NEWSLETTER
Today was the deadline for teams to issue Qualifying Offers to outgoing free agents. The offer – a one-year, $18.4 million contract for 2022 – is the offer a team must make if they want to get draft pick compensation if/when the free agent signs elsewhere. In turn, the team signing the player will lose draft pick(s), and bonus pool space, and International Free Agency bonus pool space.
As expected, this year was REALLY loaded with offers. The players today receiving Qualifying Offers:
1B Brandon Belt, Giants
OF/DH Nick Castellanos, Reds
OF Michael Conforto, Mets
SS Carlos Correa, Astros
1B Freddie Freeman, Braves
RHP Raisel Iglesias, Angels
LHP Robbie Ray, Blue Jays
LHP Eduardo Rodriguez, Red Sox
SS Corey Seager, Dodgers
SS/2B Marcus Semien, Blue Jays
SS Trevor Story, Rockies
RHP Noah Syndergaard, Mets
UTL Chris Taylor, Dodgers
RHP Justin Verlander, Astros
No huge disappointments there, outside of maybe Rodriguez (and we’ve already discussed the disappointment about Syndergaard). It’s unlikely the Cubs get involved with any of the qualified free agents, though I can twist myself in knots and conclude that a four-ish-year deal for Castellanos or Conforto could still make some sense, or a deal for one of the shortstops if the offseason drags on and there’s just surprising value to be had.
These players now have 10 days to accept or reject the offers. For those who accept, that’s that, and they’re now on a one-year, $18.4 million deal for 2022. For those who reject, they are tied to draft pick compensation. Different teams have different levels of compensation they have to give up for signing a qualified free agent. From our previous discussion about how the qualifying offers ding the Cubs, as well as a number of other large market teams:
As a reminder, because they are a larger-market team that is not over the luxury tax, the Cubs’ “cost” for signing a qualified free agent is their second highest pick in the draft (the number 7 pick in the second round), the bonus pool space associated with that pick, and $500,000 in International Free Agent bonus pool space.
Other teams in that particular tier: Angels, Astros, Athletics, Blue Jays, Braves, Cardinals, Giants, Mets, Nationals, Phillies, Rangers, Red Sox, White Sox, Yankees. Among those teams, the Angels (13th in the second round), Mets (14th pick overall, compensatory), Nationals (5th in the second round), Rangers (3rd in the second round), and Red Sox (41st overall, compensatory) have similarly-valuable second-highest picks at stake. (And even for other teams in this group, the pick they have at stake is only about 10 to 20 spots below the Cubs’ second rounder, so it isn’t THAT much better.)
Moreover, there are two teams – the Dodgers and the Padres, per MLBTR – that are over the luxury tax, so the cost to them to sign a qualified free agent is their second highest AND fifth highest picks (and bonus pool space), and $1 million in IFA money. So that’s even worse.
So, you could argue that, while the Cubs have a “Qualifying Offer problem,” so do the Dodgers, Padres, Angels, Mets, Nationals, Rangers, and Red Sox. And the other large-market clubs aren’t that far off.
Really, where there’s a strong competitive advantage in the qualified free agent market is for the smaller-market clubs (which, well, that’s how the system is designed). Those clubs – Brewers, Diamondbacks, Guardians, Marlins, Mariners, Orioles, Pirates, Rays, Reds, Rockies, Royals, Tigers, Twins – are supposed to have an advantage. And they do, in the form of only losing their third-highest pick in the draft (no IFA money) when signing a qualified free agent. (Note that, for these purposes, the Cardinals are treated like the Cubs, not the Pirates/Reds/Brewers.)
Very generally speaking, the Cubs aren’t going to want to give up draft pick compensation to sign a free agent to a very short-term deal. If there was a huge bargain signing available they might do it if the player is more under-market than the value of the draft pick comp, but I don’t see that happening. Their draft pick compensation bundle (7th pick in the second round, that bonus pool space, and $500K in IFA pool space) is probably worth, what, $5 to $8 million in expected value? So you’re talking about a one-year free agent having to be VERY cheap to justify giving up compensation.
On a multi-year deal, the calculus changes a bit, since you’re spreading the “cost” over multiple years. That’s why draft pick compensation is barely a considering if you were talking about someone like Carlos Correa or Corey Seager. If you could get a guy like Syndergaard on a two or three-year deal, you might think about giving up the comp, but it would have to be a really attractive deal (and he would, presumably, get a lot of offers like that).
And, of course, this all takes place against the backdrop of the CBA negotiations, where it is possible – unlikely, but possible – that the draft pick compensation rules for these players changes midstream upon the passing of a new CBA sometime in December or January or February. That’s the annoying reason why it makes sense for a team like the Cubs to wait to truly engage any of the qualified free agents. Your entire approach could change. Again, if you were going after a Correa or a Seager type, you don’t really have to worry about it, but a lot of the other guys? You want to know how much it is ACTUALLY going to cost you.
Note, though: no one is expecting the rules to change midstream. Consider that, today, JD Martinez (Scott Boras client) made a decision based on the assumption that the draft pick compensation rules will stay in place throughout the entire offseason:
Rationale on J.D. declining opt-out, as first reported by @JonHeyman. BOS likely would have made qualifying offer at less ($18.4M) than he would have earned in 2020 ($19.375M). QO would limit market. Universal DH not yet assured. CBA could change landscape for both QO and DH.
— Ken Rosenthal (@Ken_Rosenthal) November 7, 2021
Other notable free agents who did NOT receive a Qualifying Offer:
⇒ Righty Jon Gray, who we’ve talked about before. He’s pretty much a lock to be a Cubs target, in my opinion.
⇒ Lefty Carlos Rodon, which is a bit of a shocker. There was clearly worry by the Sox that he would accept, given the past arm issues and then the arm issues down the stretch this year. Wow. What an interesting free agency his will be. You would love to be the team that takes a four or five-year shot on him and is right, but if the White Sox have signaled that one-year and $18.4 million was too much of a risk for them …
⇒ Lefty Steven Matz, who is 30 and was a better-than-league-average starter in 2021 for the Blue Jays. He’s dealt with health issues and had a run of years where he was right around league average, but the stuff sure looks like he could be more his 2021 self going forward. I like him as a target for the Cubs, who’ll have plenty of pitching options out there.
⇒ The Dodgers did not make Clayton Kershaw a Qualifying Offer, which is probably a reflection of (1) the forearm issue that ended his season, and (2) the knowledge that Kershaw is probably never going to sign with another team, so what’s the point? He’d probably have accepted the QO, the Dodgers will likely try to get him back on something lower AAV.
⇒ As expected, the Brewers did NOT do the silly thing and make Avisail Garcia a QO. He would’ve accepted, and they can’t afford to stick a one-year, $18.4M hit on their books. They may wind up re-signing him, but if not, that’s a productive bat lost.
⇒ Righty Anthony DeSclafani didn’t get a surprising offer from the Giants, so he’ll be another interesting arm out there.
