The Players’ Association May Target Qualifying Offers
With Nelson Cruz signing a one-year, $8 million contract with the Baltimore Orioles, qualifying offers are back in the spotlight. The executive director of the player’s association, Tony Clark, has issued a statement saying he’s “concerned” about how qualifying offers are affecting the free agent market. Unions deal in politics and in this case concerned can probably be read as “we’re going to make this a sticking point in the next round of negotiations.” The current collective bargaining agreement (CBA) is set to expire after the 2016 season, so the MLBPA will have a couple more years of data in their hands before they pursue any changes.
The current CBA was reached following the 2012 season. It included a new rule called a ‘qualifying offer’ that replaced baseball’s old method for compensating a team for losing a player to free agency. Under this rule, teams have the option to offer impending free agents a contract equal to the average of the top 125 contracts in baseball. If the player declines the offer and signs with another club, then the team losing the player gains a supplemental first round pick while the signing team loses their first available pick (the first 10 picks are protected).
Very few people would deny that baseball’s qualifying offer has led to some strange circumstances. It’s been in effect less than two years and already we have had eight players noticeably affected. The complete list includes Kyle Lohse, Nick Swisher, Michael Bourn, Ubaldo Jimenez, Ervin Santana, Stephen Drew, Kendrys Morales, and Cruz. Individually, we can make cases as to why each player may have been left with fewer options than originally anticipated, but the group as a whole points overwhelming to the existence of a qualifying offer effect.
The above list is interesting because, with the possible exception of Swisher and Drew, it’s a Who’s Who list of players that we (internet analysts as a whole) expected to be overpaid relative to their talents. Mr. Cameron spent a deal of time this offseason predicting that Cruz would sign a terrible contract. We all have concerns about Jimenez and Santana after each player posted one strong season in their walk year. Last year, Bourn was supposed to earn more than B.J. Upton right up until he didn’t, and everybody was grumbling about Lohse’s underwhelming stuff.
Not all players suffer from the qualifying offer effect. There appear to be two groups who do just fine. The less interesting group is those players who quickly re-sign with their original club. Mike Napoli, David Ortiz, Adam LaRoche, and Hiroki Kuroda all fall into this bucket. The other group is comprised of free agent powerhouses – Robinson Cano, Josh Hamilton, Jacoby Ellsbury, Shin-Soo Choo and Brian McCann. To a lesser extent, Carlos Beltran, Curtis Granderson and Upton can also be included.
The players who struggle the most are those with some kind of wart. In a truly free market, players like Cruz probably would find a fairly pricey contract. There are plenty of teams that could use an offense first outfielder. My hypothesis is that when the qualifying offer penalty is attached to a player, teams become more focused on the negative than the positive. Whereas the narrative could have been, “this player will add 25 home runs and 80 RBI to the middle of my lineup,” teams might pay more attention to the PED suspension, past injuries and lousy defense when signing Cruz comes with a penalty.
The endowment effect and loss aversion probably comes into play, and they are a big reason why I hypothesize that teams focus on the negatives with players who received qualifying offers. The endowment effect is a behavioral phenomenon where people overvalue things they already own. Loss aversion is what it sounds like, people go out of their way to avoid losing things, sometimes to their detriment. Teams might be too timid about giving up a draft pick in some cases because it’s the proverbial bird in hand.
So, proposals. How can we go about fixing this? Honestly, there are a thousand and one ways that this system can be adjusted or replaced. Each has its pros and cons. It really comes down to the preferences of the owners and players as well as the trade offs that each party is willing to make. I’ll offer one idea as food for thought.
I like the theory behind the qualifying offer system. It’s a lot cleaner than the old arbitration system with its Type A, B and C players determined by an arbitrary Elias Sports Bureau formula. Given the penalty involved with the qualifying offers, my only issue is that too many players are getting caught in the net. The top tier can still sign mega-contracts, but there appears to be a definite point where talent level does not exceed most club’s desire to keep their draft picks.
My proposal is to increase the cost of the penalized qualifying offer and introduce a second tier option that carries no penalty. Let’s call them Type A and Type B as a nod to the past (also because I tried calling them Type I/Type II and it sounded too much like diabetes). Rather than an average of the top 125 contracts, the Type A players will be offered the average of the top 75 contracts. Looking back at the 22 players who received offers, perhaps four to six of them would have received a Type A offer. Incidentally, these are the players who signed large contracts without anybody hemming or hawing over the loss of a draft pick. Signing teams would still lose their top pick and draft pool allocation when inking one of these top players. The team who loses the player will still receive a supplemental first round pick.
Type B would fall in at a lower compensation level – perhaps an average of contracts 51-175. I’ll leave it up to others to get the math right. The idea is to offer some compensation for the loss of decent players like Cruz without affecting their market price. As such, a Type B free agent might net the original club a supplemental third round pick, but signing the player won’t penalize his new team.
Whether you like that idea or not, we can expect some kind of change to be instituted with the next CBA. The players affected by this rule are long-standing, dues paying members of the union. As such, their complaints carry a lot of weight. If Tony Clark is speaking up now about the topic, his goal is probably to prepare the owners to budge. Negotiating a CBA is about give and take, the players will have to give something in order to secure a free agent compensation system that punishes players less severely.
