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Wednesday, August 01, 2012

Olney: Free Agent Qualifying Offer Price Rises

When the latest collective bargaining agreement was unveiled, there were new rules in place for free agent compensation. No longer would the Elias Rankings determine Type A and Type B players, a designation which told clubs whether they would receive first- or second-round picks in exchange for losing their talent. Instead, qualifying offers were brought into play, and without a qualifying offer, a player would not receive compensation.

These qualifying offers were all the same amount, regardless of player, as it was based on the average salaries of baseball’s top 125 paid players. It was expected to be in the $12.5 million range for its first season, as that was about where the 125 player average was heading into 2012. All of the lucrative extensions have changed those numbers a bit in the ensuing months, though, and now, according to Buster Olney, the qualifying offer now sits at $13.3M-$13.4M instead.

I doubt even Alfonso Soriano would be offered that much, if he was available.

RoyalsRetro (AG#1F) Posted: August 01, 2012 at 03:21 PM | 23 comment(s) Login to Bookmark
  Tags: draft, free agent compensation

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   1. JJ1986 Posted: August 01, 2012 at 04:33 PM (#4198337)
Rises from what it was last year?
   2. RoyalsRetro (AG#1F) Posted: August 01, 2012 at 04:37 PM (#4198344)
Rises from what it was last year?


It was expected to be in the $12.5 million range for its first season....All of the lucrative extensions have changed those numbers a bit in the ensuing months, though, and now, according to Buster Olney, the qualifying offer now sits at $13.3M-$13.4M instead.
   3. ellsbury my heart at wounded knee Posted: August 01, 2012 at 06:37 PM (#4198458)
So who is this even remotely likely to apply to?

Greinke, Hamilton, Marcum?, Melky?, Montero?, Ortiz?

That's about it, right?
   4. Mess with the Meat, you get the Wad! Posted: August 01, 2012 at 08:16 PM (#4198501)
Any free agent a team hopes to get picks for
   5. AROM Posted: August 01, 2012 at 08:22 PM (#4198506)
Won't apply to Greinke since he was traded.
   6. DL from MN Posted: August 01, 2012 at 09:17 PM (#4198543)
Maybe Anibal Sanchez gets a qualifying offer. Napoli should get one. Edwin Jackson and BJ Upton too. Swisher might but I don't think he's worth it.
   7. Squash Posted: August 01, 2012 at 09:33 PM (#4198552)
So who is this even remotely likely to apply to?

I've been surprised how little ink the compensation change has spawned. It's a fairly massive structural change and there's hardly been a word said about it by anyone. I'm not sure if the baseball media hasn't really paid attention or has and doesn't realize the impact, but it's a pretty big switch. It discourages trades but encourages free agency - that's a pretty big double. At first blush that would seem to hurt small market teams more than big ones, but we'll see of course how it all plays out.
   8. You Know Nothing JT Snow (YR) Posted: August 01, 2012 at 10:33 PM (#4198581)
Swisher might but I don't think he's worth it.


I'd take him back on a one year deal at $13 mil, especially given the uncertainly regarding the Yankees outfield situation for next season. What's more interesting is how this might influence Rafael Soriano's decision to opt-out this offseason with one year and $14 million left on his Yankee contract.
   9. caprules Posted: August 02, 2012 at 12:03 AM (#4198610)
It discourages trades but encourages free agenc


How many players would have been traded but weren't specifically because of the new compensation rules?

At first blush that would seem to hurt small market teams more than big ones, but we'll see of course how it all plays out.


I believe this is why the competitive balance draft picks were created, to partially offset compensation picks that small market and low revenue teams would miss.
   10. Dan Posted: August 02, 2012 at 01:42 AM (#4198631)
One thing I haven't seen spelled out was where the compensation picks are going to be in the draft. Are they taken from the signing team like former Type A compensation or are they all in between the first and second round like the old type B comp picks?
   11. Magnum RA Posted: August 02, 2012 at 01:51 AM (#4198633)
The signing team forfeits their pick and it disappears. Everyone moves up a spot. The old team gains a pick at the end of the round. First ten picks are protected.
   12. Walt Davis Posted: August 02, 2012 at 03:13 AM (#4198656)
Napoli should get one. Edwin Jackson and BJ Upton too.

