Heading into the 2021-2022 offseason there is a lot of speculation on Cubs President of Business Operations Jed Hoyer’s player acquisition strategy and his comment about “spending intelligently” in free agency to fill the Cubs’ 2022 roster (which at time of writing has more holes than swiss cheese). One of the factors being talked about in the intelligent spending discussion is signing players who are attached to qualifying offers. So what is a qualifying offer and why is it weighed so heavily in free agent acquisition calculus?
When teams have impending free agents they potentially want to re-sign, they can choose to offer a player a one year contract called a qualifying offer. The value of a qualifying offer is equal to the average salary of the 125 highest-paid players in Major League Baseball. Going into 2022, a qualifying offer is worth $18.4 million for one season. It doesn’t make sense for a team to extend all of its imminent free agents a qualifying offer, but if the team values the player at the determined qualifying offer rate or higher, then teams should absolutely extend that offer. At best, the player accepts the team’s offer and the team gets another season with that player on its payroll and a chance to extend that player’s contract beyond the one year qualifying offer contract. At worst, the team will receive draft pick compensation for another team signing the player who rejected their qualifying offer – a much better outcome than losing the player for nothing in return. However, not all players are eligible to receive qualifying offers. If a player has already been extended a qualifying offer once before, he is not eligible to receive another. The player also has to have spent the entire previous season with that team. Players who are acquired in-season cannot receive qualifying offers.
The mechanics of a qualifying offer look like this:
- Starting the first day after the World Series through the fifth day after the World Series, a team can choose to extend a qualifying offer to one of its looming free agents.
- The player then has seven days to accept the qualifying offer. In that time period, the player is free to negotiate with other teams. This helps the player get a better sense of his value in the free agent market.
- If the player accepts the qualifying offer, then he signs with the team for the one year under the established qualifying offer rate ($18.4M this offseason).
- If the player rejects the qualifying offer, then he becomes a free agent and is free to sign with any team. The new contract offers can be of any length, any dollar amount, and aren’t restricted to the one year predetermined salary constraint.
The qualifying offer mechanism was put in place for the 2012 MLB collective bargaining agreement as a way to maintain competitive balance across the league. Draft pick compensation is the lever intended to maintain that competitive balance. If a player rejects a qualifying offer and signs with a new team, the player’s new team is now on the hook to give up draft picks or international free agency bonus pool money for signing that player. A team can’t lose its highest draft pick through this process, but if a team has two first round picks the lower of the two picks could be forfeited. There are multiple levels for the rules on forfeiting draft picks when signing a player who rejected a qualifying offer, and they vary depending on the financial status of the team that signed the player. You can find more on the specifics of the draft pick compensation value at MLB.com’s glossary page on Qualifying Offers. A point of clarification- the team losing the free agent doesn’t gain the draft picks forfeited by the team that signs the player. Instead they receive a compensatory pick in Competitive Balance Round A (mini round between rounds 1 and 2) or Round B (mini round between rounds 2-3).
Per ESPN, there have been ninety-six qualifying offers made to players since its inception in 2012 as part of the new CBA that season. Only seven of those have been accepted (7.3%). Two of the biggest free agents in the 2021-2022 offseason, Marcus Stroman (SP, NYM) and Kevin Gausman (SP, SF) accepted qualifying offers after the 2020 season which means they aren’t tied to qualifying offers this winter. Consequently, both pitchers have been mentioned as free agent targets for the Cubs who sorely need to add quality pitching to the roster. Anthony Franco at MLB Trade Rumors wrote this handy article on this year’s free agent class and their likelihood of receiving qualifying offers. It’s important to clarify- just because a player is tied to a qualifying offer doesn’t mean the Cubs are automatically out on that player this winter (and vice versa – the Cubs may not only pursue players without qualifying offers). But it has to be the right player on the right contract length to fit the “intelligent spending” strategy Jed talks about.
Jed Hoyer and new GM Carter Hawkins will attempt to construct a roster they believe can be competitive in 2022, but they are unlikely to leverage many future assets like draft picks and international free agency bonus pool dollars to add to the 2022 roster at the expense of 2023 and beyond. Qualifying offers aren’t the only factor in the player acquisition strategy this winter, but it’s fair to expect the Cubs front office will choose other player acquisition avenues to preserve longer-term assets that will be resources for building the “next great Cubs team.”
The 368 Project 