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Adam LaRoche didn’t sign quickly; it took a long time for him to re-sign with the Nationals.
The QO is supposed to depress free agent salaries and the player’s association was probably aware of that, but with the Nelson Cruz case it has probably gone farther than even the owners themselves expected. There’s the thing that Stephen Drew’s contract is going to be much smaller than Jhonny Peralta’s, which just feels wrong.
Why does that feel wrong? WAR over the last 3 years: Peralta 11.0, Drew 4.8. Even without the draft pick Peralta deserved the bigger contract.
I think people are generally unaware that UZR has liked Peralta’s defense over the past few seasons. If you assumed that was in the -5 to -10 runs range, then he’s around 5-6 WAR over the last three seasons. Then once you factor in all the DL time , Drew looks like the better player. Then there’s the PED factor.
So I understand how it could feel wrong even if I don’t agree that it is wrong. I would have preferred Peralta, although I think the Cardinals may have outbid themselves a bit.
Well, that’s the problem with arbitary sample sizes, right? If you go back to 2010, Drew’s WAR over 4 years comes to 9.5, while Peralta’s come to 12.1, or if you take 5 years it becomes 11.5:13.0, with Drew’s two semi-lost seasons in 2011 and 2012. Peralta comes up higher but not by much.
Now health is absolutely a skill and that’s where Peralta deserves the premium over Drew, but then Drew has played fairly healthy in 2013, and is a year younger when Peralta’s new contract takes him to 35.
And then there’s the PEDs, which may be more perception-related than performance (caveat: Cabrera, Melky), but it’s a thing. You could make a fair case for Peralta getting the bigger contract, but not MUCH better, and he got 53m/4yr, while Drew’s market looks like it could result in something like 22m/2yr.
I don’t like the way everyone assumes that Peralta must be worse than UZR suggests, because he has a big body and doesn’t move well in the field. The whole point of these defensive metrics is to take your eyes out of the equation, and give you measurements of what he did, respective to the expected baseline, right? So there’s variance, of course, and some luck (or perhaps good positioning) involved. But that doesn’t necessarily mean you just norm him down to “below average shortstop” based on nothing but your intuition. Over Peralta’s career, nearly 10K innings, his UZR/150 is -0.4. He’s basically a league average shortstop. As a hitter, he’s put up 102 wRC. He’s basically a league average hitter, playing good-enough defense at a premium position, and with good durability.
Drew, on the other hand, has a -3.3 UZR/150 over 8K innings, and a 96 wRC, with poor durability in two of the past three seasons. Is it really any surprise that Peralta was the guy who got the 4 year deal (with the expectation he can play 150 games a season), instead of Drew (who hasn’t played more than 125 games since 2010)?
Long story short – Peralta is a starting shortstop, and keeps your backup off the field. Drew comes with 50 games of “replacement level” shortstop baked in. Peralta is (according to the advanced statistics) as good of a defensive shortstop over his career as Drew. And Peralta’s the better hitter. The reason Drew isn’t getting signed to a bigger deal than Peralta is *not* the Qualifying Offer. It’s the Quality of the Player.
Well stated Big. I think that is something of a fallacy that trips folks up from time to time; when the metrics agree with what our eyes tell us, we trumpet them loudly. When not, we say, “maybe the metric is flawed or doesn’t capture something…”
Which isn’t to say any of our fielding metrics are perfect. We just tend to pick and choose the ones that support our particular conclusions.
To be clear, I’m pretty well convinced that Peralta has been a good fielder over the last three seasons. I suspect that it’s possible he’s been the beneficiary of superior positioning (like Chase Utley), but that’s not really a knock against him (also note that I double qualified that statement!).
I have no problem expecting a +5 mark out of him next season, which is more than I expect from Drew. Better offense and more playing time also make him more valuable as has been stated. All I’m saying is that I can see why you would look at the two players and prefer Drew before doing the analysis.
???
WAR totals: 2011 / 2012 / 2013 / 2014 (steamer)
Peralta: 4.9 / 2.5 / 3.6 / 2.6
Drew: 1.7 / -0.3 / 3.4 / 1.8
Why does peralta making more feel wrong? He’s projected as a full win better at this point. He also has offensive upside (read: dingers) which the market tends to compensate more than Drew’s defense-first package.
The only weird thing here is that Detroit didn’t extend a QO.
I agree. Peralta is projected to have better wRC+, UZR/150, and durability than Drew. A player that has better rate stats and plays more should sign a larger contract.
The reason the Peralta contract ‘just feels wrong’ is PEDs. (It is ironic that people on fangraphs are judging based on gut feelings.)
Oh, that’s easy: Iglesias.
Young, cost controlled, better defense.
Put a QO on Peralta and he might’ve taken it as a pillow to dispel PED concerns.
“Young, cost controlled, better defense.”
You forgot: “Will likely put up a sub .600 OPS”
How likely?