I wouldn't count on any of those. Napoli is back to being his usual self (actually hitting the worst he ever has), not the monster he was last year and still has just 56 starts at C this year and will be 31. Other than Mauer, the highest paid Cs seem to be Molina ($14) and McCann ($13). I suppose Napoli for one year at $14 is reasonable but I don't expect him to get a multi-year FA contract at that AAV.

Edwin Jackson (the rich man's Jon Garland) was had this year at 1/$11. Again no real harm in 1/$14 and maybe baseball has finally realize he's been durable and good and give him a good multi-year. He's probably the most likely of that bunch to get the compensation offer.

Upton's having a down year. (And what happened -- b-r now rates him as a terrible defender for his entire career. Fangraphs looks more reasonable.) Wow, I can't think of a single average, post-FA CF of the last couple of years. Adam Jones buyout only pays him a bit over $14 M in his FA years; Granderson will only make $13 M next year.

Swisher's right there too -- bloody right on average. I know, Michael Cuddyer gives him hope.

None of those guys would be unreasonable so maybe they're all worth the risk but there's a very good chance for each to accept the offer.

   13. Honkie Kong Posted: August 02, 2012 at 03:20 AM (#4198657)
Wow, I can't think of a single average, post-FA CF of the last couple of years. Adam Jones buyout only pays him a bit over $14 M in his FA years; Granderson will only make $13 M next year.


Watch the Nationals break the bank for Bourn.
   14. jacksone (AKA It's OK...) Posted: August 02, 2012 at 08:46 AM (#4198692)
These qualifying offers were all the same amount, regardless of player, as it was based on the average salaries of baseball’s top 125 paid players.


I think MLB should go the NFL franchise tag route and tie qualifying offer amounts to the average top 10 (15? 20?) at the players position. If multi-position then weight the averages based on games played at each spot. Seems like it would be a more accurate representation of the player's value.
   15. villageidiom Posted: August 02, 2012 at 09:28 AM (#4198727)
How many players would have been traded but weren't specifically because of the new compensation rules?
Hard to say. I don't suspect it was a long list - once you got past, say, 2006 or so, I think most teams recognized the value of compensation draft picks. Prior to that the more Moneyballish teams would try to trade for such players, offer them arb, get declined, and collect the picks. After the book was out, teams that had been willing to trade them away stopped doing so, or at least started demanding more value in return.

What changed over time is that the Elias A/B players had already gravitated to the high payroll or Moneyball teams, leaving little opportunity for the other teams to gain picks through arbitration offers. The problem, such as it was, was that the teams gaining the picks were not the small-payroll teams the rule was intended to help. Those picks, in turn, helped the rich teams develop more Elias A/B players, and the cycle perpetuated itself. This breaks that cycle, which I think helps small-payroll teams indirectly, in that it hurts large-payroll teams.
   16. RoyalsRetro (AG#1F) Posted: August 02, 2012 at 09:32 AM (#4198733)

Greinke, Hamilton, Marcum?, Melky?, Montero?, Ortiz?


Miguel signed a long extension this year, and Jesus is several years away from FA, unless there is another Montero I'm not thinking of.


I think MLB should go the NFL franchise tag route and tie qualifying offer amounts to the average top 10 (15? 20?) at the players position. If multi-position then weight the averages based on games played at each spot. Seems like it would be a more accurate representation of the player's value.


