Relative Shortage of Qualifying Offers Another Sign of a Chilly Winter To Come by Jay Jaffe November 2, 2020 In the latest sign that this offseason could be a difficult one for free agents due to the industry-wide loss of revenue caused by the COVID-19 pandemic, just six players received qualifying offers from their 2020 teams prior to Sunday’s 5 PM Eastern deadline. That’s the lowest total since the system was put in place in 2012, not that anyone should fret the loss of something that makes player movement more difficult. The six — Trevor Bauer, Kevin Gausman, DJ LeMahieu, J.T. Realmuto, George Springer, and Marcus Stroman — have until November 11 to accept or decline the one-year, $18.9 million offers. While historically, the odds strongly suggest that most of those players will decline them and move on, Gausman and Stroman stand out as two players who could accept them and return to their respective teams. I’ll get to the players and the decisions themselves, but before that, there’s a lot to unpack. To review, the qualifying offer system was introduced for the 2012-16 Collective Bargaining Agreement and then revised for the 2017-21 CBA. It’s the latest mechanism in a battle that’s as old as free agency itself, for not only does it compensate the team who lost a major free agent by awarding them a draft pick, it penalizes the team that signs him by costing them a draft pick, and acts as a drag on player salaries because at a certain point, the cost of the lost draft pick(s) is substantial relative to the expected value of the player. That the updated rules make a player who has previously received a QO ineligible to receive another one is a clear acknowledgement of that fact. The value of the one-year qualifying offer is based upon the mean of the top 125 player salaries (full-season salaries, not prorated ones). A player issued a QO can accept and return to the team for whom he played in 2020 at that price, or he can decline it and sign with any team (including the one from whom they rejected the offer), with his old team receiving a draft pick whose placement is based upon the size of the subsequent contract. If a qualified player signs a deal for at least $50 million, his old team gets a draft pick between the first round and Competitive Balance Round A. There were no such picks in the 2020 draft, but in ’19, those picks were numbers 33 and 34, while in ’18, they covered picks 31-35, meaning that they yielded around $9-10 million in future value. If a qualified player signs a deal for less than $50 million, the compensatory draft pick follows Competitive Balance Round B, which takes place after the second round, and which in 2019 covered just pick number 78, and in ’18 fell in the 75-78 range, worth somewhere around $3-3.5 million. Meanwhile, the quality of the pick lost by the signing team depends upon whether it exceeded the Competitive Balance Tax in the previous season, and whether it receives revenue sharing money. A team that pays the tax will lose its second- and fifth-highest picks, which might amount to around $8 million in future value, while a team that receives revenue sharing will lose its fourth-highest pick, which might be worth closer to $3 million. These are ballpark estimates; you can read the fine print here. Here’s a look at the annual number of players receiving and accepting qualifying offers, and the value of those offers: Qualifying Offer History Year Value % Change Received Accepted 2012 $13.3M — 9 0 2013 $14.1M +6.0% 13 0 2014 $15.3M +8.5% 12 0 2015 $15.8M +3.3% 20 3 2016 $17.2M +8.9% 10 2 2017 $17.4M +1.2% 9 0 2018 $17.9M +2.9% 7 1 2019 $17.8M -0.6% 10 2 2020 $18.9M +6.2% 6 — Total 96 8 SOURCE: https://www.mlb.com/news/history-of-mlb-qualifying-offer-decisions-c300602464 The eight players who accepted QOs in years past: Brett Anderson (Dodgers), Colby Rasmus (Astros), and Matt Wieters (Orioles) following the 2015 season; Jeremy Hellickson (Phillies) and Neil Walker (Mets) following the ’16 season; Hyun-Jin Ryu (Dodgers) following the ’18 season; and José Abreu (White Sox) and Jake Odorizzi (Twins) following last season. Abreu ended up reworking his acceptance into a three-year, $50 million extension. A year after the value of the QO itself declined for the first time since the system was put in place, it rebounded to post the third-highest year-to-year gain. That’s not to say that player salaries as a whole increased by 6.2%; I suspect this is just a sign of the widening gulf between the well-paid players at the top end of the salary structure and an increasing percentage of players making some function of the minimum salary, but we’ll see where the Associated Press’ annual calculations land. The six of the players who received qualifying