And how much is Detroit going to care even if he does?
Peralta’s extra production may not offset the salary differential.
It’s all part of having the marketplace decide who gets what and that doesn’t always end in the player getting the deal they hoped for. I still fail to see how this hasn’t worked out exactly as intended. Players have a difficult time getting sympathy when they walk away from a $14M salary.
Just remove the loss of a pick for signing someone. There is a logic in compensating a team, especially a smaller market team, who loses a star player to someone else – even if they were prepared to give the player a pretty good sized one year deal. Upping the money required of the QO was good as it prevented teams from gaming the system ala the Rays.
But outside of the blatantly obvious reason of wanting to suppressing salaries, signing a player shouldn’t cost you a draft pick. You already are giving something up by signing someone: millions and millions of dollars. Signing a QO player is already, in many cases, a move designed to win now. Most players are Cruz or Santana types who are closer to 30 than 25 (or closer to 35 than 25…) and so the moves are made to supplement a team’s immediate chances or winning. A draft pick is an investment that typically doesn’t pay off for years. It doesn’t acknowledge the fluid realities of most clubs fortunes to basically penalize them five years from now bc they signed Nelson Cruz today. The “window to win” isn’t always as set in stone as it’s made out to be – but the QO actually makes it MORE of a reality. Sign a player today and you’d better hope you win soon bc you sign maybe two QO guys in two years and you’re two high draft picks behind everyone else – picks that are more likely to be impactful down the line.
Totally agree. Easy solution, fixes the main problem. Owners will hate it, though, because it doesn’t suppress salaries (which is what they really want).
Or maybe instead of losing the pick, you get dropped to the “sandwich round” between 1 and 2 if you sign a QO player. Gives teams losing players a slightly better shot (via moving up in the 1st round) at future talent…
What happens if you sign two QO players? Also, if you happen to be right at the end of the draft, then it hardly deters you at all. All that does is penalise middle of the road teams more than teams that are already good.
I like the proposal, made elsewhere on this site, to allow players a more or less indefinite period in which to accept a QO (as opposed to seven days) and for teams to be allowed to rescind the offer. That way a Nelson Cruz could go back and accept the QO if he finds that his market isn’t what he hoped … or the Rangers could drop their QO if they find a new bat somewhere else and don’t want to get stuck with a $14M Cruz. In doing so they would forfeit the draft pick penalty applied to Cruz and let him explore free agency straight up.
That would have helped Cruz, but it’s still suppressing other players salaries. A lot of players have done better than their QO, but still worse than their true FA value because teams are lowering their offers to offset the loss of the draft pick.
That seems way too easy to game.
why would teams accept that situation? teams face choices/decisions in building rosters and cannot wait indefinitely on a player to accept an offer. no way that would work.
I think this blame-the-QO thing has gotten out of control. Cant wait til the system goes away and guys like Nelson Cruz still get paid small contracts and the internet explodes with people saying “What happened, I thought we fixed the system”!!
I don’t think anybody would care if that happened. In this case Nelson Cruz clearly lost 6 million dollars by declining the QO, so the Union cares. I think the solution isn’t necessarily changing the system but players, agents and owners understanding it. Nelson Cruz and others should have excepted the QO. Then teams might stop extending QOs to players like them as often. Then the QO will only go to elite players who are unaffected by it anyways.
agree with everything except substitute “accepted” for “excepted”….
it takes some time for the cba changes to adjust behaviors and this prob took longer than it should have since it’s clear that a few players should have taken the 14M QO. I still struggle to see the problem. Players either took bad advice or overestimated their own values.
I think it’s exaggerated but something is there. Teams are losing valuable draft picks when signing these guys, if they aren’t factoring in that loss of value when they make an offer they aren’t doing their jobs.
So you are positing that Nelson Cruz would have gotten 1/$8MM in a world without a qualifying offer?
Obviously not the exact same because there is a value to the pick. The common narrative is that he didn’t get that huge contract because of the pick. In reality, most people in baseball know he isn’t very good. That was more important and what most didn’t realize when they were projecting a huge contract for him.
I think a lot of that common narrative is being pushed by the players/agents. They seem to have had some success framing the current QO system as a “problem” in the press and public perception.
fwiw, I think FG readers predicted 3/34 if memory serves. That’s hardly a huge contract and I have to think he could have signed a similar deal in Dec/early Jan if it weren’t for the draft pick penalty. Of course, we’ll never know.
we predicted that because we thought GMs greatly overvalue his skills. That’s the real narrative in all this. Most GMs don’t overvalue his skill anymore. That’s a bigger story than the QO in my mind.
I just wish we could separate what I’ll call the “QO effect” from the “Savvy GM effect.” As it stands, they overlap such that what we’re seeing could be all of one, all of the other, or some combination of the two. The winning pick is a combination, but which ways does it lean and how much? There’s no easy way to test it.
One thing I would point out is that many non-QO players signed better contracts. I’ll use Marlon Byrd as an example even though I know the response is that the Ruben Amaro isn’t savvy. Even if that’s the case, isn’t it plausible that the Phillies would have been in on Cruz as 3/34?
