Qualifying offers in baseball are essentially a short-term solution for a team’s roster as well as a detrimental deal for players seeking long-term contracts. A qualifying offer is a one-year contract offer worth the average of the top 125 salaries from the previous season. Players are eligible to receive a qualifying offer if they have never received one before AND they spent the entirety of the previous season with the same team. Any players traded during the season are thus not eligible to receive a qualifying offer.
A qualifying offer is beneficial to a team offering it because, if accepted, they retain the services of the player for another season. The salary may or may not be more than what the player could have received in free agency. If the player declines the offer, the offering team will receive draft pick compensation if the player is signed by another team (up until the next year’s amateur draft). Teams have five days after the World Series to make qualifying offers, while players who receive an offer then have 10 days to either accept or reject it.
What we have seen is an attempt to keep competitive balance amongst teams through free agency transactions and corresponding draft picks. The outcome has been one-sided if you compare the number of players that have accepted a qualifying offer to those that have not. Of the 80 qualifying offers made since its inception in 2012, only five players have accepted. This has resulted in teams signing the remaining players losing a draft pick and the offering teams receiving a draft pick… until last off-season.
Dallas Keuchel and Craig Kimbrel were the two biggest qualifying offer stories last off-season because they both declined and both were unsigned until after the Rule 4 draft in June. By signing after the draft, the Atlanta Braves and Chicago Cubs did not lose draft picks because of signing Keuchel and Kimbrel, respectively. It also limited the 2019 salary for each player and possibly began a trend for future free agents looking for long-term deals who receive a qualifying offer.
There simply isn’t a reason to have qualifying offers be a part of baseball. Big market teams with deep pockets and blank checks can sign whoever they want. Those teams have to decide how much they are willing to spend with regard to the luxury tax, but money is not an issue. For years, many big spenders have used their checkbooks to fill out their rosters rather than their farm systems.
Small market teams have become economically savvy and found ways to construct their rosters to exploit weaknesses in the rest of the league. These are teams that have no chance to sign big free agents and use trades and lower tier players to get the best team possible. When done correctly, it works out: the Kansas City Royals were the 2015 World Series champions. The Oakland Athletics and Tampa Bay Rays have been competitive and made multiple playoff runs in recent years.
What does a qualifying offer do for small market teams? Few players on these teams reach the point of receiving a qualifying offer. The team either trades the player beforehand or signs him to a long-term deal. The salary from a qualifying offer is often astronomically too high for these teams to consider paying a single player; their strategies often include signing multiple players for lesser amounts to achieve the same, if not higher, production.
What does a qualifying offer do for big market teams? It allows them to gain a draft pick when they do not wish to resign their own high price players. These draft picks often become trade pieces for the big market teams to later acquire more high priced or talented players. As long as the big market teams have the big spending mentality, the long play benefits of draft pick compensation do not benefit them nearly as much as other teams.
Impact on players
The biggest question is: what does a qualifying offer do for the players? It gives them the option of a short-term one-year larger salary or the chance at free agency. With the qualifying offer comes the lack of future guarantees. With free agency comes the dark mark of costing a team a draft pick. This limits the teams interested on top of the teams with the capacity to offer a contract.
J.D. Martinez could be the next victim of the qualifying offer. His infamous off-season after 2017 included holding out until late into spring training of 2018. He signed a contract for less than market value and can opt-out to test free agency again. If he opts out, the Red Sox can offer him a qualifying offer, which would give Martinez the option of a one-year deal at less than he already makes. It would also give Martinez that dark mark of costing a team a draft pick. At his age, Martinez may not have enough upside nor potential for a team to pay him what he wants while also giving up the draft pick compensation.
While there are plenty of players who are not good enough or too old to warrant receiving a qualifying offer, there are enough players that do receive them as a “just in case” for the team offering it. Players have undoubtedly shown a preference for long-term security and wanting their fair market value. Teams have undoubtedly shown a preference for wanting draft picks by offering players, even those who have no intent to re-sign. Things began to change last off-season, and this off-season will show whether those trends continue or not.
The collective bargaining agreement will probably need to be revamped after it expires in 2021 with qualifying offers being a major topic of discussion. The average salary is impacted negatively by back end contracts. The one-year deal provides no long-term stability. The draft pick compensation limits free agent suitors with a bigger emphasis shifting to the value of draft picks. The benefits of competitive balance are minimal because of free agent qualifying offer compensation.
Is there a reason for qualifying offers to exist anymore? Players don’t accept them and are beginning to lose money and service time because of the qualifying offer stipulations. MLB wants to grow the game, but it is beginning a trend to limit great players from even being on a roster.
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