This week, one of the last remaining big-name free agents in baseball signed a one-year, $8 million deal.  To the average person that would be a life changing sum of money.  However, to Ian Desmond that represents far less than he, or industry experts, would have expected him to receive.  Desmond over the past several seasons has proven to be one of the elite hitting shortstops in the league and was expected to receive a lengthy contract with a high annual salary.  Instead, he was shackled by what is referred to as a”Qualifying Offer,” which contributed to tanking his market value.

Baseball players are largely at the will of the team which drafts them.  Once they reach the major leagues, which can take years advancing through the minor league system, players are under control by their team for six full seasons.  That means, unless the team trades or releases them, that player cannot reach free agency until they have accrued six full seasons of service time.  While the arbitration system offers a way to receive increased salary during those years of control, the player nonetheless is unable to maximize their value by hitting the open market.  Even after a player reaches free agency, however, the team can still brand them with a “qualifying offer” that makes all but the best players risky signings for other teams.

Introduced in 2012, a team can make a one year qualifying offer to a player that reaches free agency and spent the entire previous season with that team.  The salary is set as the average of the top 125 salaries in the league.  If the player accepts the deal, which no player had done until three did this year, they play out the year at that salary and can reach free agency the next year, at which point the team can give them another qualifying offer.  If they choose to reject the qualifying offer, any team that signs them through free agency loses their highest draft pick (outside the top 10 picks) and the player’s previous team receives a compensatory pick.

What we have seen with the qualifying offer system is that teams are reluctant to sign players with a qualifying offer because they want to avoid ceding their draft picks.  The result is that players, like Desmond and many others, whose skills make would ordinarily make them worth tens of millions are being unfairly undervalued in the market because of the draft pick restriction placed on them by their former team.  It will be interesting going forward whether there is a broader dispute during the next Collective Bargaining Agreement negotiations centered around  the qualifying offer system and what changes may be made to make it less unfairly cumbersome for certain players.

Kevin Cavino

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