What about players like Kendrys Morales and Stephen Drew, who still do not have contracts primarily because of the draft pick attached to them.
They were stupid for not accepting the qualifying offer. They have only themselves and their agents to blame for their lack of a contract at this point in time.
I don’t really think the problem is as big as this offseason has made it look. After this year, I imagine we’ll see a lot more players accepting QOs. The system certainly COULD have helped Cruz, Morales, Drew, etc., if they had accepted it — I think they would all consider themselves lucky to be getting $14mil/1yr at this point, and not just because the draft pick is nuking their value. It hurts the players worth slightly more than that, since either they accept something below-market from their current team or go into free agency with an anchor around their neck, but it helps the players worth slightly less than $14mil, since their current team is incentivized to give them a deal that crosses that threshold. This season just seems to be part of the adjustment period to the new system, with agents underestimating the impact of the draft pick.
It isn’t just the $14MM per year. A player like Morales may be just as happy to get $22MM over two years. Nelson Cruz might have been happy with 4/$48MM.
I’m sure Cruz would have been happy with 4/$48MM, but he’s not remotely worth that, QO or no QO.
Whether somebody is “worth that” doesn’t seem to be the driving force in the history of MLB free agency.
Yeah, I know simplifying things to one-year deals isn’t totally accurate, but there should be some equivalence, like $22 mil/2 yrs ~= $14 mil/1 yr ~= 30 mil/3 yrs, so the general point about when considering value in general should stand.
yes but a team probably wouldn’t make the QO a year after a player accepts one. that would “unshackle” said player from the year to year situation going fwd.
But they should have known those sorts of contracts were unrealistic given the draft pick loss that came along with them declining the QO.
Agree completely with Catoblepas. This year some of the players/agents got a little too greedy, overstimated their markets, and whiffed. The market will adapt pretty quickly.
If players start accepting the QO, I bet more teams will stop offering it. Right now, teams might think there is no downside to offering it since no player has accepted. But would Texas still want a $14 mil Cruz if they knew he was going to accept? Maybe, but maybe not.
I think a lot of teams offer it mainly because of a risk/reward calculation: very low risk of player accepting vs. very high reward of getting the extra pick.
I think you’re probably right, and I think Kendrys Morales is the example you’re looking for — no way Seattle actually wanted him for $14 million. My point is just that this is part of a normal adjustment period, and that by the time 2016 rolls around, it might not be perceived so badly.
It’s been my totally unsubstantiated guess that both the Mariners and the Rangers were well aware that Morales and Cruz would /absolutely/ turn the QO down.
Or they thought that it doesn’t matter either way, because 1/$14 wouldn’t be a big deal for either player.
Most teams, unless they are very small market, wouldn’t care. How bad a contract could it be to give a reasonably competent baseball player a 1/$14 deal? At worst, it should be a $3-4 million overpay with no long term risk.
This was completely predictable. How the union didn’t know this in the latest round of, “sell out the guys who haven’t been drafted yet” is beyond me.
Oh, and the thing to blame here isn’t the “loss of a draft pick”, it’s the insane faux-slotting system that was instituted. Losing your first round pick didn’t sting as much if you were willing to pony up money for guys that fell due to signability concerns. In the current system, all the power goes to the teams that can collect the highest collective bonus pool. Getting the 20th pick in the draft is nice, but in a lot of regards the assigned bonus pool money is the real driving force in my opinion.
The QO is, as stated earlier on this page, a straightforward attempt to keep player salaries down. This makes me wonder if discussing the QO becomes a bargaining chit, or at the very least a distraction, when the CBA is up in a couple years and the union wants to discuss the larger issue of what a fair slice of all those TV contracts is.
Account for a real snapshot of what the revenue streams are for the 30 ballclubs, and factor it into minimums and service-time-based things, and then things like the QO will be much more likely to just naturally settle out.
“The QO is, as stated earlier on this page, a straightforward attempt to keep player salaries down.”
I’m not sure it does that though. It doesn’t seem to make any difference in the guys who get big deals (Ellsbury, Cano, Choo), it clearly didn’t make any difference in guys like BJ Upton’s case.
It seems to just screw a couple of guys who get caught in the middle, and they’re not the ones setting the market.
I think, as far as suppressing salaries, the QO is just drops in a bucket compared to the luxury tax threshold.
Well said RC. That’s a win for you, denoted with an upvote, or plus-mark. wRC+, if you will.
They certainly are the guys setting the market for the majority of teams.
How many teams could have reasonably signed Cano given their need and the dollars? Two? Three?
“They certainly are the guys setting the market for the majority of teams.”
Again, I’d disagree with this, because we have quite a few comps. Drew and Peralta are similarly valued shortstops, who are close in age. Peralta got 4/$53M, and Drew still doesn’t have a contract (and will most likely end up on a 1 year deal).
Drew getting screwed/screwing himself didn’t affect Peralta at all, he got pretty much what you’d expect based on his projections and the current $/WAR.
The only guys who this seems to affect are the guys who refuse the QO. It doesn’t seem to affect the market as a whole at all.
