The Myth of the Qualifying Offer

The qualifying-offer system has created considerable discussion this offseason. After Dexter Fowler took smaller deal than expected and Ian Desmond ended up receiving only about half the qualifying-offer amount, there has been talk about changing the system in the next Collective Bargaining Agreement. Dave Cameron discussed a sensible solution that could help the system. The issue has been around in the past, but the CBA discussions combined with the sheer number of qualifying offers extended have increased the exposure this year. While it’s pretty well acknowledged that the QO system is designed to dampen free-agent prices, it’s important to recognize what the system is not: a reward for drafting and developing young talent.

A record 20 players were extended qualifying offers this offseason — this after, 34 offers total were made over the first three years of the system. If nothing else, the sheer quantity of offers led to three acceptances — by Colby Rasmus, Matt Wieters, and Brett Anderson — the first year in which any player had accepted an offer.

In a dreamy view of Major League Baseball, the qualifying offer helps those teams which have experienced success both drafting and developing players, but which also lack the requisite funds to prevent homegrown players from departing by way of free agency. A benevolent qualifying-offer system gifts those teams with draft picks so that they can further develop talent to help their club.

Looking at the 54 players to whom qualifying offers have been made over the last four seasons, however, fails to reinforce the illusion above. By asking a series of questions, we can break through any myths about what the qualifying offer system is or is not.

Teams to Benefit from the Qualifying Offer
Teams Offers Extended
Cardinals, Dodgers, Red Sox, and Yankees 19
Bottom Half of Forbes list 15
Everyone Else 20

Of the 54 qualifying offers made over the past four years, only 15 came from teams in the bottom half of Forbes’ franchise value list. If the idea is to reward smaller markets and less valuable franchises, then the qualifying offer has failed to do so, as four of the top-six most valuable franchises account for more than one-third of the qualifying offers extended since the system was implemented.

So it doesn’t seem that small-market teams are benefiting. But that’s not the only way the qualifying-offer system could help. It could also allow clubs simply to receive some sort of compensation for losing players who’ve been developed in their system. Is the QO helping in this way, at all?

Players with Original Teams Receiving Qualifying Offer
Number %
With Original Team 13 24.1%
With Different Team 41 75.6%

Of the 54 players receiving qualifying offer, just 13 players were with the team that acquired the player originally. Even moving the date forward, to the team with which the player made his major-league debut, doesn’t change the numbers at all.

While players might not be with their original team, it’s possible that they have played for the same team for quite some time, leaving an organizational hole if the player left.

Years With the Team for Players Receiving Qualifying Offers
Years Number %
1 19 35.2%
2 11 20.4%
3+ 24 44.4%

Doesn’t appear to be the case. More than one-third of the players receiving the qualifying offer were with their current team for just one year. One-half of the players had been with their current team for two seasons or less. An argument could be made that the previous teams extracted some value out of the qualifying offer if they traded the player with just one year. Certainly, the acquiring team has factored in the ability to make a qualifying offer when considering the value of the trade. That said, of those 19 one-year players, just seven achieved free agency at six years, meaning that the teams had already extracted extra value on the rest of the players by receiving some years of free agency or that they had already been free agents previously. Of those seven players, five had already moved at least twice before free agency, leading to the next question.

How Many Organizations for Players Receiving Qualifying Offers
Orgs Number %
1 13 24.1%
2 13 24.1%
3 18 33.3%
4+ 10 18.5%

More than half of the players receiving qualifying offers had been been employed by at least three organizations prior to hitting free agency — i.e. twice the number of players who who’d played for just one team before hitting free agency. If these players have been in multiple organizations, it is possible these players are not even that young to begin with.

Service Time for Players Receiving Qualifying Offers
Years Number %
6 21 38.9%
7-8 17 31.5%
9+ 12 22.2%
Asian FA 4 7.4%

Not even 50% of the players receiving qualifying offers were even taking their first crack at free agency — or at least not without having received some sort of contract extension from their own team, which is a considerable benefit to the team already. We have 21 players who are six-year free agents and 13 players employed by the organization that developed them and gave them a shot in the majors. How often did those paths intersect for the ideal player for compensation?

One-Team Players Heading to Free Agency
Year Player Team
2015 Pablo Sandoval Giants
2016 Daniel Murphy Mets
2016 Jordan Zimmermann Nationals
2016 Ian Desmond Nationals
2016 Matt Wieters Orioles
2013 B.J. Upton Rays
2014 Jacoby Ellsbury Red Sox
2015 David Robertson Yankees

Out of 54 players, just eight were originally acquired by the team that extended the qualifying offer without an extension at some point beforehand. Of these players, Matt Wieters actually accepted the qualifying offer, Ian Desmond should have and neither Murphy’s not Robertson’s contracts were too onerous for their teams to re-sign them. Not making this list, Alex Gordon, Brian McCann, and Robinson Cano headed to free agency after eight years with the Royals, Braves, and Yankees, respectively, and the Braves traded Jason Heyward one year from free agency. If we add in the stipulation that the team should be from a small market, we end up with just a single contract that meets the dream scenario of the qualifying offer system.

Just once has the situation worked out so that a small-market team received compensation for a player it developed. Melvin Upton Jr. was drafted by the Rays and spent the first six years of his career with them before leaving in free agency. If the qualifying-offer system had been designed to compensate small-market teams for drafting and developing players who they wanted to keep but could not due to free agency, then the system has been an absolute disaster, successful just once out 54 uses. Of course, if the qualifying-offer system has been designed to lessen free-agent prices, then it has been quite successful.

We hoped you liked reading The Myth of the Qualifying Offer by Craig Edwards!

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Craig Edwards can be found on twitter @craigjedwards.

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vbjd1111
Member
Member
vbjd1111

“In a dreamy view of Major League Baseball, the qualifying offer helps those teams which have experienced success both drafting and developing players, but which also lack the requisite funds to prevent homegrown players from departing by way of free agency. A benevolent qualifying-offer system gifts those teams with draft picks so that they can further develop talent to help their club.”

Is this “dreamy view” something that MLB actually promoted as the reason for the QO? Or is it just a straw man created so the article can knock it down? Where did the so-called “myth” originate? Where was it propogated?

jdblue
Member
jdblue

Interesting read, and it even earned props from Tom Tango (http://tangotiger.com/index.php/site/article/qualifying-offer-system-was-meant-only-for-melvin-upton-jr).

But I’m not sure it matters who drafted the player or if the player was traded before the QO.
You wrote, “If the qualifying-offer system had been designed to compensate small-market teams for drafting and developing players who they wanted to keep but could not due to free agency…” Why would the QO be designed to compensate or reward teams for drafting and developing players? Drafting and developing players is its own reward because teams get to pay those players far less than they would be worth on the market.
I think the more appropriate claim is that the QO was supposedly designed to reward small-market teams for *losing* players they wanted to keep, regardless of who developed or drafted them. This change probably does not alter the results much, given that small-market teams gave only 15 of 54 QOs.