More on Free Agent Compensation and Qualifying Offers
mlbtraderumors.com has a long piece today on the the current qualifying offer system. As I said before when the Orioles signed Nelson Cruz, the biggest problem I see with the current system is that it effectively prevents teams that finish with the 16th to 20th best won-loss records the year before (and who would thus typically lose the 11th through 15th picks in the next June Draft) from signing free agents.
In the two off-seasons in which the qualifying offer regime has been in effect, teams signing free agents who declined qualifying offers have given up the following first round picks: 17th pick (twice), 18th, 21th, 22th, 26th, 28th and 29th.
Before the 2013 season, the Milwaukee Brewers gave up the 17th pick in the 2013 Draft in order to sign Kyle Lohse to a three-year $33 million deal, which almost everyone at the time considered a bargain price for a pitcher with Lohse’s history. The Brewers were coming off an 83-79 season and may well have felt that Lohse was the piece they needed to contend in 2013. Of course, it didn’t turn out that way, but that may well have been the Brewers’ thinking at the time the signing occurred.
This off-season, the Orioles and the Yankees gave up the 17th and 18th picks in the 2014 Draft, as part of a course of multiple free agent signings by each team, with each subsequent free agent signing coming at a progressively lower price. Both the Yankees and the O’s finished 85-77 and were in the pennant chase until late in the 2013 season. Clearly, each team hopes that its free agent signings this off-season will give them the boost they need to make the post-season in 2014.
However, for teams with the 11th to 15th picks, which usually finish with records just below .500 (the Brewers, Padres, Giants, Angels and Diamondbacks finished with records between 74-88 and 81-81 last year) and who might benefit tremendously from signing one or more quality free agents, the cost of losing their 1st round picks is just too high.
The Brewers and Angels, after prior off-seasons in which they surrendered their first round picks to sign quality free agents without the desired results, have elected to keep their high first round picks this year. The Giants have elected to overpay their own soon-to-be free agents Hunter Pence (five years, $90 million) and Tim Lincecum (2 years, $35 million) rather than surrender their No. 14 draft pick. Finally, while both the Padres and the Diamondbacks might well have significantly improved their teams in the short-term by making, say, a three-year $39 million offer to Ervin Santana, neither team was willing to do so, apparently in large part because of the draft pick cost.
We will have two more off-seasons before the present free agent compensation/qualifying offer system is re-negotiated, but I very much doubt we’ll see any team give up a draft pick higher than the 16th overall in order to sign a free agent linked to draft pick compensation before then.