Unless you think the Mariners, Yankees, and Rangers valued the picks at ZERO dollars, then the compensation also affected Cano, Choo, and Ellsbury.
I think that the Mariners, Yankees, Rangers made the decisions of whether or not it was worth losing the pick to get the player independently of what they paid the player.
When you’re looking at a $250M deal, losing a $10M pick isn’t a huge deal. When you’re looking at a $40M deal, it is.
Let me expand here.
I think that teams treat $10M/yr deals as regular operating expenses. The GM just goes out and hires the guys he thinks he needs. I think at the $100M range owners start becoming involved, and it starts becoming more about emotion, and other factors come into play.
If you’re looking for a SS, the pick is a huge difference between Peralta and Drew. If you’re looking for an OF, the pick is very little part of the process. It’s more important that you get the right guy (ellsbury vs Choo).
I think of it a bit like buying a car. You want to buy a honda civic? You got to 4 dealerships, get the best price from each, and pit them against each other. You want to buy a Bentley? You go to the dealer, pick the car you want, and then pay the man what he says it costs.
I like your car analogy.
I’m still not sure the teams are operating with that much irrationality, but I guess it is plausible.
Maybe something like the NFL’s supplementary pick system would work better. Get rid of the whole QO thing, and have a certain number of picks available each year. Then just go right down the list of biggest contracts and give the picks to the teams who lost the most expensive guys.
Yankees would get the best pick for Cano, then the Red Sox for Ellsbury, Reds for Choo, right on down the line till you run out of the picks allotted for that year.
I don’t think there’s any need to have something that artificially keeps down salaries, as its not going to have any league wide affect that isn’t already made by the increasingly strict luxury tax.
I don’t follow the NFL closely, but this seems like a reasonable alternative. As I pointed out in the post, there are a thousand ways to do this. The current system is not nearly the best of those ways.
The system works! It was supposed to artifically depress players salaries, the problem is that it works too well. But the funny thing is that guys like Cruz & Morales should have taken the 1 year 14M as that would have been the best offer they’d get regardless of draft pick albatross.
I do agree that the MLBPA will not let this continue, but what I want to know is how has this impacted Scott Boras as his gamble with two of his players has clearly hurt them.
Morales was insane not to take the QO. I’m appalled that his agent let him turn it down.
Agents don’t have the authority to “let” a player do anything. They’re employees of the player, and advisors. The player makes the decisions, not the agent.
It’s entirely possible that Morales agent told Morales that he was insane to turn it down, and he did anyways. That’s his prerogative.
As to Boras, he didn’t gamble with his clients. His clients decided to gamble with their earnings.
It’s the agent’s job to make sure his player knows where he stands. If he gave an honest appraisal to Morales and Morales turned it down then it is on Morales.
He failed at doing his job when Morales turned down the QO. Ironically, the Mariners failed at doing their job when they offered him the QO unless they had good reason to believe he wouldn’t sign. I will give them the benefit of the doubt.
“He failed at doing his job when Morales turned down the QO. ”
You don’t seem to understand what an Agent’s job is. He doesn’t make decisions for his client, he advises his client, and then does what his client decides.
Now, its possible that Morales got bad advice. Its more likely that he got good advice, and decided to go against it.
The vast majority of MLB players probably think they’re worth more than they are. Thinking you’re “the shit” is almost necessary to perform at that level.
If Kendrys Morales decides he wants to be an FA, and decline the QO, its his agents job to try and get him the best deal he can. It’s his agent’s job to let Morales know hes making the wrong decision, but Morales decision is absolutely no evidence that he failed at his job.
The agent is not the decision maker here.
Obviously. I’m assuming rationality because I was trained as an economist. Either the agent, Morales, or both could have been irrational in this case and each scenario is equally plausible.
Or just wrong. You don’t need to be irrational to make a wrong decision, if you think you have proprietary information or something similar. Calling someone irrational is a cop-out.
It’s the slot money not the pick itself. Just do away with it all and have “free” free agents.
That’s fantastic for teams like the Yankees and Dodgers. Not so fantastic for the Indians and Rays.
The old system didn’t seem to have this effect. Maybe just get rid of the insane faux-slotting system.
None of these will happen, because the owners have saved tons in the process on both the draft and free agency fronts. True, the top guys have had their dollars explode but most teams would never have been in on those guys anyways.
The issue with the old system was that mediocre relievers could get tagged with the Type A label.
If you want to level the playing field among the teams do that at the league level with a stiffer luxury tax and/or revenue sharing. Don’t make the players pay the price for league’s desire for parity.
For me the best way is to leave the QO in place except that it becomes a one time deal. A player cannot be offered more than one QO in a row. If the player accepts the QO the team then gets a draft pick from MLB equal to one of the competitive balance picks the following year. This is make it less risky for teams that have players that fall in between those who are worth the $14 million and those that aren’t quite there. That way certain players will also profit. The player is protected, he accepts and is completely off the hook the next year. The teams are protected. They get compensation for losing a player and some protection in cases where a player might not be quite worth the QO. I would remove the restrictions on players that are traded mid season as well to make it equal for everyone.