offers rank among the top 14 on our Top 50 Free Agents List, which was published on Friday: 2020 Qualifying Offer Recipients Player Rk Prev Team Age 2020 WAR Proj WAR Med Years Med Total Med AAV J.T. Realmuto 1 PHI 30 1.7 4.6 5 $110.0M $22.0M George Springer 2 HOU 31 1.9 4.6 5 $110.0M $22.0M Trevor Bauer 3 CIN 30 2.5 3.8 3 $87.0M $29.0M DJ LeMahieu 6 NYY 32 2.5 4.0 3 $42.0M $14.0M Marcus Stroman 11 NYM 30 2.5 4 $64.0M $16.0M Kevin Gausman 14 SFG 30 1.5 2.4 3 $36.0M $12.0M SOURCE: https://blogs.fangraphs.com/2021-top-50-free-agents/ Rankings via FanGraphs Top 50 Free Agent List. Projected WAR via Steamer. Median contract data via FanGraphs crowdsource surveys. From among our Top 50, four players were ineligible to receive QOs, as they had received them in the past: fifth-ranked Marcell Ozuna (received after 2019 from the Cardinals), 10th-ranked Justin Turner (after ’16 from the Dodgers), 20th-ranked Nelson Cruz (after ’14 from the Orioles), and 41st-ranked Carlos Santana (after ’17 from Indians). Also ineligible to receive QOs were players traded in-season; from our Top 50 that includes 19th-ranked Tommy La Stella, 22nd-ranked Taijuan Walker, 27th-ranked Mike Minor, and 46th-ranked Robbie Ray. So who’s missing? From among the top 10 on our list, the highest ranked player not to receive a QO was Marcus Semien at number four. Semien, who turned 30 on September 17, suffered through a slow start before recovering his 2019 form but finished at .223/.305/.374 (91 wRC+) with 1.2 WAR. The A’s have never issued a QO to any of their free agents, not that any jump out as having been worthy of such consideration. While it’s possible that Semien, who’s coming off a $13 million salary (before prorating) might have accepted, a return to the market next winter would have lined him up to hit free agency in the same class as fellow shortstops Francisco Lindor, Corey Seager, and Trevor Story, all younger and better players. The highest-ranked pitcher not to receive a QO was Masahiro Tanaka, number seven on our list. The just-turned-32-year-old righty had an uneven season, posting a 3.56 ERA and 4.42 FIP in 48 innings in the final year of his seven-year, $155 million deal; his splitter/slider combo wasn’t as effective as in years past, and he missed time early in the season due to a batted ball-induced concussion. The Yankees have been very conservative regarding QOs, having not issued one since 2014, when they gave one to reliever David Robertson, who signed with the White Sox. Last year, they bypassed an offer to Didi Gregorius, who was coming off a difficult first season back from Tommy John Surgery. The 30-year-old Gregorius, who’s ninth on our list, was bypassed again after rebounding to post a solid mini-season in Philadelphia, where he hit .284/.339/.488 (116 wRC+) with 1.4 WAR after signing for a $14 million salary. Based on the early Steamer projections, Semien projects to produce 3.6 WAR in 2021, Takana 3.0, and Gregorius 2.8, which is to say they’d provide good value for their $18.9 million salaries. They’re not without risk, but hardly bums. So, where this year four of the seven QO-eligible free agents in the top 10 of our list actually received such offers, the tally was seven out of eight within last year’s top 10, with Gregorius the odd man out. Furthering the comparison, two years ago, five out of eight eligibles in the top 10 received them, with Michael Brantley, Jed Lowrie and Nathan Eovaldi — three players with considerable injury histories — the ones who did not. Three years ago, seven out of eight in the top 10 received them, with Zack Cozart the exception, and four years ago, the tally was six out of seven, with Mark Melancon the outsider. That’s 25 out of 31 “top 10 types” receiving qualifying offers in a four-year span, 81%. So, based on recent history, we might have expected five or six of the seven eligibles to get one this winter as well. On the other hand, the fact that the lowest-ranked free agent on this year’s list to receive a QO, Gausman, came in at number 14 looks pretty normal. Last year, 16th-ranked Will Smith was the lowest-ranked free agent to receive a QO, though his three-year, $40 million deal was the largest signed by a reliever since Wade Davis’ three-year, $52 million deal two years earlier. Craig Kimbrel, who placed 12th on the 2019 list, was the lowest-ranked player to receive such an offer that year and it absolutely crushed his market to the point that he didn’t sign a deal until June 7, 2019, so the Cubs could avoid losing a draft pick. Greg Holland (18th on the 2018 list) and Mark Trumbo (17th on the 2017 list) were the respective lowest-ranked QO recipients. Having made these comparisons, I should reiterate that I don’t think we should weep for