The Blue Jays stand to benefit from the Qualifying Offer system in the next few years … if the new Collective Bargaining Agreement does not change QOs too much
The existing Qualifying Offer system was implemented in 2012, replacing the old system of “Type A” and Type B” free agents. The objective of the QO system was to protect small-market teams when their best players became free agents.
The QO system accomplishes this in two ways. First, it penalizes teams who sign another team’s QO-ed player by having the signing team lose their first unprotected pick in the upcoming draft. This is significant, as a mid-first-round draft pick has been estimated to be worth $18-20 million. If a team re-signs its own player, the original team does not lose a pick. That means that players with QOs attached are much more expensive to other teams than to their original ones, which gives the original team a negotiating advantage.
The second feature of the QO system is that a team who loses a player to whom they have offered a QO receives a compensatory draft pick, usually in the range of 30th-40th overall. Such a pick is estimated to be worth $12-15 million.
The 2016 CBA
Not surprisingly, the MLB Players Association does not like QOs. They feel that having a QO places an unfair burden on a free agent player looking for a new team. Their position has some merit – as an example, some writers feel that Marco Estrada would not have re-signed with the Blue Jays had he not been burdened with a QO.
The MLBPA is accordingly rumoured to be looking to eliminate or modify the qualifying offer system in the upcoming CBA. One suggestion that has been said to be under discussion is to not permit a team to QO the same player two years in a row (which would benefit players like Matt Wieters, who accepted a QO for the 2016 season). This would eliminate the “QO ferris wheel” described by Scott Boras in 2014. Another suggestion was to not allow teams who had declined an option on a player to make a QO.
Impact on the Blue Jays
A team’s enthusiasm for the QO system largely depends on whether they are buyers or sellers. For buyers, eliminating or watering down the QO system would be a good thing, as they would give up fewer draft picks and be in a stronger negotiating position with free agents. For sellers, the opposite would be true.
So which are the Jays?
Looking a few years into the future, the Jays should be net beneficiaries of the QO system. Starting in 2017 (and assuming that these players do not re-sign), the Jays will average almost three possible QO candidates a year. (Note that this is based only on current players and current production – see “strategy” below!). If the QO system were eliminated altogether (unlikely, but not impossible) the Jays would lose negotiating leverage and possible draft picks.
Note that this assumes that the Jays do not become significant buyers of players with QOs attached. This appears likely, as they have not been significant players in the upper FA market in the past and, if the QO were eliminated, the prices of such FAs would skyrocket.
Playing the QO game?
Suppose that the Jays had an objective of rejuvenating their minor league system by stockpiling as many draft picks as possible. How would they do it?
They could try to trade for competitive balance lottery picks, but those are hard to come by and expensive. They could try to sign or trade for star players with only a single year left on their contract (like a J.D. Martinez) but even a single year of such a player would likely come at a high trade cost.
Or they could target players with a history of QO-level performance who have been underperforming, and so could be acquired at a minimal cost. Players entering their contract year, who have every incentive to try to regain their past performance levels. Players like, say, a Melvin Upton Jr. or a Francisco Liriano. The key to this strategy is the cost. If you can get an Upton for $5 million, then if he can provide even 1 WAR you are ahead of the game. And if he managed to regain his 3+ WAR form from his days with the Rays, then it is Jays -> QO -> draft pick.
The bottom line
It is entirely possible that the Jays are consciously pursuing a strategy of maximizing the chances of qualifying offers, and through them either favourable deals (Estrada) or draft picks (likely Bautista). But even if not, changes in the QO system resulting from the current CBA negotiations could have a substantial impact on the Jays’ strategy going forward.
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