Meh, I think the qualifying offer has had an unintended consequence (the unsignable guys stuck out there right now) but to me, that is as much a product of a horrible job done by these player’s agents as it is the system. I think changing the system is, in effect, letting bad agents off the hook for failing to do their jobs- identify the potential market and set their client up to get the best possible deal. Cruz and Morales are the two obvious recipients of horrendous advice from their agents.
Why on earth did Morales’ agent recommend he turn down the qualifying offer? Neither was a ‘top tier’ guy. Both are limited to the AL, because one will never see the field again and the other shouldn’t. Both were not wanted by their original clubs- who also happened to be top spenders. Sorry, but their respective agents completely dropped the ball and misjudged the potential market for them. I have no sympathy. The two pitchers, Ubaldo and Santana? Some sympathy, but really, at least in Ubaldo’s case, it helped to reign in the stupidity. It isn’t really a bad thing that a team was given an incentive to not spend (even more) idiotically on him. Santana will eventually get his, too, because starting pitching is too valuable. Drew? At least a little sympathy too, without the draft pick compensation he also has a home…. but again, his agent completely boffed gauging his original team, the Sox, actual interest in his client when they were all along the most likely to give him the best deal.
I think MLB and the PA need to at least discuss the qualifying offers and look for solutions, but at the same time, neither side needs to give in to what amounts to failures by these players agents to do their jobs.
“Why on earth did Morales’ agent recommend he turn down the qualifying offer? ”
There’s no evidence that he did.
This. Just because 3 or 4 players make a bad decision when presented with more money than they’re worth (the QO amount), doesn’t make it logical to “fix” a problem with the susytem that doesn’t really exist.
Cruz and Morales and Santana and Drew are/were all free to decide if they are/were worth more than $14.1 million, and at least a few of them are victims of self-delusion or really bad advice, or both.
Instead of blaming the QO and the draft pick, we should be blaming Cruz and his agent for assuming he would have received more money in free agency. The system doesn’t need to be changed, players just need to understand that if they’re not an elite player they’re better off accepting the QO instead of taking their chances in FA.
Why not make the qo minimum be the total value of the top 125 contracts, not aav, encouraging teams to offer a multi year qo
Mark:
I couldn’t agree more; the only thing I would add is that maybe Cruz and his agent should have considered that maybe, just maybe, the lack of interest in his services has something to do with his age and his PED suspension last year. Nah, it must be because of the SUPPLEMENTAL draft pick compensation; yeah, that’s it. Nice of you all to do Scott Boras’ bidding for him.
I heard someone on the MLB channel this morning try to make the argument that there are various ways to build teams and that draft pick compensation means that MLB now intends that the only way to build is through the draft and by having a strong minor league system. What a bunch of nonsense. If someone, like for example the Yankees, want to build by signing free agents, do you think that giving up a supplemental draft pick for someone they truly value will prevent them from signing that player? It didn’t stop the Yankees from signing Ellsbury, did it. Come on, let’s get real here.
I think RC’s supplemental pick idea is better than the main proposal here.
A few thoughts:
1) Are the owners and the union looking to PENALIZE teams that sign free agents? Or are they looking to COMPENSATE teams that lose them, to help maintain competitive balance? ( I think the latter; the former is a waste of time, and not in the players interest for sure)
2) draft picks now carry enough weight to keep these guys from getting the attention they otherwise would
3) slotting dollars are also huge.
If we forget the idea on penalizing teams who sign FA’s, and just try to compensate those who lose them, we could do the supplemental pick routine; and add to that, let the team that lost a FA, take the salary$ that guy had and put it towards slotting for signing draft picks.
Suddenly, teams that lose FA’s would have more picks, and be in a superior position to sign them. No need to classify players as Tier I,II, etc – their salary would do that automatically.
From the owners perspective it isn’t about penalizing teams that sign free agents as much as keeping free agent salaries down by adding an additional cost to the equation.
“as much as keeping free agent salaries down by adding an additional cost to the equation.”
I don’t think it does that at all though. The luxury cap is increasing at a much slower rate than player salaries and revenues. The way to keep salaries down is already here.
Oh, the poor babies- offered $14.5 million and it just wasn’t enough because they were so sure they were worth $100 million. Well, too bad. The system is fine, the problem is the inability of players/agents to properly evaluate the market and the way their weaknesses will impact the decision of a general manager on whether Player X is worth the contract plus a draft pick. I hope the owners stick to their position that what exists now is fine and if the players want to strike again in 2016/17 and lose even more money, go for it.
It IS very hard to feel sorry for these guys who grossly over-estimated their own values, and turned their noses up at $14M for a year of playing baseball…
I think you may be underestimating the sacrifices required to become a major leaguer. The excellent compensation that they receive is well deserved.
As a student of economics, players should be paid their net marginal revenue product (MRP), which is a fancy way of saying they should be paid for the revenue they bring in minus cost (i.e. minor league development). I have doubts that any player, excluding injured or those underperforming expectations, are being paid their net MRP. Not Kershaw, not Cano.