Wasn't that the problem before though? Mediocre middle relievers like Russ Springer were netting FA comp as much as good players? If teams don't value relievers as much as power hitting DHs, I don't see why they should get equal footing in terms of compensation.
   17. jacksone (AKA It's OK...) Posted: August 02, 2012 at 09:49 AM (#4198746)
Wasn't that the problem before though? Mediocre middle relievers like Russ Springer were netting FA comp as much as good players? If teams don't value relievers as much as power hitting DHs, I don't see why they should get equal footing in terms of compensation.


Weren't FA compensations based on offering arbitration previously? Or am I all ###### up? My proposal would differentiate the cost of a qualifying offer by position. If on average top relievers make as much as top DH's then yes, the qualifying offer would be the same and a team would be stupid to offer that much to a mediocre middle reliever like Russ Springer.
   18. RoyalsRetro (AG#1F) Posted: August 02, 2012 at 10:15 AM (#4198769)


Weren't FA compensations based on offering arbitration previously?


That and completely arbitrary statistical criteria developed by Elias.

I don't see the point of differentiating by position. That is done in the NFL because that is the salary the player receives, and he has no alternative - he cannot sign with another club. Here, we are talking about the free agent compensation a club would receive from a departing player - shouldn't it be based on the overall value of the departing player, not the position? Why place relievers on par with more valuable positions?

My proposal would differentiate the cost of a qualifying offer by position. If on average top relievers make as much as top DH's then yes, the qualifying offer would be the same and a team would be stupid to offer that much to a mediocre middle reliever like Russ Springer.


But if you differentiate by position, the qualifying offer is going to be much, much lower for relievers than for outfielders, so you're going to get a lot of teams offering and probably receiving compensation for departing relievers. Why do we want that?
   19. Crispix reaches boiling point with lackluster play Posted: August 02, 2012 at 10:19 AM (#4198771)
How many players would have been traded but weren't specifically because of the new compensation rules?

Probably both of the guys the Padres mysteriously acquired this spring (Huston Street and Carlos Quentin). Both have now been signed to contract extensions.
   20. DL from MN Posted: August 02, 2012 at 10:49 AM (#4198807)
Yes, FA compensation was based on offering arbitration. We still run into positional differences where a "relief pitcher" was considered a separate position. I think the new system works out fine. It is a good tradeoff between no free agent compensation at all and making sure teams who draft and develop star players aren't left with nothing when the Yankees sign their player.
   21. DL from MN Posted: August 02, 2012 at 10:55 AM (#4198818)
I wouldn't say this necessarily discourages trades. It discourages deadline deals for top players because it prevents the acquiring team from getting a pick. It doesn't really affect the value of players who don't deserve compensation and I actually expect to see MORE movement for these guys, not less. We also still saw Greinke move teams despite the disappearing draft pick so it doesn't discourage trading for a superstar.

Thought this through and it's clear Anibal Sanchez won't be getting an offer because he was traded. Those are the types of players this will discourage the trade market - players good enough to offer $13M but not quite good enough to trade a top prospect for at the deadline. These guys are going to get moved in the offseason going forward so the team that receives them can get the pick.
   22. jacksone (AKA It's OK...) Posted: August 02, 2012 at 11:50 AM (#4198889)

But if you differentiate by position, the qualifying offer is going to be much, much lower for relievers than for outfielders, so you're going to get a lot of teams offering and probably receiving compensation for departing relievers. Why do we want that?


Ah, gotcha, good point.
   23. Walt Davis Posted: August 02, 2012 at 06:40 PM (#4199229)
I think MLB should go the NFL franchise tag route and tie qualifying offer amounts to the average top 10 (15? 20?) at the players position. If multi-position then weight the averages based on games played at each spot. Seems like it would be a more accurate representation of the player's value.

But the main point of the new rule was to expand the market for these lesser players. The FA market for pitching was totally screwed up because it was relatively easy for average middle relievers to qualify as A or B free agents. These were already the most fungible position and the signing team had to give up a pick too. This new system likely accomplishes most of what the original Elias system was meant to accomplish -- it was just a classic case of folks who don't understand measurement trying to create a one size fits all scale in a particularly stupid (and common) way.

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