The current system for free agent compensation incentivizes impending free agents to get themselves traded, as any player dealt during a season is not eligible to receive a qualifying offer the following offseason. For top-level free agents that distinction matters little, since teams are gladly willing to forfeit a draft pick to sign them, but for mid-level free agents, hitting the open market with draft pick compensation attached can suppress their value so much that otherwise interested teams don’t even enter the bidding. It’s a badly flawed system that takes millions of dollars from veteran players looking for their first (and in some cases, only) big payday. Maybe the next collective bargaining agreement will eliminate the flaw; until then, we talk about it.
Not only can the qualifying offer crush a free agent’s market during the offseason, it can influence decisions made by teams at the trade deadline, as front offices look ahead to the offseason. For instance, when asked about Rich Hill thriving on a one-year deal and the perception that Oakland definitively plans to trade the 36-year-old left-hander, with free agency around the corner, A’s front office boss Billy Beane recently told Peter Gammons: “We would have no problem making him a qualifying offer.”
That certainly benefits the A’s, who can now bring additional leverage into trade negotiations by knowing they’d either be able to re-sign Hill to a one-year deal or snag a draft pick if he departs as a free agent. However, it does anything but benefit Hill, who would be forced to pick between accepting the qualifying offer to remain with the A’s on a one-year contract or taking his chances in free agency with the draft pick compensation weighing his market down. For a 36-year-old who has bounced around a ton and is looking for his first multi-year contract, that stinks.
It may prove to be a moot point in Hill’s case if his ongoing blister problems drag into August, but he’s not alone among players watching the next 11 days' rumors with great interest, and with eight figures riding on which GMs are taking calls this month. Hill’s teammate, outfielder Josh Reddick, will become a free agent if ongoing extension talks with the A’s fall through. Beane will presumably look to trade Reddick if they aren’t able to lock him up before August 1st, but there’s no reason to accept a trade offer worse than the first-round draft pick he’d bring back via free agent compensation. He's an easy QO decision.
Hill might accept a qualifying offer and make the most of an unfair situation with a one-year deal in the $16 million range, but Reddick will almost certainly reject it in search of a multi-year payday closer to $100 million. There’s almost zero incentive for the A’s to field Reddick trade offers that they don’t perceive as being more valuable than the draft pick compensation. All of which creates a weird middle ground that doesn’t work for anyone, because why should another team give up that much in trade for two months of Reddick when they then can’t make him a qualifying offer?
Aroldis Chapman is another impending free agent for whom the QO-created trade dilemma could also come into play. He’s sure to reject a qualifying offer this offseason, so for the Yankees to trade him now and bypass the near-guaranteed return of a first-round draft pick they would need a big deadline haul. But does any team want to part with that much value for just two months and what will probably be only 20-25 innings of a reliever? Maybe. We'll see. Chapman hopes so.
These circumstances also leave room for any front office willing to live dangerously to gamble on the next CBA altering or even eliminating the qualifying offer system. If, for example, the Yankees or A’s believe the qualifying offer will be no more then getting whatever they can for Hill, Reddick, and Chapman suddenly could make sense. On the flip side, if a GM wants to bet on the next CBA allowing players traded midseason to receive qualifying offers, then lots of impending free agents become appealing trade targets for their second-half value and potential draft pick compensation.
It’s not an especially fair or well-constructed system, with all sorts of flaws and unintended (or at least quasi-intended) consequences. It’s also a relatively new system—on account of baseball continuing to change this stupid, stupid concept—so the various effects and loopholes haven’t been fully explored. Finally, it’s a system that could be changed or eliminated just a few months from now. Mix that all together and there’s a ton of gray area in which smart or risk-taking front offices can try to squeeze out an advantage over the competition between now and August 1. Trade deadlines are always interesting, but this adds another layer of drama.
Thank you for reading
This is a free article. If you enjoyed it, consider subscribing to Baseball Prospectus. Subscriptions support ongoing public baseball research and analysis in an increasingly proprietary environment.Subscribe now