Monday, March 17, 2014

An Offer You Can Refuse: A Look at the Qualifying Offer

Baseball free agency allows players to be signed to some of the largest contracts in all of sports. Alex Rodriguez was able to command a contract that had him being paid just shy of $30 million last year, while Clayton Kershaw just signed a contract extension that will give him an annual salary of over $30 million dollars. Talks of money this high have led to certain agreements being made in the Collective Bargaining Agreement (CBA) between Major League Baseball executives and the Players' Union. These changes made it so that teams with very high payrolls, such as the Yankees or Dodgers, would not be able to sign all the top players in free agency without giving up some sort of compensation in return to the team that the player is leaving.

The most important change to the free agency process, made in November of 2012, was eliminating Type A and Type B free agents, and changing the rule to something known as the qualifying offer. A Type A free agent was a player considered to be in top 20% percent of all baseball, while a Type B was a player in the next 20% of top players. If a team had lost a player who was Type A during free agency, then the team would receive the player's new team's top draft pick and a supplemental draft pick. A Type B player that would be lost in free agency would only earn the team a supplemental draft pick in the upcoming draft.

The process of Type A and Type B was causing too many draft picks being surrendered and added to teams who did not have large enough payrolls to contend in free agency, and thus, the qualifying offer was introduced, completely eliminating Type A and Type B completely. The qualifying offer consists of many parts, the first being the actual dollar amount of the offer. The amount will change year-to-year, as it is the average of the top 125 salaries in baseball, which came out to be $14.1 million this offseason. The offer, if accepted, is for a one-year contract. Teams have to make the offer before five days after the World Series ends, and players subsequently have a week after the offer is made to accept or decline it.

The declining of the qualifying offer is what the big difference is. When a player declines a qualifying offer, and does sign somewhere, the new team still has to surrender their top draft pick, excluding teams with top-10 draft picks, which are considered protected. Teams without top-10 picks who sign a player that declined their qualifying offer, then forfeit their first round draft, or highest if they do not have a first round draft pick, or if they own a protected pick. These forfeited picks do not go to the players old team, instead the draft just condenses. The teams who did lose a player who declined a qualifying offer do however receive a compensatory pick after the first two rounds end.

Even though the qualifying offer has evened out some of the problems amongst teams, it had created a lot of problems for the players. Many players are given qualifying offers during the offseason, but they want a multi-year deal and feel they can command more money, so they decline it. The problem with doing this is, many teams see the draft as a better investment than signing a veteran to a four-year deal, leaving many players twiddling their thumbs during spring training. Ervin Santana, considered to be the one of the top pitches on the market this offseason, was just signed by the Atlanta Braves, due to a potential season-ending injury to their ace, Kris Medlen.

Some players are still stuck without deals due to the qualifying offer. Stephen Drew, a key defensive piece in the Red Sox World Series title, and Kendrys Morales, a power-hitting switch-hitter, both still remain with no contract due to draft pick compensation attached to them. Both Drew and Morales are clients of Scott Boras, baseball's most notorious agent, who will not let players accept any money he considers to be to low. Drew has recently told some of his former Red Sox teammates that he "regrets not accepting the qualifying offer".

The qualifying offer is most definitely a better solution than Type A and Type B free agency, but it still does not help out the player as much as it should. If the trend of players not being able to get a contract until Spring Training begins, there is a chance that an "expiration date" will be placed on the qualifying offer, until the player just becomes a normal free agent, with no compensation attached to them. Until something like that happens, or the CBA is renegotiated, players who decline qualifying offers must keep their fingers crossed that they are valued more than a first-round draft pick.

Bennett Schiff is a freshman in the Drexel Sport Management program, and one of the few members of the major from the powerful state of Rhode Island. He has volunteered for the U.S. Open of Squash held at Drexel as well as becoming a member of the Alpha Epsilon Pi Fraternity. Prior to arriving on Drexel's campus, Schiff was very active in his local community with his synagogue.

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