What is a Qualifying Offer?

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The MLB changed the rules of a qualifying offer a few years ago and it has affected the game in many ways every since.

The basics of a qualifying offer is that a team is able to offer a contract to a pending free agent for them to either decline or accept. If the player declines and another team signs the player, the team that signed the player must give them the team that lost the player their first round draft pick. If a team is in the top 10 in the draft order for the upcoming draft, then the team gives the team that lost the player their second round pick. If a team signs multiple players who have declined their qualifying offer, then they keep giving away their highest draft pick. So sign two players=1st and 2nd, sign three=1st,2nd and 3rd, and so on.

If a player accepts the qualifying offer, then they will simply pay for that salary for one year and they will be a free agent again the next offseason. The value of the qualifying offer changes every year because it is determined based on the average of the top 125 salaries every year. This offseason the qualifying offer will be $15.8 million.

The Strategy

No player has every accepted a qualifying offer under the current system. The reason for this is that many players like the security of signing a multi-year contract and feel they can get a better contract then the qualifying offer. However, the qualifying offer has also been a hinderance for some players that have declined to sign the qualifying offer.

For superstar free agents like David Price and Zack Greinke, teams have no problem surrendering a draft pick for that kind of talent. However, for players that have been good enough to get the offers extended, but are not superstars, teams have been less willing to sign them (i.e. Nelson Cruz and Ubaldo Jimenez two years ago).

Teams don’t want to sign these types of players because they don’t want to give up a draft pick and shell out a good amount of money for a player that they don’t think will impact the team as much as a potential first round draft pick will, and with prospects being as highly coveted as ever, teams are less likely to sign these borderline star players.

But when a team does decide to bite the bullet and sign one player with a qualifying offer attached, they are more willing to sign multiple because the draft pick they have to give up gets less and less valuable. This happened a couple of offseasons ago when the Orioles signed starter Ubaldo Jimenez and then signed Nelson Cruz because they would only have to give away their 2nd round election.

In conclusion, qualifying offers can help teams rebuild their farm system, but they offer teams and agents a tricky situation because of the many ramifications it has to not just the player trying to get a contract, but to how valuable the player actually is to the team.

You can follow which players have extended qualifying offers here.

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