minimum rather than fixed contract.

TKDC
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TKDC
3 years 10 months ago

It is. The rangers could offer Hamilton another 1 year offer for 25 million.

Will H.
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Will H.
3 years 10 months ago

As a Nats fan, I hope they give ALR a qualifying bid, lose him to free agency, move Morse (with Moore as another option) to first, get the extra pick, move Lombodarzi and his better fielding to left, and add someone who can hit lefties like Cody Ross to platoon with him. If ALR doesn’t get a better offer they have to pay him 13.3 for one year, have Morse playing bad defense in left, and have Lombo and Moore off the bench. If the former happens, they should get Ross for not much, not lose too much at first because it isn’t hard to defend and get better defense at LF while Ross cancels out Lombo’s inability to hit lefties. But I imagine the newly competitive Nats think they know too much and forget that ALR got only 8 million per for two years because he is very average and give him too much for too long, leaving a poor defensive LFer for this year so they can hope a mid-30s 1B repeats a career year for a number of years. Hope I’m wrong, but I doubt it, seeing as how the bandwagon has only seen ALR as something more than he has been for most of his career.

chuckb
Guest
chuckb
3 years 10 months ago

Cody Ross isn’t going to accept an offer to be a platoon player and Adam LaRoche is MUCH better than Michael Morse.

The only reason to choose Morse over LaRoche is to save $ to spend it elsewhere.

Pig.Pen
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Pig.Pen
3 years 10 months ago

Adam LaRoche WAS much better than Morse this year, but ALR is also older than Morse and missed almost all of last year to an injury, not that Morse is the picture of health, but it’s a risk. This whole Adam LaRoche thing seems eerily similar to one Aubrey Huff signing two years ago, how did that work out for the Giants? There’s lots of reasons to pick Morse over LaRoche, the biggest one being age, but the others could include popularity with the fanbase, the ability to play multiple positions, raw power and OPS.

As for Ross, I wouldn’t mind Ross playing LF everyday. Lombo is a utility infielder, a good utility infielder mind you, but a utility infielder nonetheless. Ross could keep left field warm for Goodwin, but a league average left fielder would be an upgrade for the Duane Kuiper like power that Steve Lombardozzi displayed this year.

AustinRHL
Member
AustinRHL
3 years 10 months ago

Regarding the minor-league contract thing: I don’t know how to look for a record of it happening in the past, but isn’t it completely conceivable that the clause could become relevant if a player (probably a pitcher) badly injured himself over the offseason?

Derek
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Derek
3 years 10 months ago

Also if a player has a positive PED test revealed during the offseason…

Ivan Grushenko
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Ivan Grushenko
3 years 10 months ago

Shannon Stewart was offered arbitration by the A’s after the 2007 season, but he signed a minor league deal with someone, I think Toronto. A’s did not receive a comp pick. Of course the A’s didn’t have to offer $13.3M to keep him.

P
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P
3 years 10 months ago

Calling the winner of the World Series WORLD CHAMPIONS is gratuitous and comes off as arrogant.

I stopped reading after that.

Scott
Guest
Scott
3 years 10 months ago

This seems like an overreaction. You’ve avoided a well-written and informative article.

Guest
Guest
Guest
3 years 10 months ago

God, another one of those nerds who thinks the postseason is a crapshoot and doesn’t determine a winner of anything.

Did it occur to you that most major league rosters are composed of players from all over the world, thus making the world series truly a world series?

Or if you’re being nationalistic about it, perhaps you can tell us all how eager you are to get behind the World Baseball Classic, and those 2-time champions of baseball, the Japan League team? (You know, Japan, which seems to produce one All-Star level player and 3 or 4 league-average players every few years, with the rest not even being suitable for AAA.)

The Giants are the World Champions of baseball for 2012. Deal with it.

Eminor3rd
Member
Eminor3rd
3 years 10 months ago

Lol! How is what he typed related to what you typed at all?

Richard
Guest
3 years 10 months ago

Can you really not see how it is?

Chris
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Chris
3 years 10 months ago

Yuck.

SCardinal
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SCardinal
3 years 10 months ago

Speaking of coming off as arrogant…

Eminor3rd
Member
Eminor3rd
3 years 10 months ago

lol, what?

suicide squeeze
Member
Member
suicide squeeze
3 years 10 months ago

I guess this is the new trolling: Taking a commonly used phrase, and getting angry at the author as if he invented it himself.

ZenMadman
Guest
3 years 10 months ago

The Quiet Period and the Acceptance Period sound like things that happen after someone dies. Or maybe they happen to a teenage girl? (after someone dies?)

UCCF
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UCCF
3 years 10 months ago

I can see that – the Quiet Period is the one where she gets it and doesn’t understand what’s happening. The Acceptance Period is what happens in Month 2, when she understands that this is her life now.

Anonymous
Guest
Anonymous
3 years 10 months ago

“If a player declines the qualifying offer and signs elsewhere, or if a player signs elsewhere within the Acceptance Period, then that’s where compensation becomes a thing.”

If I’m not mistaken, the original team will receive compensation if the player signs any time before the June draft. And if the player for some reason is twiddling his thumbs in free agency until after the draft, any potential draft pick compensation/loss is erased.

John Elway
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John Elway
3 years 10 months ago

When will the helicopters be back in service? I’m tired of taking everyone to the grocery store!!!!!!

keegs
Guest
keegs
3 years 10 months ago

Mr Jeffrey P Sullivan please dont EVER stop doing what you’re doing w/r/t to writing words about baseball just because a couple of assholes on fangraphs dont like your style. you’re the tops.

Sabean's Folly
Guest
Sabean's Folly
3 years 10 months ago

I don’t appreciate ANY humor attempt in ANY deadly serious discussion of baseball. I come here for news and information, not to have both of my smile muscles excercised.

Now that I’ve learned NOTHING about qualifying offers, I suppose I’ll have to go to wikipedia for my baseball learning.

Patrick
Guest
Patrick
3 years 10 months ago

if you’ve learned nothing about qualifying offers, you didn’t read the article.

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