The 2018 Qualifying Offer Will Be Set at $17.9 Million - How's All This Stuff Work Again?

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The 2018 Qualifying Offer Will Be Set at $17.9 Million – How’s All This Stuff Work Again?

Chicago Cubs

According to Joel Sherman, the qualifying offer rate for this offseason will be set at $17.9 million, a modest increase from the $17.4 million mark last year.

With so many free-agents-to-be falling off this past year, and many others getting traded in-season, the pool of qualified free agents this year figures to be uncommonly small for such an otherwise robust free agent class. You’re looking at Bryce Harper, Dallas Keuchel, Patrick Corbin, and Craig Kimbrel as obvious recipients (and Clayton Kershaw if he opts out of his deal), and guys like A.J. Pollock, Yasmani Grandal, D.J. LeMahieu, and Michael Brantley among the group of maybes.

Since we’re talking about it, and since we’ve entered the “offseason” for Cubs purposes, it’s worth refreshing folks on how this whole system works, and how it would impact the Cubs.

By way of short-version reminder, the qualifying offer is a mechanism for teams to try to retain outgoing free agents – it’s a one-year deal set at the average salary of the league’s top 125 salaries. If the player refuses the offer and signs elsewhere, his former team will get an additional pick in the upcoming draft (meanwhile, the signing team would lose some things – details below). The relative position of those picks will be tied to a team’s market size, payroll, and a couple of other related factors (again, the details are below).

Of course, a team like the Cubs can’t just go and hand out qualifying offers to their exiting free agents for extra picks, because the offer level is high enough that many outgoing free agents would be thrilled to accept. So even a very good free agent like Justin Wilson probably would not be under serious consideration for a qualifying offer, because a one-year, $17.9 million deal for Wilson would be a windfall. If he got the offer, he’d accept it.

Other limitations: a player can be given a qualifying offer only once in his career, and players who were acquired midseason cannot be made a qualifying offer. Thus, no qualifying offer for Cole Hamels, for example, if you were wondering. (The Cubs have a $20 million decision to make on him anyway.)

Qualifying offers are due five days after the conclusion of the World Series. Players then have 10 days to decide whether to accept or not.

Now let’s get a little more specific on how the offers/decisions work for the involved teams, starting with a team losing a qualified free agent. Although losing a qualified free agent used to result in a compensation pick just after the first round of the draft, it now lands after Competitive Balance Round B (after the second round). Well, most of the time. It’s a little complicated.

Losing a Qualified Free Agent Specifics:

  • If the team losing a free agent paid the luxury tax last season (i.e. had a big payroll), their compensation pick comes after the fourth round.
  • If the team losing a free agent received revenue sharing money last season (i.e. has a small market) and watches the free agent sign a contract worth at least $50M, the compensation pick comes after the first round.

Since the Cubs do not project to go over the luxury tax this past season, nor received revenue sharing money, they would then be compensated with a pick after Competitive Balance Round B (if they lose a qualified free agent this winter). In case you’re wondering, Competitive Balance Round B ended after the 74th pick last season.

Realistically, there are no players on the Cubs who will receive a qualifying offer this year, so this section is purely academic.

On the flip side … if the Cubs sign a qualified free agent, they’ll lose a draft pick. But unlike under the previous CBA, it’s not necessarily a team’s highest overall pick.

Signing a Qualified Free Agent Specifics:

  • If the team signing a qualified FA paid the luxury tax in the preceding season, it will lose its second AND fifth-highest picks in the draft (regardless of round), as well as $1M of its international bonus pool in the upcoming period. Ouch.
  • If the team signing a qualified FA did not pay the luxury tax, but does contribute to revenue sharing (i.e. larger market teams with more reasonable payrolls), it would lose its second highest pick in the draft and $500K of it’s upcoming international bonus pool.
  • If the team signing a qualified FA did not pay the luxury tax and also received revenue sharing money last season, it loses ONLY its third-highest pick in the draft.

Since the Cubs, again, probably will not pay the luxury tax for this past season, but do contribute to revenue sharing, they’d fall into that second bullet: losing their second highest pick and $500K of their international bonus pool – which would still suck, but not NEARLY as bad as bullet one. (And not as bad as it was under the old system, when you’d lose your first pick.)

So, for example, if the Cubs were to sign Bryce Harper after he receives and rejects a qualifying offer, they would lose their second round pick and $500K in IFA bonus pool money. Not nothing, but certainly not enough to dissuade you from a major player pursuit if you were otherwise interested. (If you sign a second qualified free agent, you lose your next pick after that, and another $500K in IFA money.)

However this plays out for the Cubs, the qualifying offer decisions impact the market, and thus, ultimately impact – in some direct or indirect way – every club that is trying to make moves. We will, of course, keep an eye on how things proceed.

Michael Cerami contributed to this post.

Author: Brett Taylor

Brett Taylor is the Editor and Lead Cubs Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.