ARod maybe was back in his Ranger heydays. Maybe Clemens with that one year deal he signed. I suspect it’s few and far between. We would need a full financial disclosure to take this beyond guesses and suppositions.
Who actually gets paid their net MRP in any profession though? If you paid all your employees their net MRP you would never profit despite taking on all the risk.
Aye. I’m a software engineer, I wrote a couple million dollars worth of code last year. Nobody paid me that. And nobody will
Here’s my proposal:
We know the purpose of the existing agreement is to (i) compensate teams for losing free agent talent, and (ii) mitigate against the rising costs of acquiring free agent talent. This all stems back to competitive balance; middle-market teams receive compensation for players they can no longer afford, and costs are controlled to an extent where middle-market teams can be bigger players in the free agent market.
With that in mind, I think you can structure a new agreement that still accomplishes goals (i) and (ii) above but makes all sides happier by (i) increasing the compensation for losing free agent talent and (ii) reducing the indirect costs of signnig a player who received a qualifying offer. This can be done in the following way:
1. Increase compensation to the teams losing free agent talent by increasing their slot pool.
2. Reduce the indirect costs of signing a player who received a qualifying offer by awarding the team an extra draft pick (either before or after the supplemental round).
For example, under this new framework, by losing Ubaldo Jimenez to free agency, the Indians would still receive a supplemental draft pick and also would be permitted to spend additional dollars in the draft beyond the slot pool. Baltimore would still lose the 17th overall pick (and the correspondng slot money), but they would also receive a supplemental pick at the end of the first round (and corresponding slot money) in an effort to grant each team a top 30 pick. So they would basically fall from 17th in the draft to 29th.
Thoughts?
On the face of it, that makes some sense. The problem I foresee is that the large market clubs seem to possess a disproportionate number of the QO quality players. They’re also better able to make the offers both from a budgetary and market perspective. Not only do the large market teams have nearly double the payroll of say Cincinnati, but the players themselves are worth more in those large markets. A player who is worth $12 million in Cincinnati might be worth $16 million in Boston. One team would extend the QO and the other wouldn’t. Ostensibly, we’re more worried about giving Cincinnati extra resources than Boston.
So without changing the basic mechanism, your proposal is just telling large market teams that they’re allowed to spend more of their money on free agent AND amateur talent.
Keep in mind, many of the fringe guys who turned down the QO weren’t looking to average $14 mil a year. The reason they turned down the offer might have had more to do with 3-4 years of contract security than the AAV.
So the Cardinals would fall one slot for signing a free agent, while teams like the Brewers, Padres and so on would fall about 20 slots. Also, what happens if you sign two free agents. Dropping a few slots at the end of the second round is of no importance at all really.
Drop the first rounder to the end of the second round if they sign another. No loss of picks, just loss of value of those picks.
I think Drew is the cautionary tale here. He took a pillow contract coming off an injury, had a pretty decent year (especially June-September) and then couldn’t cash in with a multi-year contract to finish his career. The QO, though good money, wasn’t at all what he wanted. Guys like him in his position, aging good-but-not-great players attempting comebacks, are the real losers.
I would like to point out that for the players and the teams signing them the QO system is essentially the same as the player being a type A free agent in the old system. The signing team loses a draft pick which hurts the signing players value.
This means that this system is older than just two years so why have all these problems just popped up recently?
There were issues with the old Type A system too, most notably the problem of middle relievers/set-up men getting tagged with the Type A designation. The difference is that under the old rules, players were independently designated Type A or Type B. Under the new rules, it’s up to the teams and players.
Thus, if either a team or a player incorrectly estimates the player’s value, we have players who shouldn’t have attached compensation coming with that loss of a draft pick.
The new compensation system is also a somewhat steeper cost than the old. For one, fewer picks are protected – it’s just the first 10 instead of the first 15. For another, you don’t get a first-round pick if you lose a high-caliber free agent anymore; you get a supplemental pick, and you can lose that one if you sign another free agent. That means it’s no longer possible for teams to game the system by, for instance, losing a Type A free agent to get another team’s first-round pick (plus a compensation pick) and signing a different Type A free agent at the cost of a second-round pick.
I see no reason for the penalty phase of the QO system, which was also present for Type A free agents. Players have paid their dues playing 6 years at below market rates. Compensation is fine, heck, give the team losing a player an extra pick for all the players care even if it makes it less likely they sign with their old team.
Also feel curious why and how all teams apparently have collectively arrived at what must be a much higher valuation for the cost of the draft pick. The loss of slot money, given the team does not have to spend on the 1st rounder, also seems grossly inflated as a reason, and certainly should not have a universally high value.
What are the broader implications for the salary suppression in this group?. I imagine it can impact arb salaries and down the road elite free agent salaries. In fact,arb salary increases dropped this year from 119% to 117%. There is a motive for you.
When you have a habitual offender for a “crime”, in this case collusion, can we really rule that out? Obviously, it seems limited to non-elite free agents at this point, but that may be because they have gotten smarter at it and are taking baby steps this time.