the fact that fewer players received them this time around. Generally, they’re burdens, and so if players can move more freely in what already appears to be a rough winter based upon the modest values of the declined options for the likes of Charlie Morton ($15 million), Kolten Wong ($12.5 million), and Brad Hand ($10 million), more power to them. The losses are to the teams not issuing the QOs; at a time when amateur drafts are being shortened and budgets tightened, it’s most obviously the A’s, Yankees, and Phillies bypassing the chance to add a prospect to the system because the risk of ending up with a good player on an $18.9 million one-year deal is too high for their tastes. Getting back to the six QO recipients from this year, both our crowdsource and our Top 50 list author, Craig Edwards, estimated that Realmuto, Springer, Bauer, and LeMahieu would all receive deals of three years or longer, making their decisions to turn down the QOs an apparent no-brainer. On Stroman and Gausman, however, where the crowds estimated four years for the former and three for the latter, Edwards came in at two years for both, with $26 million for the former and $28 million for the latter, that after receiving input from elsewhere within the industry. It’s those two who have real decisions to weigh. Stroman is certainly an interesting case, as the 29-year-old righty did not pitch during the 2020 regular season. After being sidelined by a left calf strain just before Opening Day, he announced on August 10 that he was opting out of playing, citing “all the unknowns and uncertainty due to the pandemic,” and forfeiting the prorated portion of his $12 million salary. His decision came at a point when the Marlins and Cardinals had recently been hit hard by team-wide outbreaks, and the entire season appeared to be teetering on the brink. While some read the move as a thumb in the eye of the organization — which didn’t exactly show its best side when Yoenis Céspedes opted out a week earlier — Stroman spoke highly of the Mets in his opt-out press conference, and sounded open to returning, saying, “It was a blessing, a breath of fresh air when I came to this organization and I truly mean that… I would love to be a part of what they have going on, there’s a lot that goes into that but I can’t say enough good things about this organization.” The franchise’s sale, from the tight-fisted Wilpons to the deeper-pocketed Steve Cohen, probably makes a return all the more attractive. When he last pitched in 2019, Stroman was quite good, posting a career-high 3.9 WAR via a 3.22 ERA and 3.72 FIP in 184.1 innings, and offsetting his lowest groundball rate (still a hefty 53.7%) with his highest strikeout rate since his rookie season (20.5%). If he’d hit the market off of that season, he’d be rolling in dough, perhaps something like Eovaldi’s four-year, $67.5 million deal (which is right around Stroman’s crowdsource numbers) or even better. Now, it’s entirely possible that he’d be better served by taking the offer and hoping to complete a healthy season, then reentering the market next winter without having to worry about the QO. Health has proven somewhat elusive for him, however; setting aside his rookie campaign, he’s managed 32 or 33 starts in three of his six other seasons… and a total of 23 starts in the other three seasons. Gausman, likewise, has been effusive about returning to the Giants. At season’s end, he said that the chance to throw to Buster Posey was a big reason he signed with the team in the first place, that after bouncing from the Orioles to the Braves to the Reds while evolving from prospect to workhorse to stopgap to reclamation project. “Hopefully he’s going to be back here next year,” said Gausman of Posey, who himself opted out before playing a single game. “He was a big reason why I decided to sign here. So coming back knowing that he’s going to be here next year definitely adds another element to it.” Thanks in part to a substantial rebound in fastball velocity and a virtually unhittable splitter, Gausman turned in a very strong season in San Francisco, ranking sixth among NL pitchers with at least 50 innings in strikeout rate (32.2%) and strikeout-walk differential (25.7%), ninth in FIP (3.09), and tied for 17th in WAR (1.5). After working on a one-year, $9 million deal in 2020, the QO itself would be a welcome boost in salary, but the bet here and elsewhere in the industry is that as with Abreu last year, his acceptance might be reworked into a multiyear deal. Things will probably work out for all six of this year’s QO recipients, but if we — and the other free agents — needed another sign that this winter might be a chilly one when it comes to spending, we’ve certainly gotten one.