Considering the possibility of treble damages stemming from collusion and free flow of anonymous information these days, I would put the chances of MLB risking another collusion lawsuit at ~0%.
The average first round pick produces more than $20M worth of surplus value over his career.
Essentially, if you’re giving Stephen Drew a 2 year deal, he has to outperform by 2+ WAR per year just for you to break even, so he either has to be a 4WAR player being paid like a 2WAR player, or basically play or free.
This really isn’t that complicated. The slotting system means you can’t use late pick bonus babies to replace earlier picks, so draft picks are very valuable now.
Though this articles suggests that rectifying the qualifying offer system requires only a few minor tweaks, I’m of the opinion that the system in place is more fundamentally flawed. Qualifying offers serve two functions: tying down rampant salary inflation, and compensating teams- namely, smaller market teams- for the loss of talent.
As for the first objective, I don’t neccesarily few rising salaries as an inherent problem. The game as a whole is flush with money, so I fail to see the harm in reinvesting some of that money into the guys who play the games themselves. The salary cap already disincentivizes wild, crazed spending (well, for all teams except the Dodgers) since it penalizes slaries beyond a cap. Especially as salaries increase, this will limit the amount teams will spend, preventing runaway inflation of salaries. Basically, I don’t view controlling player salaries as a neccesary objective of the qualifying offer system, as other structures already exist for this purpose.
Second- and this represents the meat of my argument- the qualifying offer system only rewards the already talent-rich teams with more draft picks, allowing them to maintain a monopoly on talent. There appears to be some thought- or at least there had been some thought- that the qualifying offer system was more prone to compensate smaller market teams, which would be more likely to abstain from paying their own players premium dollars once they hit free agency. According to this train of thought, larger market teams would willingly do so, meaning that lower payroll teams would primiarily benefit, reinjecting them with the lost talent in the draft. However, in reality, those teams with the most talent reap the greatest benefit. For example, the Yankees offered three players qualifying offers this offseason, meaning they had the potential to recieve three draft picks. The Yankees are hardly a team in need of these picks; meanwhile, teams truly starved of talent, such as the Astros, scarcely have players that reach free agency talented enough to warrant a qualifying offer, trapping them in a perpetual cycle of mediocrity. This issue is compounded by the fact that small market teams are probsbly lesss likely to offer fringe players, such as Cruz, the qualifying offer, since the risk of the player accepting it poses a greaterr burden.
The qualifying offer system needs a complete overhaul, or perhaps retirement entirely. To adequatley balance talent in the league, ensuring parity, the league should devote more focus to reworking the draft- some efforts of this sort have already been attempted in handing an extra pick to teams that finish near the bottom of the pack- to benefit lower market or underpreforming teams.
There is something inherantly wrong with a compensation system that should, by design, reward large market teams more often. The Yankees and Dodgers of the world can pretty much freely give out Qualifying offers to anyone that the contract is fair market for or above (i.e something like 2+ Win players).
The difference is that small teams have to have bargains, generally at most positions, to compete. giving out whats even a fair offer of $/Win in a QO is a gigantic amount of some teams total salary. $14 million is about 20% of some teams total salary, for a league average player thats a recipe for disaster.
There should be no scenarios where market size should be something that determines if a QO should be given IMO. It shouldnt be acceptable for the Yankees or Dodgers to give an offer to a player that the Royals could not because of the “risk” of him accepting. The reality of the baseball world right now is that success either comes through getting a lot of young cost controlled players in the minor league system at the same time or spend money.
“There should be no scenarios where market size should be something that determines if a QO should be given IMO”
The only way to do that is to get rid of Market size as a factor, which means a hard salary cap and floor, like in the NFL. And thats probably not going to happen.
I’m in favour of any new system that will once again allow AA to stockpile players he can offer arbitration to with a much lower penalty if they do accept, and much greater incentive for them to not accept (not having another team lose a draft pick).
the one thing that’s inherently flawed in this system is that the “penalty draft picks” always differ in magnitude or cost depending on where you finished in the previous season. right now the teams who fall right outside the bottom ten get penalized the most, while the best teams whose draft picks are at the bottom of the first round get penalized the least (after the teams with protected picks).
the idea of abolishing the draft pick penalty goes to the heart of what the system was set up for in the first place – to act as a counterweight to what might be unfettered FA binging by some teams. If there is a consequence to FA spending, the league hoped it would slow the market down. This is obviously far better than having any sort of cap like the other major sports do.
If the penalty were somehow more evenly applied, like for example, teams not spending over a certain amount in FA contracts (like 15M perhaps) could be issued a bonus round pick which might occur after the sandwich rd and those teams who go over that amount wouldn’t qualify for that bonus pick. Say half the teams would qualify for this bonus round and picking order was determined by some random generator. So, the FA penalty was less than losing your 1st round pick and more like early/mid 2nd which is still something, and also more evenly applied. Of course, it would rarely stop teams with money from being active in FA but that doesn’t happen now anyway. Bottom line is it doesn’t take picks away from teams who sign FAs, rather it would reward the teams less active in FA with an extra pick.